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tv   KPIX 5 News at Noon  CBS  May 14, 2020 12:00pm-12:30pm PDT

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right now on capital hill where a hearing is ongoing right this. rick bright, a federal vaccine
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expert is testifying in front of a house panel saying he was demoted after filing a whistle blower complaint claiming health and human services leadership dismissed his dire predictions about the coronavirus in january. >> our window of opportunity is closing. if we fail to improve our response now based on science, ar the nd woand be prolonged. >> i was surprised by his answer because, you know,
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because it's not an acceptable answer. >> dr. bright said we have the world's greatest scientist and let us speak without fear of retribution. the department of health and human services said ewg ys the complaint and full w ouof washi senator richard burr is stepping down as chairman of the and he was served with a search warrant and took a self-phone and will step down at the end of the day tomorrow . more unsettled weather and a chance of showers in the bay area tomorrow. we have a closer look.
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mary. lighted rain in the area. as we go through the day, mostly cloudy skies and catching a few more showers heading through the afternoon but tomorrow sunshine and through fridand most of saturday when the next storm system arrives. 69 in fremont, 72 for san jose and 71 for concord. daytime highs running seasonal if not just a bit below average for this time of year. there we go with that seven day forecast looking at sunshine friday, most of saturday and then rain returns with a stronger storm system sunday into monday. now let's listen into governor gavin newsom. >> that was january a few weeks after the budget we worked with the government on repatriation
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flights from mainland china related to the coronavirus. we clearly, the time had an expectation this was serious but none of us had a sense of how serious. the focus appropriately the time was public health. as you can see from this slide, not only was the state of california impacted by what was to come but the entire nation and of course and it's been induced and 25.6% in the spring and nations and just like that, most of the blink of an eye and fiscal returns and certainly a blink of an eye, 60, 70, 80 days later and completely different position. not just again the state of california but the entire nation. the good news though for those that watch and follow the work
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that has been done here in this capital or done by the previous administration, governor brown and the outstanding leadership that he advanced in terms of the fiscal stewardship of the state over the last two terms combined with the talents in similar stewartship and we enter into this moment in a much better place than previously entered into any moment. i say that soberly. not naively and not triumphantly. we'll be dealing with challenges that we haven't faced in some time. it is important to note when we talked in terms of the surplus we were debating last year, that operating surplus was in the range of $21.5 billion. that was last year's operating surplus that we were responsible for balancing. we debated that surplus and we did a lot of things that i
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think is make this situation better today. we paid down debt in the $4.5 billion in debt from that wall of debt, infamous wall of debt here in the state of california. at the time it totaled $34.7 billion. the final payment was done last year, $4.5 billion completely eliminating that debt. we were thoughtful perhaps more so than the last decade and a half of using surplus dollars very prudently and even more so than in prior years where 88% of the surplus went to pay down one time obligations or to invest in just one fiscal year's investment, meaning we try to reduce the amount of ongoing expenditures and the 12% reflected in the slide of new ongoing commitments and in budget terms, fiscally
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conservative approach that we entered into last year including by the way, making commendments to pay down long term obligations not just to pay off that wall of debt. that allowed us to increase our reserves into a record $16.2 billion. that was just one of a number of reserve accounts in the state and i'll talk about not only that reserve account but talk about a number of other accounts where we're able to put aside money not just in that rainy day fund for a rainy day, but social safety net fund that we had set aside, some $524 million that was set aside in our budget under prop 98 provisions for our public education systems including some economic uncertainty dollars that were set aside. along ways of saying this: we weren't just asserting more and
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the bond rating and increase at the highest levels in over two decades and as a consequence of that borrowing cost for the state of california declined. it's a long way, again, of saying or entering into this time of uncertainty in much better place than we entered into it in for example 2003. or 2009 and more contemporary 2011. we are in a position where i can advance at least a commitment to you that while the numbers have certainly changed, our values remain, and we are committed despite the head winds of $54.3 billion budget short fall that we are entrusted to balance in the current fiscal year and into the next budget year to advance a not only an effort and
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balance the budget but also to balance our principles and advance our values and those values and core principles are refracted in the slide next to me. public education, public health, public safety, and always an eye on people that have been hit hardest by covid- 19. i am not naive by any stretch of the imagination. as painful as the state punishment may be, personal budgets are even more deffing and exhausted and very credit completely destroyed. you're desperate to get aceps of your fate and selective future. some 4.6 million of you have filed for unemployment claims just since march 12. we are at a time that's simply unprecedented. when i mean unprecedented, we
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talk in terms of the great recession, that great recession, we had unemployment that peaked at 12.3% in the third quartier 2010. some 2 2.2 million people were out of work. i'll go back to what i said, 4.6 million californiaens just since march 12 have filed for unemployment insurance claims or assistance under our pua program. 2.2 at the peak in 2010. now 4.6 million filing claims so far just since march. we are projecting in our documents we're putting out today in our may revise of that january budget that unemployment will peak north of 24.5%. one could argue we're already there. we're projecting that as a peak. the budget year we are projecting that we will come in roughly at about an 18%
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unemployment number. this is simply without precedent. these numbers, unemployment numbers, economic consequences of covid-19 are not only being felt statistically but they haven't been felt like this since the great depression. these are not normal numbers even in a state so familiar with revenue increases and declines because the volatility of our tax system, these are simply without precedent in modern times and the economic consequence reel and that's why i just want folks to know we are very mindful while this may be an economic exercise or intellectual enterprises of balancing a state budget, this translates very differently to the folks watching and trying to pay the bills and keep their
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lights onto be able to figure out this and get back to work and just provide for a family and their future. dreams quite literally being torn asunder in realtime and lives continuing to be lost including 98 human beings that lost their lives in the last few hours rebated to covid-19. these competing and confounding factors are front and center in terms of consciousness and in terms of mindset moving forward to balance these year's budget. let me now talk about this year's budget in more specific terms the current budgets proposal re-vice is 22.3% in revenue from the january budget. the budget we've put out today
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is $133.9 billion general fund. some $203.3 billion overall budget. the general fund reflects a 9.4% decrease from the budget act of 2019. the overall budget about a 5.4% decrease from the 2019 act. it's important -- as a consequence, revenue projections inde in sales tax revenue is 27.2%.
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we're projecting personal income tax, the pit as it's referred to in budget language to decline by 25.5%. and corporate tax by 22.7%. all told, revenue decline of over 22.3%. and so we start there. that's the baseline. no longer a projected surplus north of the projected deficit and north of the fiscal year and budget year we're advancing here today of $54.3 billion. we cleaned up the 2018-2019 budget year and showed up as a net gain of $700 million.
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i don't want to lose too much of you on this but i want to sum up the foundational challenge that we have so we had some good news there but in the current fiscal year obviously some bad news and the reduction in our projected deficit and into the next fiscal year we're projecting a $32.2 billion budget short fall. roughly $41.2 billion is the projected deficit. that assumes no increase case load, no increase cost and expenses to help the most vulnerable californiaens. one cannot assume that and as the consequence, we add roughly $13 billion to that total, $13.1 billion to be exact thus the total budget projected for the current fiscal year and budget year $54.3 billion.
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it is not the economic consequences and the personal and professional consequences, those unemployment numbers certainly are but the budgets numbers are not in this respect. not only do we come in more fiscal -- with more fiscal health than in the past into this recession with more ample reserves and more capacity for deferrals, the ability to borrow where it's appropriate under these circumstances, but also we come in with a substantially large fund than we have seen in the past. just to put it in statistical returns and called conferment for those watching. roughly 45% was the budget short fall in 2003, 58% in 2009, 58% in 2009. you may recall that 2009 budget
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deficit came in roughly $60 billion short fall so 2011 it was about 30.8%, 31% of the challenge. this year we project roughly 37%. this is challenging, this will be trying, and this certainly will be a multiyear opportunity and effort. >> we are having some technical difficulties with the news conference there, but he did
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talk about the budget threwout a lot of numbers and some of the numbers that are very important is saying there's a projected deficit for the state of california of $54.3 billion. that is for the current fiscal year and also the budget year. we appear to have him back online so let's listen in. >> use all of the $16.2 billion in the rainy day reserve but do it over a three year period. no matter what we do this year, it won't be enough to address the short fall next year. we have to be mindful of our responsibility to balance the budget every year but do to so strategically and no printing press in the state of california. we are constitutionally -- that
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is our requirement. the next number of weeks by july first of this year. again, we're looking at multiyear strategy and that will include pulling down the rainy day reserve. the other reserve account was created a few years ago by the outstanding leadership of our bunt chair in the senate. holly mitchell, it was her brain child to put together a safety net reserve and thankfully she did that with her colleagues and leadership and the assembly and the senate and the support of our administration. that reserve account has $900 million in it.
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we proposed to the legislature that we use $450 million in this budget year and $450 billion in subsequent budget years. like the rainy day reserve. so there you have 7.8 rainy day and $450 million in the reserve. finally, a reserve little noticed and highly debated and one that we never see trigger into our lifetime and that's the guarantee support of our time. that reserve and thankfully all
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$520 million of that surplus into pay down this deficit and help support our education system this year. three reserve accounts and roughly all totaling $8.8 billion. so that's 8.8 billion on our way to solving a $54.3 billion problem. we have been blessed by the credible leadership of speaker nancy pelosi and strong support bipartisan support of our congressional delegation and congressional leaders in the state and the republican himself with the cares act. it'll provide an additional 15% of relief in terms of ultimately balancing our budget. 1% relief from reserves, 15%
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relief from the cares act. in january i stood up and promoted a number of important programs, things that i think overwhelmingly were supported and appeared once again to be embraced by the legislature, focus on expanding and preschool for all programs, investment and further expanding healthcare to those currently without healthcare coverage, specific of proposals we made in january. the overwhelming majority of the proposals we're pulling back. those are enhance ments to the baseline budget. vast majority, not all, vast majority we're pulling back. that represents an equivalent 15% of the solution reserves, 18%, federal government 15%.
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it provides an additional 15%. three additional gat gores now get us to a balanced budget. the number one area of the nation that some of the borrowings and funds of the fiscal years that were done in the past and made an oblique comment that i'm looking forward to ending these things and first budget i submitted on becoming governor but i also did that and made a side comment. i said, play the tape because it's not unlikely that i'll be conditions to come back and utilize some of those examples in the future. i never imagined to be back a year later under these
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extraordinary circumstances. we're going to use a little bit of that. we think it's very strategic and pry dept under the circumstances because the magnitude of problem that occurred and manifested so quicin the reserves, 15% i'm pulling back investments from january, 15% from the federal government, 19% in terms of some of these deferrals and strategies to balance our books in a way and well described in the past here in the state of california. afforded because we cleaned a lot up in the past. that leaves us with two years more traditionally balancing budgets and define some revenue and how do you define what's
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appropriate to cut? nothing breaks my heart more than making budget cuts. we have been making historic investments in the last many years in the state of california and now forced back into this position where we're making cuts. breaks my heart. one thing with cuts, there's a human being behind every single number. behind every category is a dream that is either deferred in some case, a dream that is denied. i'm sober about it, i'm not naive about cuts. 26% of our solutions would come into the category of cuts but cut withs a caveat. i want to make this crystal clear, we have been making he la many weeks. hcourse that is that can be triggered and eliminated with a stroke of a pen. president of the united states with a stroke of a pen could
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provide support for speaker pelosi's new hero's act and these cuts would be eliminated and language in our budget directly triggers the elimination of the cuts. if the federal government do what it must do to help states large and small all across the nation that these cuts would go away. when i list off and have my budget team come up and go through all the details for you as is your -- our responsibility and your right to know. you will hear of cuts that make none of us proud, but the values nonetheless we are
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holding onto i think and hope will. i'm going to get to those in a minute as proof points that also is not just rhetorical flairs and 26% where the federal government provides relief for state, city, and county where those cuts do not go into effect. the final point is an 8% solution on net operating losses and tax credits that we want to tighten up. that's on the revenue side. roughly $4.5 billion of the total solution. you add all those up and get to reflect and i talk about values and what we're protecting and i
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want to make that visible and real not just to get rhetorical. when we talk in terms of values, as i said, numbers change, values don't have to. values remain. i ran onto become your governor and values and regardless of time of life and hold precious on the investment in the future, investment in our children. you want to look in the eye of a child to see the mirror of their reflection of our capacity as a society. it's always reflected in the eyes of young children. right now those eyes are reflecting back a $19 billion impact to proposition 9 the in the education sector and in this budget. $19billion. but i want you to know that we are not just going to roll over and accept $19 billion of cuts to public education.
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let me be specific and tell you what i mean. we're going to use some $4.4 billion from the cares act and allow for discretion and realtime and $4.4 billion to address the issue to help with summer school and to help with the flexibility that the districts will need to consider on their own on a district by district basis that includes extending the school year and bringing it later into the summer and the like. this will be discretionary
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money to substantively address some of the short-term anxiety. that is $4.4 billion. additionally, we have made commitments at the top of this. i mentioned those commitments about pain the down the system. we are going the is one of those that was scheduled to pay down these obligations but the immediate needs require this of all of us. we will use $2.3 billion scheduled to be invested in a 30 year time period to pay off these inventions to address the crisis in the public education system because of 4.4 and another $2.3 billion. i mentioned the operating loss and tax credits. about $1.8 billion of that 4.5 billion would be going into th


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