Gov. Newsom Says Tough Economic Times Ahead and More Cash Needed from Feds

Gov. Gavin Newsom warned that tough times are ahead for California's state and local budgets, while acknowledging that renters and homeowners are struggling.

In an interview with KQED on Tuesday, Newsom said he won’t move to force California counties to delay the April 10 property tax deadline, noting that groups representing counties and tax collectors recently warned that a state-mandated extension could push some local governments to insolvency.

Newsom said his office has been working with counties to ensure that people who are unable to pay their property taxes by Friday will be able to extend the deadline without penalties.

But, he said, those taxes are what counties and cities rely on to provide basic services.

“You could see the insolvency of these local governments if they're not able to collect property tax. We made it clear that we understood that,” he said. “But we also made it clear that we expected hardship exemptions for those that simply can't pay them. And there was some pushback ... but ultimately they agreed on a case-by-case basis that they would create those hardship exemptions to extend the payment options.”

When it comes to renters, Newsom said he has no current plans to expand his recent executive order that places a moratorium on the enforcement of evictions through May 31. Advocates for renters criticized the order as meaningless because it doesn’t prevent landlords from pursuing evictions in court — it simply delays the enforcement of those evictions until June. 

Newsom said his office has cracked down on some counties where sheriffs' departments were ignoring his order and still enforcing evictions — and will continue to keep track of what’s happening at the local level.

“There are many cities that have put together even more aggressive renter protections than the state, and we think that's good,” he said. “And obviously, we will continue to consider additional steps as necessary.”

But it’s not just individuals that will continue to need help, the governor said. He warned that the “magnitude” of the COVID-19 pandemic will exceed California’s robust fiscal reserves — and that the state budget will suffer for several years to come.

Newsom noted that an astounding 2.3 million Californians have filed for unemployment since March 12.

He noted that unemployment rates, which peaked in California during the last recession, at around 12.4%, could go even higher because of the pandemic.

“The short term is one thing, but the next two, three years, there's going to need to be significant support well above and beyond the support already provided,” he said, referring to the $2.2 trillion relief act passed by Congress last month.

Newsom didn't join New York Gov. Andrew Cuomo in criticizing Congress for not including more funding for local governments in that bill, but said he agrees with Cuomo that much more will be needed in the future.

“The impact to the general fund, the impact in terms of our capacity to deliver services, is substantially greater than anything we've ever experienced in our lifetime. And so I think [Cuomo] was implying they need to do more,” he said. “And we have all the expectations they will, because they're going to need to keep states large and small from going into insolvency and into bankruptcy.”