California Gov. Gavin Newsom said Friday the state’s budget deficit has grown to nearly $32 billion. That’s about $10 billion more than predicted in January.
SACRAMENTO, Calif. — California's budget deficit has grown to nearly $32 billion, Gov. Gavin Newsom announced Friday, saying the state's challenges are partly due to high federal inflation rates and the state's decision to let some people delay filing their taxes after winter storms.
California is one of the only states to have a shortfall this year. That's mostly because its progressive tax code relies on wealthy taxpayers whose income is closely tied to the performance of the stock market. Newsom's plan in January was to cut money for flood protection projects, delaying an expansion of a subsidized child care program and canceling a $500 million plan to help small businesses pay higher tax rates associated with some state debt.
That angered some Democratic lawmakers, who said the reason the state was having trouble filling its child care slots is because there aren’t enough child care workers. On Monday, Democrats in the Assembly proposed $1 billion in new spending to increase the pay of child care workers. But restoring those cuts could be difficult. The situation has only gotten worse since Newsom first announced the deficit in January. California's tax collections have continued to decline, falling $4.6 billion below what the governor's office had been expecting. The nonpartisan Legislative Analyst's Office says they expect the deficit to be about $5 billion bigger.
The last time this happened was at the start of the coronavirus pandemic in 2020, when taxpayers had extra time to file their taxes. Newsom and state lawmakers assumed the worst, approving a budget that slashed spending in order to cover what they thought would be a $54 billion deficit. But that deficit never happened because the pandemic’s impact on state revenues turned out to be less damaging than anticipated.
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