California Gov. Gavin Newsom has projected a $22.5 billion budget deficit for the upcoming fiscal year
FILE – California Gov. Gavin Newsom delivers a speech after taking the oath of office on Friday, Jan. 6, 2023, outside the California state Capitol in Sacramento, Calf. On Tuesday, Jan. 10, Newsom will reveal his plan to cover what is expected to be a multi-billion dollar budget deficit. SACRAMENTO, Calif. — — California faces a projected budget deficit of $22.5 billion for the coming fiscal year, Gov. Gavin Newsom announced Tuesday, just days into his second term.
Among his maneuvers to deal with the deficit: He’ll shift $4.3 billon in spending on zero-emission vehicles from the state’s taxpayer-funded general fund to a special fund paid into by polluters. He’s also delaying by a year $3.1 billion in climate and transportation funding.Newsom stressed the state would continue robust spending in public and higher education, climate change, health care, and responding to drought and wildfire.
Dealing with a deficit will be a change of pace for the state, where spending has more than doubled in the 10 years since the last recession. Officials have launched a dizzying amount of new programs and services — including committing to pay for all 4-year-olds to go to kindergarten and agreeing to cover the health expenses of all low-income immigrants who are living in the country without legal permission.
With rich people not making as much money, they are paying less in California state taxes. So far this year, California’s tax revenues have been $4.6 billion below expectations — not including some one-time corporate tax payments that state officials say they can’t count on. Plus, the state has $37.2 billion stored across its various savings accounts, which by itself would be more than enough to cover a $25 billion deficit. Constitutional limits prevent lawmakers from emptying reserves to cover a deficit. And unlike the federal government, California’s budget must be balanced. Newsom and lawmakers will have to tighten state spending to cover all of the shortfall — something that Senate Budget Committee chair Nancy Skinner said is doable.
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