California governor likely to announce bigger budget deficit than the $22.5B announced in January
California Gov. Gavin Newsom is likely to announce that the state's budget deficit is a lot bigger
SACRAMENTO, Calif. (AP) — Gov. Gavin Newsom on Friday is expected to announce an even bigger budget deficit than the $22.5 billion hole that he confronted in January, reflecting an economy burdened by a sagging stock market and disrupted by a series of powerful winter storms that delayed billions of dollars in tax payments.
California is one of the only states to have a shortfall this year, mostly because its progressive tax code relies on wealthy taxpayers whose income is closely tied to the performance of the stock market.
The deficit is small compared to the cash crunch that the state faced during the last recession. But the challenge for Newsom will be persuading lawmakers to spend cuts who are not accustomed to enacting them.
Since taking office in 2019, Newsom's biggest budget fights with the Democratic-controlled state Legislature is how to spend California's record-breaking surpluses. Agreeing on what to cut could be much more difficult.
