The non-partisan Legislative Analyst’s Office has updated their report on effects of recent federal actions on the California State budget.
The report’s introduction states:
It lists potential budget problems:
- Higher than anticipated direct costs to respond to public health emergency — for example, the purchase of ventilators and personal protective equipment.
- Higher than anticipated indirect costs — for example, the huge jump in the number of Californians filing for unemployment benefits.
- Lower revenue than anticipated — for example, sales tax whacked by consumers cutting back on spending because they are suddenly unemployed.
It lists and describes major sources of federal funds that could help the State cope with the problems listed. The list does not contain all available federal help, but includes:
- Coronavirus Relief Fund aid to States based on population.
- An estimated $5.8 billion in aid to local California governments with a population of at least 500,000. For example, Orange County is eligible for $555.4 million in aid.
- An estimated $9.5 billion in potential direct State aid.
- Funding is aimed at helping with higher costs, not with loss of revenue.
- A temporary 6.2% increase in the federal government’s share of the cost of Medicaid, including Medi-Cal and In-Home Supportive Services. “Of all the federal funding changes described in this post, this change provides the broadest budgetary benefit.”
- “Given the magnitude of initial unemployment claims received so far, the state UI Trust Fund likely will become insolvent…” — federal aid includes funding administrative costs and expanded benefits plus interest-free loans.
- A federal stabilization fund to offset adverse effects on education institutions from Kindergarten through college.
The reports conclusion states:
Editor’s comment: The Governor and State Legislature will contort themselves to avoid cutting programs in order to make the State’s budget work. They should stop the contortions and start looking for programs to trim.