Travel limits, end to vacation buy-back directed for state agencies as California’s recession hits
The California Department of Finance urged state agencies on Thursday to take “immediate actions” to cut spending and identify savings in preparation for a years-long recession caused by the coronavirus.
Executives were directed in a memo sent by the finance department to cut unnecessary travel both in and out of California and cancel annual leave and vacation “buy back” in the 2019-2020 fiscal year. Departments are also barred from entering into new goods and service contracts unless they are coronavirus-related and cannot make any cost-increasing changes to existing agreements.
Agencies also were asked to “use discretion when filling vacancies” and to assess whether additional staff are needed for positions or whether there’s flexibility in the existing workforce.
“The severe drop in economic activity is expected to result in a recession, significant decreases in state revenues, and significant increases in safety net programs,” wrote Finance Director Keely Martin Bosler. “The revenue decrease is expected to be immediate, affecting fiscal year 2019-20. Revenue decreases and cost increases are expected to last for several years.”
The state agencies and departments are allowed to make a few exemptions, as when “addressing a declared emergency” or to avoid “significant revenue loss.”
California lawmakers have in recent weeks echoed the finance department’s economic concerns and have foreshadowed tough cuts ahead.
“We are embarking on difficult fiscal times,” said Sen. Holly Mitchell, an L.A. Democrat and chair of the Senate Special Budget Subcommittee on COVID-19 Response, during an April 16 hearing.
Today’s economic uncertainty is far from the optimism Gov. Gavin Newsom and Democrats in the Legislature felt just months ago, when the governor unveiled his record $222 billion state budget in early January. That blueprint expanded social service programs and included an ambitious goal to address the homeless crisis.
Newsom has since declared that plan inoperable and begun preparing Californians for a bleak, updated proposal due May 14.
Though California entered this recession with about $17 billion in reserves, factors like shuttered businesses and shocking unemployment numbers have blunted the state’s economic growth.
About 3.7 million people have filed for unemployment insurance since March 12, Newsom said on Wednesday. The unemployment rate could top even the 12 percent experienced during the Great Recession, Vivek Viswanathan of the finance department said during the Senate hearing.
Fiscal experts and the Legislature have also warned of days ahead when California can no longer rely on the federal relief currently provided to help states navigate the enormous fiscal consequences of COVID-19.
“Now,” Martin Bosler wrote, “it is even more critical than before that state government be efficient, effective, and conducted in the most economical manner possible.”
This story was originally published April 30, 2020 at 3:41 PM with the headline "Travel limits, end to vacation buy-back directed for state agencies as California’s recession hits."