Sacramento, California: This week, California Governor Gavin Newsom is scheduled to unveil his proposed budget, which is intended to address the state’s projected $68 billion deficit. Many people are concerned about potential spending cuts due to the significant fiscal deficit.
The governor has until Wednesday to release his 2024–2025 budget. looking forward to his proposal and the upcoming months of state capitol budget talks.
The 2022–2023 budget year is responsible for about $26 billion of the deficit, which the LAO referred to as an “unprecedented prior-year revenue shortfall.” Due to tax filing extensions following severe winter storms, lawmakers did not have all of the tax money totaled when they constructed their spending plan last summer.
This is a massive deficit and it will affect every Californian in one way or more. The state recently revised its minimum wage for health workers. The increased wages are likely to exacerbate the situation.
The extended federal and state deadlines for filing 2022 income tax returns from April to November made the dire financial picture more apparent later than usual this year. This forced lawmakers and the governor to enact the current budget in July without a clear understanding of state tax revenues.
Now that tax collections are in hand, the analyst’s office revealed a sharp drop in revenue and calculated that California’s fiscal year ended June 30 with a $26 billion loss; similar deficits are anticipated for this year and the following. From 2025–2026 to 2027–2028, analysts project an extra $30 billion in shortfall annually, for a possible six-year deficit of $155 billion.