Newsom to declare ‘fiscal emergency’ as Cali. faces $38B deficit, new budget SLASHES key programs: report

What do you do if you’re a slick progressive governor with obvious White House ambitions and your catastrophic policies have saddled your once-wealthy state with a nearly $38 billion budget deficit?

You start slashing — through even the programs you claim to hold dear — like you’re Freddy Kreuger on steroids.

That is precisely what California Governor Gavin Newsom proposed in his 2024-25 state budget proposal, announced on Wednesday.

(Video: YouTube)

“Newsom stopped short of calling California’s budget deficit a ‘crisis,'” according to the Associated Press. “But his plan to cover the deficit includes pulling more than $13 billion from the state’s reserves — an action that will require him to declare a ‘fiscal emergency.’ His plan includes $8.5 billion in spending cuts, with about half of those cuts spread across various housing and climate programs.”

The plan could also force more than 400,000 healthcare workers to wait for a promised minimum wage increase.

According to Newsom’s office, “Using some of the unprecedented budget reserves built up over the years and other tools, this budget responsibly closes a projected $37.86 billion shortfall.”

“Thanks to the record reserves we have built up and a commitment to fiscal discipline over the years, our state is in a strong position to close this shortfall while protecting key priorities and programs that millions of Californians rely on,” Newsom said. “This balanced budget plan keeps California on firm economic footing while continuing our work to tackle homelessness, keep communities safe, expand access to high-quality education, overhaul behavioral health care and fight climate change.”

“I look forward to partnering with the Legislature to meet this moment with a balanced approach that meets the needs of Californians and safeguards our state’s future,” he added.

According to a summary from the governor’s office, “the Budget proposes $6.7 billion of General Fund solutions in climate-related programs to achieve a balanced budget including: $2.9 billion in reductions; $1.9 billion in delays of expenditures to future years; $1.8 billion in shifts to other funds, primarily the Greenhouse Gas Reduction Fund (GGRF).”

For example, concerning his state’s much-bragged-about Zero-Emission Vehicles (ZEV) agenda, Newsom’s proposed budget “maintains $10 billion, extended over seven years, in investments to the state’s ZEV agenda—including targeted investments in disadvantaged and low-income communities by increasing access to the benefits of clean transportation and by continuing to decarbonize California’s transportation sector and improve public health.”

“The Budget includes $38.1 million of General Fund reductions, $475.3 million in fund shifts to the GGRF, and $600 million in delays across various programs,” according to the summary.

And, as homelessness continues to ravage California’s cities and towns, hundreds of millions of funding dollars for programs to address the crisis and much-needed behavioral health programs will be delayed.

In total, Newsom proposed to delay, “but not cancel, $5.1 billion in spending for a variety of programs,” the AP reports.

That has Republican state Senator Roger Niello concerned.

“A real risk of not developing a sustainable spending plan is that the budget makes commitments that maybe it can’t follow up on if we do have severe continued deficits,” he said.

Newsom, however, said that things weren’t as bleak as some would have you believe.

“The nonpartisan Legislative Analyst’s Office predicted last month that California’s budget deficit would be $68 billion — a staggering number that would have been a record-high shortfall for a state known for its progressive tax structure that makes it prone to wild swings in revenue,” the AP reports. “But Newsom said the deficit is actually $37.9 billion — a shortfall that, while still steep, is much easier to manage for a state with revenues expected to exceed $291 billion.”

“We are just a little less pessimistic than they are about the next year,” Newsom said about the discrepancy.

While he believes Newsom’s estimates are reasonable, legislative analyst Gabriel Petek thought the governor was still being “optimistic.”

“They fall,” Petek said, “on the optimistic side of what we consider most plausible.”

According to the chairwoman of California’s Republican party, Jessica Millan Patterson, Newsom’s proposed budget is “reckless.”

“Only Gavin Newsom and California Democrats can take a nearly $100 billion record budget surplus just two years ago and turn it into a record $58 billion budget deficit today — that is, unless you go with Newsom’s numbers claiming only a $38 billion deficit,” she said in a statement.

“They ignored calls from Republicans to put more away for a rainy day, instead spending recklessly while pushing a radical agenda that drove long-time residents and taxpayers away by the hundreds of thousands,” Millan Paterson continued. “This should serve as a much-needed wakeup call to Newsom that his time is better spent trying to fix the mess he’s created at home instead of chasing nonsensical dreams about a future in the White House.”

 

Melissa Fine

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