California faces a $22.5 billion budget deficit, Gov. Gavin Newsom said Tuesday as he proposed billions in cuts and deferred spending amid a significant drop in capital gains tax revenue.
After the state’s revenue boomed a year ago due largely to a capital gains tax rate that reached nearly 10 percent, that revenue is now down by $29.5 billion year-over-year, as the capital gains rate fell to roughly 5.5 percent.
As a result, Newsom said, state officials have taken steps to pare down his budget proposal for the 2023-2024 fiscal year and avoid dipping into the state’s $35.6 billion in reserves.
The proposal would delay roughly $7.4 billion in spending to which the state had committed between 2021 and 2024 while reducing or pulling back some $5.7 billion in spending that had been planned over the prior two fiscal years.
“What this means is we’re looking at investments that we’ve committed to over the multi-year, we’ll continue those investments but we’ll just delay some of those,” Newsom said of the $7.4 billion in delayed spending.
The proposal also shifts the source of some investments away from the state’s general fund, using debt from previously issued bonds and other pools of state funding like the Greenhouse Gas Reduction Fund.
Some $4 billion in spending cuts in Newsom’s proposal are so-called trigger cuts, and the spending would be restored next year if the state’s revenue is high enough.
The trigger cuts are primarily centered on the state’s allocations to combat climate change and expand the use of and access to zero-emission vehicles.
The state had previously committed to invest some $54 billion through 2026 to combat climate change, but Newsom’s proposal reduced that to $48 billion, a total which the governor still classified as “unprecedented.”
Newsom noted that the deficit could have been even larger if state officials had not focused on one-time and short-term expenditures during last year’s budget negotiations, which included allocating a surplus of nearly $100 billion.
Roughly 93 percent of that surplus was used for one-time spending instead of long-term spending projects.
“We’re in the position we are today because we were not profligate as it relates to ongoing spending,” Newsom said.
The proposed budget maintains large investments in the state’s efforts to improve K-12 education and expand housing access as well as the state’s plan to expand Medicaid access by Jan. 1, 2024 to all state residents who meet the program’s income requirements, regardless of their immigration status.
The budget allocates $128.5 Billion for K-12 education, representing nearly $24,000 per student across the state, and roughly $39.5 billion for the state’s higher education system, a 2.1-percent decrease over the 2022-2023 budget.
“This proposal, despite uncertainty surrounding the state’s economic circumstances, reinforces the administration’s commitment to (the California State University), it’s belief in our mission and appreciation of our successes in transforming the lives of Californians,” CSU Interim Chancellor Jolene Koester said in a statement.
University of California President Dr. Michael Drake also lauded Newsom’s proposed investments in education.
“Governor Newsom has put forward a budget proposal that maintains his strong commitment to the University of California and allows us to continue our important work supporting all Californians,” he said.
The proposal also shaves $350 million off the $11.2 billion in housing-related spending included in last year’s budget, but those cuts will be restored in 2024 if the state’s revenue allows.
In a statement, California Republican Party Chair Jessica Millan Patterson called for Newsom and other state leaders to prioritize “smarter spending” in light of the projected deficit.
“Californians would be best served by this failing governor working with Republicans to find real solutions to our state’s biggest problems,” she said.
Assemblyman Phil Ting, D-San Francisco, argued the state is well-positioned in spite of the reduced revenue, which will allow state officials to continue prioritizing spending on education, housing and health care.
“Thanks to this diligence, there are many solutions available to us to ensure that access to vital services and programs won’t be cut,” said Ting, the chair of the Assembly’s Budget Committee.
Newsom will present a revised budget proposal in May based on updated tax revenue totals. State legislators have until June 15 to adopt the budget before the fiscal year begins on July 1.
Do we have to give back our CA stimmy checks from last year?
lol plus interest for sure.
Already put mine toward a new rifle.
This shows great leadership. I couple years ago, there was a huge surplus. Thanks Jackass!!!
money spent on cocaine and hair gel.
Likely hookers too.
Lol, maybe Newsollini can hire some of those 87,000 IRS Agents to shakedown Californians.
Just think of them as tax police helping ensure wealthy citizens are doing their part to support a lawful and orderly society.
I know this is going to hurt your little tenders but the IRS doesn’t need 87,000 new agents to audit the 1% or even top 10% of the richest Americans.
From the US Government Accounting Office: Published: May 17, 2022. Publicly Released: May 17, 2022. Audit trends vary by taxpayer income. In recent years, IRS audited taxpayers with incomes below $25,000 and those with incomes of $500,000 or more at higher-than-average rates.
You will note BELOW $25,000 is ALSO audited more at a HIGHER-THAN-AVERATE rate.
Once again I am confused… did we or did we not have an enormous surplus we were endlessly bragging about? A rainy day fund brought on by that extra gas tax that did not go to fix the roads? Why was this spent as part of the regular budget? I must be doing things all wrong in my personal finance as when I look at my bank acct and see extra money I see it as discretionary income and when I am broke I stop spending…and discretionary income (surplus) doesn’t mean don’t just go blow it.
one million, $1000000.
one billion, $1000000000 (one thousand million)
one trillion, $ 1000000000000 ( one thousand billion)
I think we should really start to push back when they start throwing words around that sound alike with the goal to make us feel comfortable with it.
MY guess and judging by History, the real number is probably much higher, can’t wait to see the slight of hand to have the deficit stay where they say
“…The state had previously committed to invest some $54 billion through 2026 to combat climate change, but Newsom’s proposal reduced that to $48 billion, a total which the governor still classified as “unprecedented. ”
Hey Gavin, let the Federal Government invest in climate change, quit using the state’s money (tax payers) for your pet project.
I can’t believe so many people still think we can change the climate by throwing money at it.
It changes the climate of those who are gifted all these monies. They can move from a 5 bedroom 3,000 sqft mansion to an 8 bedroom, 10,000 sqft mansion, much better climate.
Seems maybe he counted too much on all the federal covid relief monies; thinking they would not go away???\
Foolish is Newscum’s middle name….
Not enough Californians Fell for the SCAM of contact tracing and testing….the WEF plan for the world.
Maybe Newsom will start gaslighting us some more like Castro’s Son up in Canada.
reported to be about $42 billion dollars last year. No wonder we had a “surplus.”
Wooohoooo, crash and burn California. The moron politicians and those who voted for them deserve it!
Too little too late for me. I just paid the last of Capital Gains Tax for my dead husband of another 40k yesterday to the IRS and 20k a few months back.
Will just ONE person, just one, have the guts enough to chime in here and give us some factual reasoning why they voted for this guy? Please, no slobbering emotional woke crap, just a single fact that makes you feel that he is somehow suited to continue to screw up California.
Big money special interests got him elected. They create the propaganda that twists the data enough for voters to vote the way the authors intend. The real informed voters are swimming upstream against the rest.
Teacher’s union, SEIU, CPUC PG&E, & SCE are some of the huge backers…. and of course opening the borders guarantees all that came in will vote for the guy that let them in – that went for Brown too.
Our voting system is a hack job. the machine was hook up to the internet and easily manipulated for the benefit of the very very very few.
Our border is way more secure than our voting system. Let that sink in.
“The problem with socialism is that you eventually run out of other peoples’ money”.
Did I say what he, my husband use to call them, them Government? I will now, because I am. The Slickist Pimps around.
It’s actually much worse than this appears. Just as Newsom knew all of this before the election and did not say anything until he won, these current announcements from Newsom are not honest. Many economists and business leaders are now expecting a recession next year, but this $22 billion deficit assumes no recession. To quote the Legislative Analyst’s report,
“While the heightened risk of a recession weighs down our revenue outlook, our estimates do not reflect a recession. Were a recession to begin within the next several months, revenue declines would be greater than shown in our revenue outlook. Based on historical experience, should a recession occur soon, revenues could be $30 billion to $50 billion below our revenue outlook in the budget window.”
There of course would also be massive increases in expenditures so the deficit would balloon. And looking at the detail of the Analyst’s report, credibility is immediately lost. For example, their yearly projections by expenditures shows the latest state budget cost of the “Legislative and Executive” branch of government goes from $15 billion fiscal year 2021-22 down magically to only $2.4 billion in a few years. What baloney. It looks to me like the budget projection, just like Newsom suppressing the information before the election, is designed to hide what could happen.
Newsome made it sound like a good thing. Like Joe and his secret documents. They all went to different schools together. Newsome did say we will be getting buckets of money from the broke federal government though.
Paragraph 10 is key: “Newsom noted that the deficit could have been even larger if state officials had not focused on one-time and short-term expenditures”.
First of all, that’s a completely erroneous statement. If they did indeed focus on those types of spending it was for two reasons:
1-Spend as much money as possible as fast as possible on pet projects and awarding contracts to marketing benefactors just in case he could not hold onto his office.
2-Later scrutiny of such reckless spending becomes strictly an academic discussion.
“Hey, the moneys gone, but trust us, it was well spent”. The Feds write the state a check. Upon receipt of said check, “Thanks to the leadership of Governor Newsom, California has a surplus”.
Rinse and repeat. It’s one big bottomless ATM machine.
Wealthy people who paid high taxes leave CA + Governor freebie gives handouts like it’s candy on Halloween. Yup. that leads to this financial situation. Who didn’t see this coming.
That’s what happens when you open the state to anyone that wants to come in.Then give them everything for free.Make the cost of living so nobody can afford to live here.It takes a real dumb moron to run this state into the ground.And we have a real crisco head running ours.And what’s worse is the idiots that voted him back in office.
Budget deficits?? huh. My guess is many companies and regular citizens are leaving CA because of the high taxes. Budget surplus on 2021-2022 was due to many IPOs and now those companies are moving away and/or bankrupt. California is going down the drain very soon.
There goes Newsom’s political career. He would have been better off as a real car salesman. But I guess forcing residents who have not yet fled the state into poverty will fulfill his duty to Agenda 2030.
Speaking of which I heard yesterday that Brazil’s new prez is pushing the Great Reset and that if homeowners have a home of over 60 sq meters (645 sq ft) they have to open it up to immigrants. We’ll see how long that takes in this state. There was a UK series a few years back, “Years and Years” on HBO that showed what was going to happen including that.
From a recent huge surplus to a now massive deficit. It’s a perfect example of the inept and feckless liberal California government, who are basically little more than self serving actors.
So where does Newscum think the 569 billion in reparations is going to come from. Can’t even pay for the programs he has.
And “The Biden” (not newscum) just declared California a state of emergency and we all know where the BILLIONS are going too and nobody but God can do anything about it because our once wonderful state is run by evil wicked satan worshippers! God help us!
From $96B surplus to $26B deficit – his backers call this leadership? good fiscal management? He & his fiance staff need to be replaced.
Slime all the way. It rolls down from the leadership. That is why CA is a cesspool
CA has been in the red for years. They never talk about the unfunded retirement debt that as of this day is estimated at $1.5 trillion dollars. In the last 40 years since the Dems have been in power they have destroyed this state. I really wish voters would wake up
Does this mean reparations, blatant attempt to buy the black vote in 2024, ain’t happening ? ? ? ?
Then again DEMs are good at dangling carrots to the gullible.
Student loan forgiveness sound familiar ? ? ?
Too bad DEMs hold their voters in such low regard . . .
Too bad there are so many fools that are gullible enough to believe the lies again and again …
Never trust a democrat when it comes to money. Don’t forget that the supermajority of democrats in the CA legislature are also complicit in this.
Bunch of liars and hypocrites- all of them!
But they’ll make sure there’s enough money to surgically and chemically mutilate children.
How can we not be running a deficit when more than half of California residents are subsidized by the state. We live in a wellfair state here in California. Without State handouts you would see three times as many homeless on the street. Not sustainable and all self inflicted.
I mean, we can just stop giving illegals and deadbeat welfare rats money? And close the free needle sites? That alone would save billions.
Yet, Newsom goes ahead with the expansion of Medicaid to cover illegal aliens over 50 at an annual cost of $2.1 billion.
Any man with even an ounce of regard for his countrymen would kill the Medicaid expansion and put that yearly $2.1 billion towards US citizens and legal residents.
It never ceases to amaze me what a scumbag Newsom is.
Well you said any ‘man’. A ‘man’ would not cheat on his wife. A ‘man’ has honor. A ‘man’ is respected. A ‘man’ does not rule like a dictator to appease his power trip.
Newscum has cheated on his wives, is not respected, has not served with honor and would screw over his wife to get a his name in lights. Newscum is no man, he is the waste excreted from a bottom feeder in a moldy pond.
People in 2023 are like, “Hello, I am a weird, damaged person who has personal pronouns, sees a therapist twice a week, and is on multiple drugs for anxiety and depression. First off, I want to explain why I became a teacher, then I want to tell you how to fix society.”
We’d only have a billion dollar deficit if we secured the border. According to a 2022 report, “California is most devastated by the heavy toll, with a whopping $23 billion in that state alone”.
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