California Gov. Gavin Newsom will reveal his updated budget plan Thursday as state Democrats grapple with what they claim are “Trump inflation” impacts on public services, particularly health care.
The state is seeing higher-than-expected revenues — but those could be offset by more state spending amid inflationary costs.
“California’s finances are under incredible pressure,” Assembly Democrats wrote in their recently released budget proposal. “Harder choices are coming, and spending at every level of government needs to be looked at honestly today to avoid even more dire choices down the road.”
In afinancial reportreleased Tuesday by the state controller, the last fiscal year saw $595 billion in revenues, more than 8% from the prior year, much of it driven by capital gains from a strong artificial intelligence sector and corporate taxes.
The last five months, more than $10 billion in tax revenue have come in above projections, and throughout the next two years, tax revenues should be “tens of billions” above January estimates, legislative staff predicted.
“The economy in this state is remarkable, resilient, dominant,” Newsom said last Friday when asked to comment on the upcoming budget reveal. “No economy in the United States of America, no state has outperformed the state of California.”
However, the state’s eye-popping spending also increased at a similar rate last fiscal year, totaling $582 billion that year. The state’sMedicaid andeducation programs drove much of that spending.
But Democrats say the Trump administration’s actions on Medicaid and other programs, plus potential wild swings in the stock market, means California still faces future deficits of tens of billions per year, as they try to use state money to help backfill federal cuts.
In January, Newsom proposed a $348 billion budget, a $30 billion increase from the current state budget. At the time, he projected a $2.9 billion shortfall.
That shortfall mayend up being smaller after a $2 billion budget accounting errorthat wasn’t publicly announced.
Source: California Post – Breaking California News, Photos & Videos
