Democratic Gov. Gavin Newsom faced criticism from his Republican colleagues after announcing that the budget deficit was actually $7 billion worse than originally expected, bringing the total shortfall to nearly $74 billion. facing.
“The Legislative Analysis Office (LAO) estimate was significantly higher,” Republican State Budget Committee Vice Chairman Roger Niero said in an interview on Fox News Digital. “Ledge analysts are unbiased and have a long history of being relatively accurate and smart about things like this. It’s just incomprehensible that I go so far as to say that I think so.” “
“As long as we underestimate the deficit, the solution will miss the target and we will miss the target, which will result in an even wider deficit next year,” he added.
Gov. Gavin Newsom faces $73 billion deficit; lawmakers say he helped create it
California Governor Gavin Newsom must reckon with the state’s multibillion-dollar budget deficit. (Justin Sullivan/Getty Images)
Newsom estimated the shortfall at $38 billion in January, even though the LAO estimated the shortfall was closer to $45 billion. Last Friday, Newsom released a revised budget that matches the LAO’s $1 billion deficit through 2024-25 and an additional $28.4 billion in 2025-26, according to bipartisan LAO estimates. Mr. Newsom’s revised amount is now $73.3 billion higher.
Newsom also announced significant cuts to more than 10,000 government jobs and an 8% cut in “state operations,” boosted by the state’s progressive climate change policies.
“He’s trying to eliminate unfilled positions, which means that budgeted spending will be wasted,” Niello said. “I would like to put it in the category of contraption. But beyond that, in terms of actual budget solutions, three to four years before the current budget year, even the governor’s own calculations , there was a huge and unsustainable surplus.”
In 2022, Newsom will $301 billion budget It was enacted into law and boasted a surplus of $97 billion. The budget, nearly triple the size of the previous fiscal year, included billions of dollars to tackle climate change, combat homelessness and education. But two years later, the deficit had ballooned.
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Governor Gavin Newsom addressed the press about the new state budget. (California Governor’s Office)
“Our revenues fluctuate a lot because of our very progressive personal income tax structure, and frankly we experience these cycles in a very dependent manner,” Neiro said.
An economic slowdown caused by recent statistics showing the highest unemployment rate in the nation. Golden State job growth The population in 2023 was much lower than previously thought, which is the main reason for the shortage. Another factor is the exodus of businesses and residents from the state to states with more tax-friendly policies. California relies heavily on income taxes for revenue.
“Under Governor Newsom, California went from a $98 billion surplus to a huge deficit within a few years and declared a ‘fiscal emergency,'” Vince Fong, the Republican vice chairman of the state Assembly Budget Committee, wrote in X. It became,” he said.
“This is pretty much the definition of fiscal mismanagement,” Fong said.
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Aerial view of the California State Capitol Building in Sacramento, California on February 1, 2023. (Justin Sullivan/Justin Sullivan)
In 2020, California experienced its first ever population decline as the state imposed strict lockdowns amid the coronavirus disease (COVID-19) pandemic. From January 2020 to July 2022, the state lost well over 500,000 people, with nearly 700,000 people moving out and moving in.
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Meanwhile, Newsom said Friday, “This is just another reminder of the totality of the challenges of the past based on the volatility of our tax structure, the benefits of a progressive tax system in good years, and the challenges of weaker years.” Stated. . ”
