Governor Newsom Confronts $73B Budget Deficit

( – California has long been known as the most prosperous state in the U.S. due to the high GDP, or gross domestic product. In 2022, California’s GDP was $3.8 trillion, significantly higher than the next two highest in the nation, which were Texas at $2.56 trillion and New York at $2.15 trillion. However, that prosperity can be so mismanaged as to plunge the golden state into enormous debt. At the moment, California’s leaders are struggling to reconcile the $73 billion budget deficit by June.

Governor Gavin Newsom signed a $301 billion budget into law, which seemed to miraculously include a $97 billion surplus. The prospect of such a large surplus led many to start planning exciting new missions and programs it could be used for, despite the fact that budget was already nearly triple that of the prior fiscal year and included billions for education, for addressing homelessness, and for new climate change initiatives. The surplus seems to have mysteriously vanished though in light of a ballooning deficit.

Friday April 5, Democrat lawmakers came to an agreement on a plan to reduce the deficit by $17.3 billion, which is far from solving the problem but which some consider a respectable start. The plan involved a lot of deferred spending, which is not really a budget cut but rather just delayed spending. These deferrals would include $1 billion for transit infrastructure, $550 million for preschool, transitional kindergarten and full-day kindergarten facilities, and even deferring $1.6 billion in pay. There is also a provision that would allow Newsom to freeze one-time funding that was included in the original budget which would target things like education, welfare and climate change programs.

Republicans have criticized the deficit reduction plans as “gimmicky”. Member of the California State Assembly and vice chair of the budget committee, Vince Fong, claims that California has an overspending problem and that none of the proposed “budget gimmicks, cause shifts and deferrals” will tackle that. Some place the blame on lower revenue as California experienced the first drop in population in its history during the pandemic, losing roughly almost 700,000 people, with many higher earners leaving for more tax-friendly states.

Others, like Republican state Representative Kevin Kiley, place the blame on California initiatives like taxpayer-funded health care coverage for illegal immigrants. Whatever the reasons, the proposed cuts and deferrals will not be enough to cover the deficit and there will be more difficult decisions to be made.

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