California Reveals Massive Expected Deficit

Based on a recent report from California’s Legislative Analyst’s Office, the state’s projected budget deficit could be larger than the state initially estimated, CBS News reported.

According to the report, the estimated budget deficit was revised to $73 billion, nearly double the $38 billion deficit Governor Gavin Newsom’s office projected.

The Legislative Analyst’s Office recommended that the state legislature review its one-time and temporary spending augmentations to determine if they could be reduced. The areas the LAO listed for possible spending cuts included housing, education, transportation, environmental programs, and programs to address homelessness.

According to the Deputy Director of the Department of Finance, while the state projects tax receipts of over $51 billion between now and April, it was impossible to say with certainty if that would change the estimated budget shortfall. The Department of Finance initially recommended that the legislature act immediately to reduce spending by $8 billion to help close the gap.

When asked by CBS News why there were inconsistencies in the estimated deficit, a spokesperson for the Department of Finance said the timing of the estimates, along with different interpretations of spending and different revenue forecasts could affect the estimates.

Republican state Senator Roger Niello told CBS News that the state knew of the impending problem last spring and since then, the situation has deteriorated. He said part of the problem is that the state uses projected tax revenue amounts when it determines spending.

A revised budget is expected to be presented to the legislature in May.

The staggering budget shortfall prompted conservative activists to once again file papers with Governor Gavin Newsom’s office notifying him that they were pursuing another recall effort.

According to Anne Dunsmore, the executive director of Rescue California, the group leading the recall effort, Governor Newsom left the state with a $73 billion deficit while he traveled the country to “advance his Presidential ambitions.” Dunsmore said the state deserved a governor who would focus full-time on the issues affecting California residents.

Whether the latest effort results in a recall appearing on the ballot remains to be seen.