California Governor Gavin Newsom and state lawmakers have addressed a $10 billion deficit, even before federal budget cuts implemented by the Trump administration and the Department of Government Efficiency.
Newsom and the Democratic majority managed to turn a nearly $100 billion surplus in 2022—partly due to federal funding during the COVID-19 pandemic—into an anticipated nearly $50 billion deficit by 2024.
Earlier this year, the state had to borrow $6.2 billion to support Medi-Cal, its Medicaid program.
Now, as reported, Newsom and the Democrats are bracing for further deficits on the horizon.
Governor Gavin Newsom might be facing a significant gap in his budget exceeding $10 billion.
Factors like President Trump’s tariff policies, medical shortages, and delayed tax returns from wildfire victims in the Los Angeles area have contributed to a worse economic outlook than previously expected by the California governor. This situation does not factor in upcoming federal spending cuts.
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Back in January, the Governor’s Treasury Department forecasted a modest surplus for the year. Yet, now it seems newspapers and legislative leaders are struggling to navigate through this budget crisis. The absence of tariffs and falling tax revenue, particularly from some of California’s wealthiest residents, is creating a climate of financial uncertainty.
Newsom’s actions are under scrutiny, especially as he aims for a possible presidential run in 2028.
