California Faces Record $68B Budget Deficit, Auditor Says

California is facing a $68 billion budget deficit, the nonpartisan 
Legislative Analyst’s Office said Thursday.

Most of the deficit comes from lower than expected tax revenues this year, 
the office said.

California delayed its tax filing deadline to November this year because 
of a series of damaging storms. That forced Democratic Gov. Gavin Newsom 
to come up with a spending plan without knowing how much money the state 
would have.

RELATED: San Francisco Mayor Guts City Programs as $1B Budget Shortfall 
Looms

The Legislative Analyst’s Office says revenues for the 2022-23 budget year 
ended up $26 billion below previous estimates. The office says the state 
could cut spending on education and take money from the state’s savings 
account to help balance the budget.

The state’s budget topped $300 billion last year.

The projected $68 billion deficit is a record in terms of a dollar figure. 
But the state has seen deficits that represent a larger share of the 
budget in the past.

It’s the second year in a row, tax collections in the nation’s most 
populous state likely won’t be enough to cover expenses—potentially 
leading to some hard choices for Newsom and his allies in the Legislature.

The problem is inflation and how the U.S. government is trying to control 
it. The Federal Reserve has been increasing a key interest rate that makes 
it more expensive for people and businesses to borrow money. That means 
fewer people are buying homes and fewer businesses are hiring workers.

In California, that means the number of unemployed workers has risen by 
nearly 200,000 since last year, enough to increase the state’s 
unemployment rate to 4.8% from 3.8%. The national unemployment rate is 
3.9%

Layoffs have hit the tech sector particularly hard, which has an outsized 
impact on California given the industry’s concentration in Silicon Valley.

https://sfstandard.com/2023/12/07/california-budget-deficit/