The State of California will suffer a $25 billion deficit in 2023-2024, despite enjoying a record-setting $98 billion budget surplus this year, according to new analysis from the nonpartisan Legislative Analyst’s Office.
These projections were released Wednesday just over one week after the elections in which Democrats including Governor. Gavin Newsom, a Democratic candidate for every statewide office was elected after an entire year of public spending.
The Legislative Analyst’s Office explained that the deficit could be even worse, if a recession is particularly bad (original emphasis):
Under our outlook, the Legislature would face a budget problem of $25 billion in 2023‑24. (A budget problem—also called a deficit—occurs when resources for the upcoming fiscal year are insufficient to cover the costs of currently authorized services.) The budget problem is mainly attributable to lower revenue estimates, which are lower than budget act projections from 2021‑22 through 2023‑24 by $41 billion. Spending in some areas offsets revenue loss. The annual deficit would decrease from $17 billion a year to $8 billion in the following years.
The $25 billion budget problem in 2023‑24 is roughly equivalent to the amount of general‑purpose reserves that the Legislature could have available to allocate to General Fund programs ($23 billion). Our lower estimates of revenue do not include the possibility that there will be a recession. These numbers do not represent a recession.. Based on historical experience, should a recession occur soon, revenues could be $30 billion to $50 billion below our revenue outlook in the budget window.
California’s revenues soared in the past two years, thanks to a speedy economic recovery that began under President Donald Trump, and massive transfers from the federal government under President Joe Biden.
The state was so flush with cash that Newsom sent lower-income households a “Golden State Stimulus” before his recall election last year, and sent them $400 checks to offset higher fuel costs before this year’s election.
However, California’s state budget is exceptionally sensitive to shifts in the national economic outlook, as it depends heavily on tax revenues from a very small group of high earners in Silicon Valley and Hollywood.
Joel B. Pollak serves as Senior Editor at Large for Breitbart and hosts the show. Breitbart News SundaySirius XM Patriot Sunday Evenings, 7 p.m.-10 p.m. ET, 4-7 p.m.PT Author of the e-book Neither Free nor Fair, The 2020 U.S. Presidential Election. The latest book he wrote, ROLRED NOVEMBERThe conservative view of the 2020 Democratic Presidential Primary is shared by. The 2018 Robert Novak Journalism Alumni Fellowship was awarded to him. Follow him @ @joelpollak.
The full article is available here here