Newsom reveals $297bil budget as state preps for swelling deficit

California Gov. Gavin Newsom unveiled his proposed 2023-2024 budget on Tuesday, setting the stage for various cuts as the state prepares for a major deficit. 

Last year’s $100 billion surplus is decidedly in the rear-view mirror, and Newsom’s proposed $297 billion budget comes in behind the record $310 billion budget currently operating the state. 

The big picture: California starting down a $22.5 billion deficit due to tax revenues that heavily rely on the state’s most affluent, who saw their capital gains revenue from the stock market nosedive throughout much of last year. 

• To cope, Newsom is looking to cut about $6 billion in climate investments, and he plans to move $4.3 billion in spending on zero-emission vehicles from the general fund to a special fund paid into by polluters. Climate and transportation funding will also see $3.1 billion delayed by a year. 
• Another major cut comes in the planned $3 billion in payments to offset inflation. 
• On the other hand, Newsom is committing to expanding Medi-Cal insurance to all illegal immigrants, which will cost around $2.7 billion annually. 
• Newsom also added $1 billion for local governments to deal with homelessness. 

What they’re saying: “With our state and nation facing economic headwinds, this budget keeps the state on solid economic footing while continuing to invest in Californians – including transformative funding to deliver on universal preschool, expand health care access to all and protect our communities,” Newsom said. “In partnership with the Legislature, we’ll continue to prioritize the issues that matter most to Californians while building a strong fiscal foundation for the state’s future.” 

• “Democrat politicians have wasted a record surplus on new social programs and pork projects, while allowing our aging infrastructure to crumble. Now we are faced with a $22 billion deficit as a result of their fiscal recklessness. It’s high time we refocus our budget on the core functions of government,” said Assembly Republican Leader James Gallagher.