Big cuts, no new taxes: Gov. Newsom’s plan to fix California’s budget deficit

Faced with ongoing weaknesses in state finances, Gov. Gavin Newsom put forward a revised budget plan today that he said aims to stabilize California in the longer term by addressing a “sizable deficit” estimated at $56 billion over the next two fiscal years.

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Looking beyond the typical annual budget cycle, Newsom proposed more than $30 billion in ongoing and one-time spending cuts, including to education and climate objectives that have been among the governor’s own priorities, though he promised that “core programs” providing social services to needy Californians would be mostly untouched.

“These are propositions that I’ve long advanced, many of them. These are things that I’ve supported,” Newsom said during a press conference in Sacramento. “But you’ve got to do it. We have to be responsible. We have to be accountable. We have to balance the budget.”

https://calmatters.org/politics/2024/05/california-budget-deficit-newsom-may-proposal/
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The governor’s proposal is an opening offer to the Legislature, which faces a June 15 deadline to pass a balanced budget or forgo its pay. That leaves a little more than a month for members to sort through Newsom’s solutions and negotiate a compromise that reflects their own concerns amid what is certain to be a fever pitch of lobbying from outside groups hoping to stave off cuts to their preferred programs.

The immediate reaction from Democratic leaders in the Assembly and Senate, who will negotiate a deal with the governor, was cautious and addressed few specifics. 

“We are encouraged that the Governor’s May Revision improves budget prospects for future years and saves rainy-day reserves,” Assembly Speaker Robert Rivas of Salinas and Budget Committee chairperson Jesse Gabriel of Encino, said in a joint statement, but they added they “will continue to fight to protect core programs for California’s most vulnerable residents and essential classroom funding.”

Senate President Pro Tem Mike McGuire of Healdsburg and Budget Committee chairperson Scott Wiener of San Francisco, in a joint statement, said their past budgets “have uplifted communities and Californians — this year will be no different.”

Here are some key numbers from Newsom’s revised budget for the 2024-25 fiscal year, which begins July 1:

-7.3%

With tax revenues coming in below expectations — about $7 billion lower than even the governor’s January projections — this revised budget proposal is substantially smaller than the $310.8 billion spending plan for the current fiscal year. Including the general fund, special funds and bonds, Newsom is proposing to spend $288.1 billion on state programs next year, down about 7.3%.

$27.6 billion

This is the remaining deficit that the Newsom administration projects for the upcoming fiscal year. Officials have known since last fall that the fiscal picture was bad, but estimates of just how deep the hole would be varied widely — from a more optimistic $38 billion by Newsom’s Department of Finance in January to a dire $73 billion by the nonpartisan Legislative Analyst’s Office.

That prompted Newsom and the Legislature to take “early action” last month to reduce the deficit by more than $17 billion ahead of the regular budget process. Their plan included some program cuts, but mostly relied on new revenue, internal borrowing and funding delays and shifts for savings, earning criticism from Republican lawmakers for being “gimmicky” and “balanced on hopes and prayers.”

Click here to read the full article in CalMatters

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