According to a recent analysis from the nonpartisan Legislative Analyst’s Office, CA will face a $25 billion shortfall in 2023-2024, after a record-breaking $98 billion budget surplus this year.
The updated forecasts revealed on Wednesday, come a little over a week after Dems., including Governor Gavin Newsom (D), was re-elected to every statewide post following a year of extravagant public spending.
The Congressional Analyst’s Office explained that if the recession is extremely severe, the deficit could be considerably worse.
“According to our projections, the Legislature will face a $25 billion budget deficit in 2023-24. (A budget crisis, often known as a deficit, happens when the forthcoming fiscal year’s resources are insufficient to meet the expenditures of existing authorized services.) The budget crisis is primarily due to reduced revenue expectations, which are $41 billion below budget act projections from 2021-22 to 2023-24. Lower spending in certain sectors offsets revenue losses. Annual deficits would fall from $17 billion to $8 billion throughout the forecasted years.”
“The $25 billion budget crisis in 2023-24 is nearly equal to the number of general-purpose reserves available to the Legislature to distribute to General Funding programs ($23 billion). Although our lower revenue predictions account for the possibility of a recession, they do not include a recession scenario. Based on previous history, if a recession occurs soon, revenues could very well be $30 billion to $50 billion lower than our revenue forecast in the budget frame.”
California’s revenues have skyrocketed in the last two years, thanks to President Donald Trump’s rapid economic recovery and huge transfers from the federal govt. under President Joe Biden.
Before his recall election last year, Newsom offered lower-income households a “Golden State Stimulus,” and before this year’s election, he sent them $400 cheques to offset increasing fuel expenses.
However, because it relies significantly on tax income from a very tiny number of high-income earners in Silicon Valley and Hollywood, California’s state budget is extremely susceptible to changes in the national economic picture.