The last time we checked on California’s budget, the deficit was a whopping $68 billion, which was twice the original amount (due to Bidenomics).
The deficit has grown considerably since that December report. It now stands at $73 billion.
The tug-of-war between California Gov. Gavin Newsom and the nonpartisan Legislative Analyst’s Office [LAO] over the state’s projected budget deficit took a new turn Tuesday, when the LAO announced a revised shortfall of $73 billion — $15 billion more than previously forecast, and significantly more than the $38 billion gap that Newsom has estimated.The LAO reported that recent revenue collection data “reflect even further weakness” for the state’s financial outcome.“All else equal, this means the budget problem is likely to be higher” when the governor gives his revised projection of the state’s finances in May, the LAO said in a Tuesday update.The LAO said that the actual budget shortfall will depend on a variety of factors, such as mandatory Proposition 98 spending on schools and community colleges.
As before, Bidenomics appears to contribute to the deficit expansion.
The LAO notes that tax collections in recent month have deteriorated, rather than improved. “Recent revenue collections data reflect even further weakness relative to [earlier] estimates,” the analyst notes. Corporate tax collections were a third lower in December relative to the year before.Income tax withholding and estimated payments from capital gains have also been weak. “As California’s tech companies have grown, equity pay withholding has increased as a share of total income tax receipts,” the LAO notes. Yet despite tech stock gains that should boost the amount of tax being withheld from paychecks, it adds, “recent withholding has been underwhelming.”Perhaps this is due in part to the underperformance of the overall state economy. California’s unemployment rate rose to 5.1% in December from 4.1% a year earlier, while the number of employed workers declined by 108,200. The U.S. jobless rate is 3.7%, and Florida’s is 3%. Sorry, Gov. Newsom.
This is unfortunate timing for Newsom, who appears to be the “Plan B” for the Democrats’ presidential candidate.
President Joe Biden appeared unprepared to be asked if his upcoming trip to California is to brainstorm a back-up plan amid doubts over his viability in 2024.A reporter asked ahead of Biden’s Los Angeles campaign visit on Tuesday if California Gov. Gavin Newsom should ‘stand by’ to be tapped by the Democratic Party to appear on the ballot….Biden, 81, is participating in a campaign reception in Los Angeles on Tuesday evening amid rising concerns over his fitness for office.Podcaster Joe Rogan predicted that Newsom will end up on the Democrat’s 2024 ticket.’I think they’re gonna get rid of him… I’d say they’re setting up Gavin Newsom for it,’ he said last week.
How high can the state’s deficit go? Put your estimates in the comment sections!
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