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

National Governors Association leaders express concern over Trump's unemployment order

President Trump at a press briefing on Aug. 10. Photo: Alex Wong/Getty Images

President Trump's executive action calling on states to provide 25% of an additional $400 in weekly unemployment benefits poses "significant administrative burdens and costs," according to a bipartisan letter from the leaders of the National Governors Association.

Why it matters: Many states have had their budgets decimated by the coronavirus pandemic and cannot afford pitching in an $100 extra per unemployed resident. Several state unemployment offices told Axios that they don't even know how the program works, and that any changes to state unemployment systems would take weeks to implement.

House will not hold votes until Sept. 14 unless stimulus deal is reached

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House Majority Leader Steny Hoyer (D-Md.) announced Monday that the House will not hold any floor votes until Sept. 14, though members will remain on 24-hour notice to return to Washington in case a deal on coronavirus stimulus is reached.

Why it matters: Democrats and the Trump administration remain deadlocked and have not met since negotiations broke down without a deal on Friday.

Adobe: E-commerce growth slows as stores reopen

Illustration: Rebecca Zisser/Axios

E-commerce sales are still way up compared to a year ago in the U.S., but growth moderated in July as more traditional stores reopened, according to fresh data from Adobe.

Why it matters: Undoubtedly some of the shifts to online shopping will be permanent, but the numbers suggest that consumers want to do a certain amount of their buying in-person.