California state budget deficit to get much bigger
SACRAMENTO, Calif. - The state's budget deficit is so large, it would purchase the latest, brand new 737 Max airplanes.
The state deficit, projected in January at just over $22 billion has now ballooned by $9.3 billion; a 41% increase in Friday's announced $306 billion revised budget.
"So, we have a $31.5 billion challenge, which is well within the margin of expectation and well within our capacity to address," said Gov. Gavin Newsom.
Through a mixture of internal borrowing and revenue shifting, the budget will be less than 1% lower than the last one. However, it will be seriously impacted by lower overall tax revenues, delayed tax revenues and inflation.
"We are in a position with this May revise, building off the January budget announcement, despite some additional shortfalls, to foundationally be in a position where we're preserving, enhancing and protecting programs that we all hold dear," said Newsom.
Per pupil school funding, trimmed from the January proposal, will still be the highest ever. Overall education funding including higher education has also increased.
Gov. Newsom says state’s budget deficit has grown to nearly $32 billion
Newsom said the state’s challenges are partly due to high inflation and a decision to let most people delay filing their taxes because of a series of winter storms.
"Homelessness. We're not backing away at all. Fully funding, full commitment to move forward in the $15.3 billion; address the issue of cleaning up these damned encampments," said Newsom.
That's why overall housing is yet another top priority, as is bond funded mental health fund and a $48 billion commitment to climate issues. Due to the overwhelming snowpack, Newsom has sharply increased flood protection to almost $500 million.
A major increase in fentanyl enforcement, treatment and intervention is in the budget. To erase the huge deficit, a combination of funding delays, program reductions, fund shifting, potential triggered cuts depending on changing circumstances and borrowing or revenue enhancements will be implemented.
Why did this happen? California's so-called 'progressive tax code' gets most of its money from super-wealthy taxpayers, the 1% who currently fund about half of the state's budget.
Those taxpayers rough ride in the stock market and other investments, slashing their capital gains taxes.
"We believe we can do better and do more to be a more efficient organization, and we take that seriously," said Newsom.
In future reports, those cuts and reductions will create lots of political heat.