California Faces a $68 Billion Deficit. Largely as a result of a severe revenue decline in 2022‑23, the state faces a serious budget deficit. Specifically, under the state’s current law and policy, we estimate the Legislature will need to solve a budget problem of $68 billion in the upcoming budget process.
Unprecedented Prior‑Year Revenue Shortfall Creates Unique Challenges. Typically, the budget process does not involve large changes in revenue in the prior year (in this case, 2022‑23). This is because prior‑year taxes usually have been filed and associated revenues collected. Due to the state conforming to federal tax filing extensions, however, the Legislature is gaining a complete picture of 2022‑23 tax collections after the fiscal year has already ended. Specifically, we estimate that 2022‑23 revenue will be $26 billion below budget act estimates. This creates unique and difficult challenges—including limiting the Legislature’s options for addressing the budget problem.
Legislature Has Multiple Tools Available to Address Budget Problem. While addressing a deficit of this scope will be challenging, the Legislature has a number of options available to do so. In particular, the state has nearly $24 billion in reserves to address the budget problem. In addition, there are options to reduce spending on schools and community colleges that could address nearly $17 billion of the budget problem. Further adjustments to other areas of the budget, such as reductions to one‑time spending, could address at least an additional $10 billion or so. These options and some others, like cost shifts, would allow the Legislature to solve most of the deficit largely without impacting the state’s core ongoing service level.
Legislature Will Have Fewer Options to Address Multiyear Deficits in the Coming Years. Given the state faces a serious budget problem, using general purpose reserves this year is merited. That said, we suggest the Legislature exercise some caution when deploying tools like reserves and cost shifts. The state’s reserves are unlikely to be sufficient to cover the state’s multiyear deficits—which average $30 billion per year under our estimates. These deficits likely necessitate ongoing spending reductions, revenue increases, or both. As a result, preserving a substantial portion—potentially up to half—of reserves would provide a helpful cushion in light of the anticipated shortfalls that lie ahead.2024-25-Fiscal-Outlook-120723
- CalMatters: Gavin Newsom’s new budget is already leaking red ink as revenues fall behindCalMatter:By Dan Walterscover photo: Gov. Gavin Newsom addresses the media during a press conference unveiling his 2024-25 January budget proposal at the Secretary of State Auditorium in Sacramento on Jan. 10, 2024. Photo by Miguel Gutierrez Jr., CalMatters Credit: Miguel Gutierrez Jr. While Gov. Gavin Newsom gallivants around the country as a campaign surrogate for President Joe… Read more: CalMatters: Gavin Newsom’s new budget is already leaking red ink as revenues fall behindCalMatter:
- California voters will decide on Newsom’s mental health overhaul. How did we get here?Reprint: CalMatters By Jocelyn Wiener Fallout from our state’s long history of breaking promises to people with serious mental illness is everywhere. It can be found under our overpasses and in our tent encampments, but also inside our jails and prisons, our emergency rooms, our schools, our homes. It flashes across our public opinion polls,… Read more: California voters will decide on Newsom’s mental health overhaul. How did we get here?
- CalMatters: Budget blues at the CapitolReprint: CalMatterscover photo: Assembly Speaker Robert Rivas speaks during a floor session at the state Capitol in Sacramento on Jan. 22, 2024. Photo by Fred Greaves for CalMatters In summary The Legislative Analyst’s Office projects the 2024-25 shortfall at $73 billion, putting more pressure on legislators and the governor to find savings. The biggest challenge… Read more: CalMatters: Budget blues at the Capitol
- OPINION: blatant in our face election interferencesuggest we push back with Judicial Watch and/or any other form we can place our hands on. This is a blatant in our face election interference which will be felt outside the city of San Fransico. A few of the decision made at the local level influenced by a commissioner are: City of San Fransico… Read more: OPINION: blatant in our face election interference
- Obituary: H.D. “Dick” SumnerH.D. “Dick” Sumner Obituary Dr. H.D. “Dick” Sumner passed away, peacefully, in his home on February 17, 2024, at the age of 92. Dick was born on July 21, 1931 in Brooklyn, New York, the only child to Dr. Irving Emerson & Erna Margaret Sumner. They relocated to Carmel, California where he spent most of… Read more: Obituary: H.D. “Dick” Sumner