Current:Home > MyCalifornia Legislature approves budget that slashes spending to address $46.8 billion deficit -TradeCircle
California Legislature approves budget that slashes spending to address $46.8 billion deficit
Oliver James Montgomery View
Date:2025-04-06 21:47:48
SACRAMENTO, Calif. (AP) — California lawmakers approved on Wednesday a budget that slashes spending and temporarily raises taxes on some businesses to close an estimated $46.8 billion budget deficit.
It’s the second year in a row the nation’s most populous state has been forced to pare back or delay some of its progressive policies that had been fueled by record-breaking surpluses during the COVID-19 pandemic.
It was just two years ago that Gov. Gavin Newsom and his fellow Democrats in the state Legislature were boasting about surpluses that totaled more than $100 billion, the product of hundreds of billions of dollars of federal COVID-19 aid and a progressive tax code that produced a windfall of revenue from the state’s wealthiest residents.
Those revenue spikes did not last as inflation slowed the state’s economy, contributing to a rising unemployment rate and a slowdown in the tech industry that has driven much of the state’s growth. The Newsom administration then badly miscalculated how much money the state would have last year after a seven-month delay in the tax filing deadline.
Last year’s deficit was about $32 billion. This year’s deficit swelled to $46.8 billion — with more deficits projected for the future.
California’s budget has historically been prone to large swings in revenue, given the state’s reliance on its wealthiest taxpayers. But these deficits have come at a bad time for Newsom, who has been building his national profile ahead of a potential run for president one day and has been tapped as one of the top surrogates for President Joe Biden’s reelection campaign.
The budget includes an agreement that Newsom and lawmakers will try to change the state constitution in the coming years to allow California to put more money in reserve to prepare for future shortfalls.
“California needs to have fiscal reform to prevent these wild swings in revenue that causes us to make really difficult decisions,” Democratic Assemblymember David Alvarez said.
Newsom’s plan to balance the budget includes a nearly 10% cut for nearly all state departments, including eliminating thousands of vacant state worker positions.
Many previous promises have been paused or delayed. Two years ago, lawmakers pledged to help pay child care expenses for an additional 200,000 families by 2026. This budget delays that promise to 2028, with the caveat it will only happen if there is money available for it.
A promise to increase the pay for workers who help people with developmental disabilities find jobs has been delayed by six months — which advocates say will cost them roughly $500 million in lost revenue. And a promise to change foster care rates has been pushed back one year.
A promise made last year to increase the minimum wage for health care workers this summer has been delayed until January at the latest.
Other major expansions have been protected, including making all low-income adults eligible for government-funded health insurance regardless of their immigration status and making school lunches free for all students.
“In California, you don’t have to be profligate to be progressive,” Newsom said. “We understand how to balance budgets while protecting working families, children, and the most vulnerable people in this state.”
Republicans said they were left out of budget negotiations. They criticized the tax increase on businesses, which applies to companies with at least $1 million in revenue and will last for three years, bringing in more than $5 billion in extra revenue for the state next year. And they criticized Democrats for some cuts to some social safety net programs.
“We are seeing what I can only characterize as heartless cuts for those that are hurting the most. We can do a whole lot better than this,” Republican Assemblymember Jim Patterson said.
The budget represents an agreement between Newsom and legislative leaders in which both sides had victories and concessions. The Legislature agreed to loan Pacific Gas & Electric $400 million as part of a plan to extend the life of the state’s only remaining nuclear power plant. And Newsom agreed to abandon some of his most controversial cuts to social services programs, including agreeing to pay for people to care for some disabled immigrants who are on Medicaid.
The budget spends $136 billion on public education next year, or about $24,000 per student. Lawmakers agreed to reduce spending on public schools by about $8 billion but pulled an equal amount from reserves to protect schools from those spending cuts. The complex maneuver ensures districts will have more money in future years, rejecting one of Newsom’s earlier proposals.
“Since the beginning of this year we have been committed to a budget that protects classroom funding and invests in our greatest resources, our children,” Democratic Assemblymember Jesse Gabriel said.
Newsom is expected to sign the budget into law in the coming days.
veryGood! (18664)
Related
- How to watch new prequel series 'Dexter: Original Sin': Premiere date, cast, streaming
- Ford, Toyota, Tesla among 517,000 vehicles recalled: Check car recalls here
- Celine Dion talks accepting stiff person syndrome diagnosis, first meeting husband at 12
- Jury deliberating in Iraq Abu Ghraib prison abuse civil case; contractor casts blame on Army
- B.A. Parker is learning the banjo
- A retirement expense of $413,000 you'll need to be prepared for
- 3 California boys charged with beating unhoused man using tripod, tent poles
- US House Judiciary Committee chair seeks details from ATF on airport director shooting
- Former Syrian official arrested in California who oversaw prison charged with torture
- Islanders give up two goals in nine seconds, blow 3-0 lead in loss to Hurricanes
Ranking
- South Korea's acting president moves to reassure allies, calm markets after Yoon impeachment
- The Daily Money: Want to live near good schools?
- Real Housewives' Kyle Richards Says People Think She Has Fake Lashes When She Uses This $9 Mascara
- Mall retailer Express files for bankruptcy, company closing nearly 100 stores
- Friday the 13th luck? 13 past Mega Millions jackpot wins in December. See top 10 lottery prizes
- KC Current owners announce plans for stadium district along the Kansas City riverfront
- Celebrity designer faces prison for smuggling crocodile handbags
- Olivia Munn Shares How Son Malcolm Helped Lift Her Up During Rough Cancer Recovery
Recommendation
Former longtime South Carolina congressman John Spratt dies at 82
Prosecutors cancel warrant for lawmaker on primary eve, saying protective order hadn’t been in place
Forget green: Purple may be key to finding planets capable of hosting alien life, study says
Taylor Swift’s Friend Keleigh Teller Shares Which TTPD Song “Hurts So Much” for Her
Man can't find second winning lottery ticket, sues over $394 million jackpot, lawsuit says
Earth Day: Our Favorite Sustainable Brands That Make a Difference
Stock market today: Asian stocks track Wall Street gains ahead of earnings reports
Beyoncé Shares Rare Look at Her Natural Hair With Wash Day Routine