SACRAMENTO, Calif. — Governor Gavin Newsom signed a $202 billion budget Monday, assuming a $54 billion deficit brought on by the COVID-19 pandemic and Newsom’s March stay-at-home order, which halted much of the state’s economy.

The policy would put Newsom’s Department of Finance in charge of determining whether counties are compliant.

The 2020-21 budget gives Newsom power to withhold $2.5 billion from cities and counties if they do not follow his administration’s COVID-19 rules designed to slow the spread of the virus, including his statewide mask mandate.

The budget will take effect on July 1 and maintains spending on schools, health, and safety net programs by tapping reserve accounts. Schools will experience a delay in some payments as lawmakers agreed to defer $12.5 billion in school funds that would otherwise have been required to be paid in the fiscal year that ends next week or the 2020-2021 year.

Meanwhile, the budget temporarily raises taxes on some businesses to bring in an additional $4.4 billion in revenue. The taxes mostly apply to businesses that have more than $1 million in revenue.

The budget Newsom signed is about 9% smaller than the spending plan he proposed in January.