California Gov. Gavin Newsom. Photo: Carolyn Cole-Pool/Getty Images

California projects it will face a $54.3 billion deficit as a result of the economic damage caused by the coronavirus, Gov. Gavin Newsom’s administration announced Thursday.

Why it matters: It's a sign of the massive economic devastation caused by the coronavirus and the stay-at-home orders that have followed, especially when compared to the $21 billion surplus that California ran a year ago, per CNBC.

  • The budget deficit means California's required funding level for public schools and community college will drop by $18.3 billion.
  • Meanwhile, the state has to pay an extra $7.1 billion due to the surge of residents who have enrolled in social safety net programs.

The big picture: State and local tax revenues across the country have been severely depleted during the pandemic, while states have had to increase their spending because of unemployment and medical obligations.

  • The crisis will be at the heart of the federal government's negotiations over the next coronavirus stimulus bill. Democrats are pushing for billions in relief for state and local governments, while some Republicans are resisting — citing poor budget management by some states prior to the pandemic.
  • Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) are proposing a $500 billion fund for state and local governments to be included in Congress' next coronavirus rescue package.

By the numbers: The $54.3 billion deficit dwarfs California's $16 billion "rainy day fund," Newsom said.

  • The state also predicted an 18% unemployment, up from 3.9% earlier this year.
  • California also projects personal income will fall by close to 9%, while permits for new housing construction will drop more than 21%.

What he's saying: Newsom said in a memo released Thursday that the massive deficit “underscores the necessity of further federal stimulus to help states and local governments," per CNBC.

  • “These numbers are jaw-dropping,” Newsom said. “I just hope that people are preparing themselves ... for the effort that we all need to engage together to undertake to unwind that and get back on our feet.”

Go deeper: Cuomo tears into McConnell for suggesting states should declare bankruptcy

Go deeper

Kim Hart, author of Cities
Aug 13, 2020 - Economy & Business

The pandemic is hitting city budgets harder than the Great Recession

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Data: National League of Cities; Chart: Axios Visuals

With tax revenue in free-fall and expenditures dramatically rising, the coronavirus pandemic is on pace to hit cities' finances even harder than the Great Recession.

Why it matters: Almost all cities are required to balance their budgets, and at this rate they'll have no choice but to cut more services, layoff or furlough more workers and freeze capital projects.

Updated Aug 12, 2020 - Politics & Policy

Pelosi says Mnuchin told her White House is "not budging" on stimulus position

Democrats and the Trump administration remain "miles apart" on negotiations over a coronavirus stimulus deal, House Speaker Nancy Pelosi (D-Calif.) said on Wednesday.

The latest: Around 3 p.m., Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) issued a statement saying that Treasury Secretary Steven Mnuchin had initiated a phone call and made clear that the White House is "not budging from their position concerning the size and scope of a legislative package."

Kudlow calls "voting rights" part of "liberal left wishlist" for stimulus talks

White House economic adviser Larry Kudlow dismissed "voting rights" as a non-starter request from Democrats in stalled talks over a coronavirus stimulus package, arguing on CNBC Thursday that it's part of a "liberal left wishlist" and that it's "not our game."

The big picture: President Trump vowed on Fox Business Thursday to block Democrats' demands for $3.6 billion for "universal" mail-in voting and $25 billion for the USPS in the stimulus package, baselessly claiming that funding that would help voters cast ballots remotely would lead to mass voter fraud.