California's budget deficit in the upcoming fiscal year is $7 billion more than Gov. Gavin Newsom, D-Calif., predicted last month, according to a report from the state's Legislative Analyst’s Office (LAO).
Newsom said in January that California had a projected budget deficit of $22.5 billion for the next fiscal year, but the LAO found that the state likely will receive $10 billion less in tax revenues than expected.
"In particular, using recent revenue collections and economic data, we estimate there is a two‑in‑three chance that state revenues will be lower than the governor's budget estimates for 2022‑23 and 2023‑24," reads the report, which was written by California legislature budget analyst Gabe Patek. "Our best estimate is that revenues for these two years will be roughly $10 billion lower — implying a larger budget problem by about $7 billion."
The report also found that tax revenues remain above historical averages. However, "spending remains above historically recent peaks," meaning that tax revenue will be unlikely to cover the state’s projected spending over the next several years.
"Since around 2020, the state has seen historic surges in revenues—and ensuing historically large surpluses and spending levels," the report reads. "However, while revenues are moderating from the recent peak, they are still above average historical levels.
"For example, even after adjusting for inflation, anticipated revenues for 2023‑24 remain about 20 percent higher than before the pandemic. Moreover, the Governor’s proposed spending level—as a share of the economy … remains above peaks from the early and mid‑2000s. None of these levels — both on the revenue and spending side—are consistent with shortfalls seen during recessions."
Theodore Bunker ✉
Theodore Bunker, a Newsmax writer, has more than a decade covering news, media, and politics.
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