SACRAMENTO, Calif — Governor Gavin Newsom plans to reveal his revised budget this week as California faces a record-breaking $68 billion budget shortfall. However, according to the state finance department, the actual shortfall is much less.
“I don’t mean to imply by that that our numbers are going to say there isn’t going to be a significant problem to solve. There will be. That’s a given,” said H.D. Palmer, deputy director of External Affairs at the California Department of Finance.
Last year, California had a $97 billion surplus. It was so much money the state actually gave cash to California through the Middle Class Tax Refund. A year later, California is facing a deficit. As for why, officials say tax receipts were lower than expected and victims of flooding after back-to-back winter storms were given until October to file their taxes.
Still, the finance department insists the actual shortfall is less than the $68 billion number that made headlines.
“It’s $68 (billion), according to the legislative analyst. We will have different numbers when the governor comes out with his budget,” said Palmer.
Meanwhile, Republicans have released a statement calling on Governor Newsom to declare a budget emergency in California. Last month, the governor put a pause on all non-essential spending, including fleet vehicles and non-essential travel.
“We do have a substantial amount of reserves that have been set aside from dealing with this type of situation, the largest on record, the highest level of combined reserves the state has ever had,” said Palmer.
The state has about $22 billion in the rainy day fund, but that alone won't fix the problem.
“We may have to pull back on some one-time expenditures that we can’t sustain right now. So we will be looking to where we can make those types of adjustments, those types of savings while maintaining the core programs that are essential for Californians and maintaining the progress that we have made in critical areas such as education, such as housing, such as homelessness and in the climate as well," said Palmer. "All of those things, we are looking to maintain the progress that we’ve made.”
The governor is set to make his budget announcement on Wednesday morning.
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