I recently noted that California Governor Gavin Newsom was not enthusiastic to write reparations checks as Big Tech banking troubles and residents fleeing the state (along with their businesses) have left the Golden State a bit cash-strapped.
It turns out the state’s economic situation is worse than I imagined, and I had imagined fiscal purgatory.
California Gov. Gavin Newsom (D) unveiled a revised $306.5 billion budget proposal on Friday, while announcing the state’s budget deficit had grown to $31.5 billion.This shortfall is about $9 billion more than the $22.5 billion gap he projected in his initial January budget proposal, which totaled about $297 billion.“We are walking into a budget where we need to maintain our prudence, and we need to prepare not just for the short term but the medium and long term,” Newsom said at a Friday press conference, where he presented the revised proposal.Recognizing the current environment of economic volatility, Newsom stressed the importance of taking that uncertainty “very soberly and seriously as it relates to macroeconomic headwinds.”
Much of the budget uncertainty stems from Sacramento not being able to predict exactly how much revenue it will be bringing in over the next year.
Delayed tax deadlines because of storms that inundated the state, the impasse in Washington over the federal debt ceiling and the looming threat of a recession all add to the uncertainty.“We’re going into a budget in a way we’ve never gone into a budget before,” Newsom said. “We need to prepare not just for the short term, but for the medium and the long term.”Newsom and lawmakers rely on state analysts’ predictions about how California finances will look over the next year to craft their state budget plan. They’ll have to make decisions about how to structure the state budget by the July 1 start of the upcoming fiscal year, before they have a clear picture of tax receipts from 2022 because the tax filing deadline in most counties has been pushed back to Oct. 16.
Remember when Newsom went to Florida to bash Gov. Ron DeSantis? DeSantis is having the last laugh. Given Florida’s record budget surplus under his leadership, DeSantis’ budget includes proposed tax breaks for Floridians.
DeSantis calls his proposed budget, which totals more than $114 billion and is $4 billion over last year’s, “a framework for freedom,” and said it includes new and expanded tax breaks — including an additional $1.5 billion in consumer relief, on top of the $500 million Toll Relief Program which began on Jan. 1.The governor is proposing:
- Two back-to-school sales tax holiday periods instead of one
- Temporary tax breaks on pet food and over-the-counter pet medications
- A permanent tax break on baby supplies like food, diapers, strollers and more
- New sales holidays on household supplies that cost less than $25, including dental supplies, toiletries, toys and athletic equipment
- An additional $12 million in migrant flights
“This is going to be really, really good for families in Florida,” DeSantis said. “If you do all this stuff — if a family commutes, if they have young kids and all this stuff — you’re talking potentially thousands of dollars in savings when all this is said and done.”
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