If the state of California were to be considered as a sovereign nation, it would have the world's 5th largest economy surpassing that of India and the United Kingdom. But even if it contributes to a staggering 55% of the world's GDP even they couldn't be spared from the economic tragedy brought about by COVID-19.

To date, around 255,000 have recovered from the dreaded virus but COVID-19 has claimed 87,000 lives and has left 36 million Americans jobless. This caused state governments to find ways to ease the pain faced by the US economy. 

Unprecedented times

California is considered as one the economic engines of the USA and the state government has continued to find ways to work through the challenges that have arisen from the coronavirus pandemic. 

The state of California was the first to apply for federal unemployment loan funds. The Treasury Department spokesman has said that the state has received $348 million in funds after approval for the $10 billion pandemic assistance was granted to be given until the end of July this year. 

The state has also announced that they are about to enter phase two of their economic recovery plan and will see some retail operators to open if they will meet the designated criteria. 

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Budget cuts

Governor Gavin Newsom has revealed the revised budget proposal in which the healthcare and education system are expected to take the biggest hit. As heartbreaking as it may seem, there will be a $19 billion impact on public schools due to a local funding cut of 10%. 

The state's healthcare program Medi-Cal which benefited low income residents of the state of California has predicted that around 2 million more residents will be enrolled due to COVID-19. Immigration advocates have rallied the inclusion of illegal immigrants, however in the current budget all medical plans for undocumented immigrants over the age of 65 will have to be abolished. Medi-Cal will continue to provide for all basic plans however other benefits such as dental care, post pregnancy mental health care, and hearing aids for recipients will sadly be scrapped.

State workers will retain their jobs however everyone across the board, will be asked to accept a pay cut of 10%. This will include the governor and his personal staff. For those state agencies who have already been asked to work from home, they will be asked to extend remote work which will allow the state to lease less office spaces. 

The bottom line is that the state has a projected deficit of $54 billion but Newson remains optimistic. He said that California is currently in a healthy budget position economically and the state has surpassed even worse shortfalls in the past.  

Before the COVID-19 hit the US, California was projected to have a $5.6 billion surplus and was enjoying continuous job growth with almost 10 years of record low unemployment rates. Newson has emphasized that they are trying their best to support everyone in need and will be relying on the federal government for support.