Last week, Governor Gavin Newsom revealed that in the coming fiscal year, California faces a $22.5 billion deficit, bad news after last year’s $98 billion surplus. In announcing his proposed 2023-24 budget last Tuesday, Newsom acknowledged that California is “in a very volatile moment” of “uncertainty” which could likely worsen in the coming months.
The ballsy Democrat dismissed the “old narratives” describing Democrats as “profligate” spenders who are incapable of “managing budgets.” Instead, he claimed the budget shortfall was due to California’s dwindling tax base, which is roughly half of what it was last year.
The governor announced a strategy of spending delays, including for mental health, preschool “inclusion” grants, climate programs, and University of California capital investment. Newsom’s $297 billion budget also proposes using federal funding to make up for reductions to the state’s climate initiatives. Meanwhile, California’s failing public schools will see an increase in funding.
The governor’s budget will also maintain billions in spending to combat homelessness, and the state will not delay the roll-out of its healthcare coverage for illegal aliens. In defending the lack of cuts for homelessness, Newsom cited the importance of cleaning up the homeless encampments, arguing “people are dying on the streets all across the state.”
Newsom said the state must “take responsibility” while providing more accountability and transparency.” Despite the projected deficit, the governor claimed that the state has never had “more resources, ever, period, full stop, including with this budget.”
He pledged that he would not raise taxes to cover the deficit or to pay for programs. The governor is expected to revise his budget proposal in May before he sends it to the state legislature for approval. In the interim, Newsom pledged that he would not draw from the state’s rainy-day fund, noting that, in the meantime, the economic forecast could worsen.
The state’s Legislative Analyst’s Office has projected a significant economic hit if the US enters a recession in 2023.
