California is now facing a $32 billion budget deficit, as the state faces a much deeper hole than previously projected, Bloomberg reports.
“We are walking into a budget where we need to maintain our prudence,” said Governor Gavin Newsom (D) on Friday, warning that a recession could worsen the financial situation in the years to come.
“That is an uncertainty that we must take very soberly and seriously as it relates to macro economic headwinds,” he added.
The expected shortfall is $9.5 billion worse than a $22.5 billion January estimate, according to figures released today, and will be the biggest deficit since 2010…
Newsom proposed a $224.1 billion general-fund budget for the fiscal year starting on the 1st of July, according to the report.
Revenue has been hurt by the sinking fortunes of California’s wealthiest residents, who shoulder a disproportionate share of the tax burden. Roughly half of the state’s personal income taxes coming from the top 1% of earners.
Thousands of workers have been laid off from California-based tech giants including Alphabet Inc., Meta Platforms Inc. and Twitter. The collapse of Silicon Valley Bank, which mainly catered to the tech and venture capital sectors, along with two other California-based regional lenders earlier this year adds to the economic turbulence. -Bloomberg
That said, the deficit is comparatively small vs. the cash crunch faced by the state during the last session, but this time Newsom will need to persuade Democrat lawmakers to make deep cuts – something which doesn’t come naturally to tax-and-spend liberals.
Meanwhile, deadlines to file and pay taxes were extended by six months to October 16 in most counties in the state due to the severe winter storms earlier this year.
State legislators – who must now negotiate over potential cuts to the budget – have until June 15 to pass one or they forfeit their pay for each day they are late.
Earlier this year Newsom touted ‘transformative investments’ in housing, education, childcare, health care and climate programs as part of his preliminary spending plan.
“This was not an easy budget, but I hope you see we will try to do our best to hold the line and take care of the most vulnerable and most needy, but still maintain prudence,” said Newsom.
Is it any wonder, Newsom is quickly (and carefully) sidestepping the $800 billion in reparations costs that he has implicitly promised California’s black residents, preferriung instead to remind citizens that “its about more than just cash payments.”
We suspect, there may well be a few (million) disillusioned voters who feel like they were promised cash for being black.
As one minister declared at the hearing last week, “Tell Governor Newsom we’re coming. He knows me.”
Did the virtue-signaling golden-boy just hit a reality wall?
Tyler Durden
Fri, 05/12/2023 – 19:20
