Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Politics

CA Gov. Gavin Newsom to announce his plan to cover a $25 billion deficit

by January 10, 2023
January 10, 2023
CA Gov. Gavin Newsom to announce his plan to cover a $25 billion deficit

Days after the start of his second term, California Gov. Gavin Newsom on Tuesday will announce his plan to cover a multi-billion dollar budget deficit in what could signal the end of a decade’s worth of economic growth in the nation’s most populous state.

Newsom, a Democrat, has been warning of a potential budget shortfall for more than a year, and the Legislative Analyst’s Office said last in November the shortfall could be around $25 billion.

In September, Newsom publicly scolded lawmakers for sending him dozens of bills that, when added together, would have allowed billions in new spending. Newsom vetoed those bills, saying he has ‘made it crystal clear that we are seeing economic headwinds.’

But he’s been unusually quiet in the days leading up to his budget announcement. In years’ past, Newsom would often have news conferences to roll out some of his big new spending programs. But this year, all he has said is he plans to ask lawmakers for an additional $202 million to strengthen levees that protect the state’s cities from flooding — an issue at the forefront this week after multiple powerful storms have caused flooding across the state.

Dealing with a deficit will be a change of pace for the state, where spending has more than doubled in the 10 years since the last recession. Officials have launched a dizzying amount of new programs and services — including committing to pay for all 4-year-olds to go to kindergarten and agreeing to cover the health expenses of all low-income immigrants who are living in the country without legal permission.

The money has come mostly from a soaring stock market that launched a parade of California-based tech companies. Those companies — including the likes of Uber, Airbnb, Lyft and Pinterest — made lots of people very rich, creating a new class of millionaires and billionaires in a state with a progressive tax code where nearly half of all income taxes come from the top 1% of earners.

Sine then, lots of economic factors — led by runaway inflation, supply chain disruptions and Russia’s invasion of Ukraine — have had a chilling effect on the economy. The S&P 500, a key indicator of the health of U.S. stock markets, has fallen more than 18% since its peak at the end of 2021.

With rich people not making as much money, they are paying less in California state taxes. So far this year, California’s tax revenues have been $4.6 billion below expectations — not including some one-time corporate tax payments that state officials say they can’t count on.

Still, California appears to be well-positioned to weather an economic downturn. Of the $131 billion in general fund surpluses the state has had in the past four years, most of it — about $80 billion — has paid for things that do not require ongoing funding, like construction projects. Just $10 billion of surplus spending has paid for ongoing commitments, according to the Legislative Analyst’s Office.

Plus, the state has $37.2 billion stored across its various savings accounts, which by itself would be more than enough to cover a $25 billion deficit. Constitutional limits prevent lawmakers from emptying reserves to cover a deficit. And unlike the federal government, California’s budget must be balanced. Newsom and lawmakers will have to tighten state spending to cover all of the shortfall — something that Senate Budget Committee chair Nancy Skinner said is doable.

‘We funded things at such record levels, and a lot of the programs that we funded haven’t even gotten going yet, so we still have room to make some adjustments if needed,’ she said, adding: ‘I’m very optimistic because we’re in good shape.’

Assemblymember Phil Ting, a Democrat from San Francisco and chair of the Assembly Budget Committee, said he thinks the deficit can be easily managed by state officials, saying he thinks the state is in for a ‘softer landing’ than it had at the start of the last recession in the late 2000s.

‘What we expect (on Tuesday) is a vision of how we protect all the amazing things we funded,’ Ting said. ‘Things are definitely slowing down.’

This post appeared first on FOX NEWS
0
FacebookTwitterGoogle +Pinterest
previous post
AK judge dismisses challenge that Anchorage Democrat who won the House race was unqualified to serve
next post
Arkansas introduces new bill defining drags shows as an ‘adult-orientated business’ under legal code

You may also like

Democrats downplay Biden’s classified documents: ‘No comparison’ to...

January 10, 2023

Newsom’s mental health plan would take $700 million...

July 19, 2023

Russia test-launches nuclear-capable missile from new submarine

November 6, 2023

Trump: Environmental Protection Agency eyeing to cut 65%...

February 26, 2025

Biden finally speaks out on granddaughter he refused...

July 29, 2023

Biden repeatedly says ‘I don’t remember’ regarding classified...

May 17, 2025

More Republicans Back Away From Supporting Ronna McDaniel...

December 15, 2022

‘Structural racism’: Top taxpayer-funded academy rife with DEI...

February 27, 2025

Biden takes blame for ‘bad night’ in debate...

July 6, 2024

Tacky. Tacky. Tacky. Jill Biden Dresses as Fairy...

November 1, 2022

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025
    • Musk jokes about reconsidering stance on Big Beautiful Bill after Schiff’s praise

      June 7, 2025
    • Musk deletes explosive posts about Trump and Epstein files

      June 7, 2025
    • House witness flips script on Dem who ambushed him during hearing with unearthed tweet: ‘Iceberg is ahead’

      June 7, 2025
    • Call with China’s Xi, and Trump-Musk exchange fueled barbs during 20th week in office

      June 7, 2025
    • Trump’s conservative allies warn Congress faces critical ‘test’ with $9.4B spending cut proposal

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,568)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved