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Published on May 11, 2024
Gov. Newsom Targets $27.6 Billion Gap with Revised Budget, Averts New Taxes in CaliforniaSource: Andre m, CC BY-SA 3.0, via Wikimedia Commons

California Governor Gavin Newsom has revealed a revised budget proposal that aims to eliminate the state's massive budget shortfall while maintaining core services and avoiding new taxes, as reported by the Governor's official website. In a move that addresses both this year's and next year's fiscal challenges, Newsom proposes cuts across the board, designed to right the ship after the financial turbulence of the COVID-19 pandemic.

The revised budget anticipates closing the current $27.6 billion gap, as well as next year's expected $28.4 billion deficit. Without the need for new taxes, it plans to streamline government operations and reduce positions that have yet to be filled. Newsom highlighted the state's preparedness for economic downturns with prior investments in reserves, resulting in a strong fiscal standing despite recent challenges, according to the official press release. However, his proposal cuts one-time spending by $19.1 billion, and ongoing spending by $13.7 billion through 2025-26.

"Even when revenues were booming, we were preparing for possible downturns by investing in reserves and paying down debts – that’s put us in a position to close budget gaps while protecting core services that Californians depend on," Newsom said. The budget reduction measures include a near 8% decrease in state operations and targeting the removal of 10,000 unfilled state positions. This strategy is expected to make government leaner, promote efficiency, and cut red tape.

Despite the cuts, Newsom's plan strives to shield essential services and safety nets. Ensuring that vital programs in housing, food assistance, health care, and other areas do not suffer, it avoids placing additional financial burdens on Californians. The Governor is particularly focused on avoiding new taxes, even as the state navigates its way out of the "Rainy Day" reserves territory. In the realm of revenue, the budget faced a downturn primarily due to a volatile stock market and federal tax deadline extensions which compounded the shortfall according to the state's announcement.

On the economic front, California remains a global powerhouse—according to the Governor's office, the state boasts the title of the world's fifth-largest economy with a growing population and booming tourism revenues. Newsom's revised budget aims to preserve California’s position as a leader in new business ventures, venture capital funding, manufacturing, high-tech industries, and agriculture.

For those desiring more specifics on the May Revision, the state has provided a fact sheet and detailed information is available on California's budget website.