California’s estimated budget deficit has grown by $9 billion since January, Gov. Gavin Newsom announced Friday, though the governor downplayed the severity of its potential impact on critical government services and programs.
During a press conference at the California Natural Resources Agency in downtown Sacramento, Newsom unveiled a revised spending plan that will rely on some additional fiscal moves — including shifting funding sources and internal borrowing — to address a projected $31.5 billion gap in the 2023-24 state budget.
“We have a $31.5 billion challenge, which is well within the margin of expectation and well within our capacity to address,” Newsom said.
Despite the growing shortfall, California’s overall budget is now expected to be $306 billion, including special funds, less than a 1% decline from a record $308 billion in the current fiscal year.
What Newsom’s proposing
Newsom proposes to close the deficit by shifting an additional $3.3 billion in existing commitments out of the general fund, including paying for $1.1 billion in climate spending and $1.1 billion in college student housing projects with bonds, and pulling back another $1 billion in unused money from programs such as middle class tax refunds and utility bill support for low-income residents.
Under the governor’s plan, the state would also borrow $1.2 billion from special funds and extend a $2.5 billion tax on managed care health plans to address the spending gap. Extensive savings would remain largely untouched, though Newsom did propose to make a $450 million withdrawal from one reserve account.
California’s fiscal picture has largely worsened…
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