Governor Gavin Newsom said Wednesday the state’s budget deficit — projected just last month at a staggering $68 billion — has been revised to $37.9 billion, and will be solved without drastic cuts to core programs.
Newsom unveiled a proposed $291.5 billion 2024-2025 budget, including a $208.7 billion general fund that covers operating expenses for most programs including education, health and human services, criminal justice and transportation.
“For decades and decades we’ve come to expect the volatility in our tax system,” Newsom said, where revenue “goes up during good times goes down very badly in the bad times.”
“This is a story of correction and normalcy, and one that we in some respects anticipated, and one we’re certainly prepared to work through,” Newsom said.
The governor attributed the difference in his administration’s lower deficit projection and last month’s $68 million figure from the Legislative Analyst’s Office to a difference in optimism about near-term revenues.
“I value their work,” Newsom said, “we just are a little less pessimistic about the next year than they are.”
The governor’s budget proposes to fill the $37.9 billion deficit with a combination of:
- $13.1 billion from reserve funds
- $8.5 billion in reduced spending, including $2.9 billion in climate programs, $1.2 billion in housing programs and $500 million for school facilities, and “belt tightening” that includes freezing new contracts, cell phones, technology equipment and nonessential fleet purchases and travel.
- $5.7 billion from new revenues and borrowing, including $3.8 billion in a managed care organization tax to support Medi-Cal.
- $5.1 billion in funding delays, including $1 billion for transit and inter-city rail projects and $550 million in kindergarten facilities grants.
- $3.4 billion in shifting expenditures to special funds, including $1.8 billion to a fund for reducing greenhouse gas emissions linked to climate warming.
- $2.1…
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