California facing projected $18B deficit as Newsom heads into his last year as governor

By TR N NGUY N Associated Press SACRAMENTO Calif AP California will face a projected billion deficit next year setting up a challenge for Gov Gavin Newsom to safeguard particular of the progressive policies that have defined his tenure as he considers a presidential run The nonpartisan Legislative Analyst s Office projected the shortfall in a statement issued Wednesday It would mark the state s fourth deficit in a row State spending continues to grow much faster than revenues and new federal agenda changes to robustness care and food assistance programs for low-income people will also increase costs for the state by billion the overview says Newsom will release his own budget estimates in January as he lays out a spending proposal for the next fiscal year sometimes his office disagrees with the LAO and paints a rosier financial picture His second and final term as governor ends in January and this year s budget will be his last say on how money is spent in the nation s the greater part populous state Governors in California are limited to two terms New federal policies on tariffs and ongoing high borrowing costs are leading to weaker corporate and sales tax trends and sluggish job improvement Legislative Analyst Gabriel Petek revealed at a briefing Wednesday The only bright spot has come almost exclusively from strong investments in artificial intelligence allowing the state to collect billions more in personal income tax than projected But largest part of those revenue gains must go toward schools and paying down state debt The document also warns that the AI investments might not be sustainable in the long run Related Articles AG Rob Bonta spent nearly K on lawyers while trying to be helpful amid East Bay corruption probe adviser says Billionaire investor Tom Steyer announces run for California governor in wide-open race Why a Bay Area lawmaker is expected to jump into governor s race this week Silicon Valley Democrat leads achieving fight for release of Epstein files Trump administration guts -year-old Bay Area college access undertaking It s risky to assume that these trends will just continue unabated Petek mentioned He added The budget condition right now has become relative weak For Newsom how he balances the budget without abandoning Democrats priority programs will help shape his national image as he mulls a presidential run He already had to roll back a signature healthcare care project last year in the face of a billion deficit dealing a major blow to state Democrats priority of providing universal soundness care The ambitious state-funded venture started in to provide free vitality care to immigrants living in California regardless of their legal status Those without legal status will no longer be eligible to enroll in the operation starting next year and selected will have to start paying a premium in State Democratic leaders in the past scarce years have avoided several of the deepest cuts to their priorities by borrowing from special funds and delaying payments to plug the budget hole But they re running out of greater part temporary and one-time solutions More cuts to wellness care programs could come next year as they are among the biggest expense in the state budget The governor in past years had rejected calls to raise taxes to fix budget problems Lawmakers have until June to pass a balanced budget While we re still updating and refining our forecasts and projections for the Governor s January budget the LAO has again highlighted the challenges that we ve underscored throughout the year federal uncertainty realm volatility and continued increase in both cost and caseload for major state programs H D Palmer a spokesperson for the California Department of Finance disclosed in a report California will likely see even a bigger deficit up to billion the following year the LAO review commented Legislative Republicans reported the budget challenges are a conclusion of poor spending decisions The state s structural deficit continues to grow because of the majority party s unstoppable spending problems Republican state Sen Roger Niello reported in a announcement Lawmakers passed a billion spending plan last year following an agreement between Newsom and Democratic leaders Senate President pro Tempore Monique Lim n a Democrat stated lawmakers will work with the governor to craft a responsible state budget that protects core programs including mentoring childcare safety net medical care and society safety