California Gov. Gavin Newsom (D) on Friday announced a $44.9 billion deficit in his revised 2024-25 state budget, while proposing a series of cuts to close the spending gap.
The shortfall includes the $27.6 billion detailed in his proposal, plus $17.3 billion in cuts that the state Legislature aggressively introduced weeks ago.
of the governor proposed The total budget is $288.1 billion, down from Newsom’s original budget. January proposal The budget is $291.5 billion. The total deficit is $44.9 billion, higher than the $37.9 billion projected in January, but Newsom’s revised proposal includes drawing down $4.2 billion from the state’s reserves, which he initially recommended. This is down from the previous $13.1 billion.
Mr. Newsom’s amendment seeks to close the spending gap through a series of cuts, including $15.2 billion in spending cuts and $14.8 billion in pausing planned program expansions. It also plans to cut $3 billion and borrow $7.5 billion to improve efficiency.
Efficiency efforts will primarily focus on building a “leaner state government,” including eliminating vacant seats, eliminating landline telephones, assessing the state’s printing needs, investing in technology, and increasing procurement competition.
“We want to do what you do in your personal life and what every company out there does in their work,” Newsom said. “And we think we can do that and still achieve great results.”
The cuts include $12.7 billion for one-time streamlining efforts in the workforce, broadband, child behavioral health, and water storage sectors, as well as ongoing savings in things like the revocation of prison beds and middle-class scholarship programs. includes $2.5 billion.
The pauses include $146 million to expand the California Food Assistance Program and $1.4 billion to expand child care.
California now faces its second consecutive year of deficit, following three consecutive years of surplus. Newsom said Friday that the shortfall is largely due to the unpredictability of the tax system.
“It was very clear in January that there was a lot of volatility and a lot of questions surrounding tax collections,” he said, adding that Congress wanted to “take early action” with preemptive cuts. ” was praised.
The governor also promoted a new strategy to look at the current budget year comprehensively, along with the “budget year plus one.” He estimated the budget deficit for 2025-26 to be $28.4 billion.
“Fundamentally, the approach we’re taking today is a little different than the approach we’ve taken in the past,” Newsom said. “We’re not just thinking about the budget year. We’re looking at the budget year plus one.”
Newsom said if lawmakers agree to advance his proposal, the state would be able to function with a $4 billion operating surplus in 2024-25 and a $650 million operating surplus in 2025-26. He pointed out that it is possible. He explained that such measures would enable the company to go from “two years of operating deficits to two years of operating surpluses.”
“Why are we so confident that we can accomplish this? Because it’s solvable, we’ve done it before,” the governor said. “This is just a reminder of the broader challenges of the past based on volatility in the tax structure.”
Despite certain setbacks, Newsom said California and its residents remain strong, noting the state attracts “first-round draft prospects” from around the world.
“Our values have enabled us to continue to grow, and even though we are making some difficult choices, those values remain fundamentally intact. I believe that,” he added.
The California Legislature has until June 15 to approve the budget, and Mr. Newsom has until July 1, the start of the new fiscal year, to finalize details.
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