Governor Newsom Reveals Spending Plan Amid Budget Deficit
As he reveals his spending plan for the upcoming fiscal year, Governor Newsom has revealed the California budget deficit has risen to nearly $32 billion.
While his spending plan would balance the budget for 2023-2024, experts worry it could increase the deficit in the following year.
The nearly $32 billion budget deficit has grown from January when Newom projected it would be around $10 billion less.
California is one of only a handful of states to have a shortfall for the upcoming fiscal year, which is surprising considering the budget surpluses it has experienced over the past few years.
So, what is causing the big change?
California has one of the most progressive tax codes in the country, with a majority of revenue coming from personal income taxes from richer Californians. However, since wealthier taxpayers' money is oftentimes closely related to the stock market, California's budget is as well.
With this stock market not being as strong as it has been in recent years, the state has faced the consequences.
Other causes for the deficit have been high inflation and a delay in the tax filing deadline.
Over Newsom’s tenure, many of his battles over the budget have been on where and how much spending should go to certain programs. This was due to the record-breaking budget surpluses the state had over the pandemic.
However, with the budget deficit, Newsom’s new fight will be over where spending needs to be cut.
His recent spending plan features another $1 billion in cuts that were not in his original proposal in January. In total, he has proposed over $10 billion in spending reductions for the 2023-2024 fiscal year.
In Newsom’s current proposal, it would balance the budget this year but potentially increase it down the line. His plan would create a projected structural deficit of $5 billion next year and $14 billion by 2027.
As a result, Assemblymember Vince Fong has called the proposal “fiscally irresponsible,” while Republican Assembly Leader James Gallagher has called some of the cuts “fiscal gimmicks.”
While Newsom planned in January to cut money from flood protection, his updated proposal restores the money and increases funding for it.
Instead, the Governor plans to shift some expenses, cut climate programs, delay planned childcare programs, and borrow from reserves.
We’ll make sure to update you on the latest when it comes to the California Budget. Until then, keep up with BOMA on the Frontline for the latest news in the Greater Los Angeles area.