California is facing a significant budget challenge, with a projected deficit of $26.7 billion, which could actually be closer to $45 billion due to certain unaccounted actions. Governor Gavin Newsom unveiled a $288 billion spending plan for the upcoming fiscal year, a decrease from last year's $311 billion budget. Despite the reduction, California's budget remains the largest in the nation, surpassing other big states like New York, Texas, and Florida.
To address the deficit, Newsom's proposal includes various cuts across 260 state programs. These cuts involve eliminating vacant state worker positions, clawing back funds allocated for healthcare services, reducing operating costs for state agencies, cutting funding for broadband initiatives, closing housing units in state prisons, and reducing support for homelessness and housing programs.
Furthermore, the budget plan includes cuts to education programs, public health services, mental health funding, and in-home care services for low-income, undocumented immigrants with disabilities. Notably, the proposal also suspends the net operating loss tax deduction for businesses in the following fiscal year and increases taxes on managed care organizations.
California's constitution mandates a balanced budget, requiring lawmakers and the governor to either raise revenue through taxes or make spending cuts. Newsom's focus is primarily on reducing expenditures, supplemented by tapping into reserve funds. The proposed budget aims to navigate the state out of its financial shortfall, with a deadline of June 15 for lawmakers to pass the budget to avoid payment disruptions.
