UPDATE 1-California governor slashes budget in COVID-19 economic crisis

(Adds budget cuts to education, environmental protection)

By Sharon Bernstein

SACRAMENTO, Calif., May 14 (Reuters) – California Governor Gavin Newsom on Thursday slashed his proposed budget for the next fiscal year by $19 billion, bringing spending below 2019 levels as coronavirus-related economic woes thrash his state’s economy, the world’s fifth-largest.

The proposal, which must be approved by the state legislature, is meant to help close a $54 billion gap in spending over two fiscal years – the current year as well as one beginning July 1.

It would cut funding for public schools and universities, environmental protection, and natural resource management, and dramatically scale back programs planned when the state was flush with cash just a few months ago.

Newsom started out in January with big ideas, recommending in a proposed $222 billion budget for the fiscal year beginning July 1 that the state set up its own generic drug label, expand public preschools, combat homelessness, and spend more on education from elementary school to college.

But the coronavirus has severely weakened California’s once-robust economy, wiping out billions in anticipated revenue from taxes on income and sales and leaving the most-populous U.S. state with a predicted 18% unemployment rate for 2020. (Reporting by Sharon Bernstein, Editing by Rosalba O’Brien)

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