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Newsom announces California budget deficit much larger than previously expected
Then it was off to the 'French Laundry' for dinner. This shortfall is about $9 billion more than the $22.5 billion gap he projected in his initial January budget proposal, which totaled about $297 billion. "We are walking into a budget where we need to maintain our prudence, and we need to prepare not just for the short term but the medium and long term," Newsom said at a Friday press conference, where he presented the revised proposal. Recognizing the current environment of economic volatility, Newsom stressed the importance of taking that uncertainty "very soberly and seriously as it relates to macroeconomic headwinds." The total $306.5 billion budget includes $224.1 billion in general spending, $79.5 billion in special funds and $2.9 billion in bond funds. The May revision estimates $37.3 billion in budgetary reserves — an increase from the $35.6 billion estimated in January. Although Newsom indicated in January that he did not intend to tap into the reserves, he announced on Friday a $450 million withdrawal from the Safety Net Reserve. This represents about half the funds available within that reserve. "We are sweeping $450 million from the safety net reserve to help offset costs associated with Medi-Cal and CalWorks," Newsom said, referring to two family assistance programs.
In January, Newsom proposed a number of ideas to cover the deficit, including about $9.6 billion in spending cuts that hit some of the state’s ambitious climate programs and other policy areas. His latest proposal includes roughly another $1 billion in spending reductions. Some of that comes from clawing back unspent money in various programs, including those designed to provide tax refunds and help people with their utility bills. He’s making up the rest of the deficit by shifting expenses, taking some money from the state’s safety net reserve and borrowing. "This was not an easy budget, but I hope you see we will try to do our best to hold the line and take care of the most vulnerable and most needy but still maintain prudence," Newsom said. In a press release, Newsom's office said it was prepared for the shortfall "with the governor and legislature paying down the state’s prior debts, building unprecedented reserves and prioritizing one-time investments." Republican legislative leaders blasted Newsom’s proposal as another marker of irresponsible spending by the Democrats who control Sacramento. "His cuts to drought programs are dangerous, his ‘fiscal gimmicks’ are shortsighted and his words about good government and efficiency are yet another empty promise. Californians deserve better," Republican Assembly Leader James Gallagher said in a statement. Newsom’s press conference comes roughly a year after he touted a budget surplus of $97 billion and said it was "simply without precedent." The budget shortfall announcement comes almost exactly a week after a committee established by Newsom recommended cash reparations payments to Black residents to make amends for slavery that could cost the state billions if approved by the legislature. Shortly after the committee approved the plan, Newsom distanced himself from the idea of cash payments to Californians in response to slavery, which was never legal in the state.
Posted by: Besoeker 2023-05-13 |
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