June 25, 2020 / 6:20 PM / 14 days ago

California governor declares budget emergency due to COVID-19 pandemic

SACRAMENTO, Calif. (Reuters) - California Governor Gavin Newsom on Thursday declared a budget emergency in the most populous U.S. state, blaming expenses and the economic downturn caused by the COVID-19 pandemic.

FILE PHOTO: California Governor Gavin Newsom speaks to the media after at a voting center for the presidential primaries on Super Tuesday in Sacramento, CA, U.S., March 3, 2020. REUTERS/Gabriela Bhaskar/File Photo

Declaring a budget emergency allows the state to tap into its rainy day fund. California anticipates a $54.3 billion budget deficit due to costs and a drop in revenue linked to the pandemic.

Under a deal reached with lawmakers, the state would use about $16 billion from the rainy day fund over the next three years to help right its budget, said H.D. Palmer, a spokesman for the governor’s finance department.

The finance department has projected a 25.5% decline in personal income taxes collected by the state, and a 27% decline in sales taxes and a 23% drop in corporate taxes.

In addition, the state expects to spend more in 2020 than it had projected because of expenses related to the coronavirus pandemic of about $13 billion.

The state’s budget crunch lies in the shadow of coronavirus cases that continue to mount.

Nearly 5,350 people tested positive for the coronavirus in California the past 24 hours, Newsom said. The increase was smaller than Wednesday’s record of 7,149 new cases. But the number of Californians becoming very ill continued to rise, using about 34% of the available intensive care beds in the state, up from 29% on Wednesday.

A total of 4,240 patients were hospitalized with COVID-19 on Thursday in the state, using about 9% of total available beds, Newsom said.

The surging cases have prompted the state to put 11 counties, representing about half of California’s population, on a watch list of places that might be required to roll back recent efforts to reopen their economies.

Newsom on Thursday praised the Walt Disney Co (DIS.N) for postponing the planned reopening of theme parks in the state.

Reporting by Sharon Bernstein, Editing by Franklin Paul and Nick Zieminski

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