California Gov. Gavin Newsom signs budget to close $46.8 billion budget deficit

SACRAMENTO, Calif. — Gov. Gavin Newsom signed California’s budget Saturday aimed at closing an estimated $46.8 billion deficit with $16 billion in spending cuts and a temporary tax increase on some businesses .

Lawmakers passed the budget Wednesday following a deal between Newsom and legislative leaders in which both sides made concessions and also scored victories as they were forced, for the second year in a row, to cut or delay some progressive policies that had been fueled by record surpluses during the COVID-19 pandemic.

“This is a responsible budget that prepares for the future while investing in foundational programs that benefit millions of Californians every day,” Newsom said in a statement. “Through careful budget management over the past several years, we are able to reach this moment while protecting our progress on housing, homelessness, education, health care and other priorities that matter deeply to Californians.”

The deficit stood at about $32 billion in 2023 before growing even more this year, with more deficits expected in the future in the nation’s most populous state. Saturday’s signing comes just two years after Newsom and Democratic lawmakers boasted of surpluses totaling more than $100 billion, the product of hundreds of billions of dollars in federal COVID-19 aid and a progressive tax code that generated a windfall of state revenue. wealthiest residents.

But those income increases did not last as inflation slowed the economy, contributing to rising unemployment and a slowdown in the technology industry that is driving much of the world’s growth. ‘State. The Newsom administration then miscalculated how much California would have available last year after a seven-month delay in the tax filing deadline.

California has historically been prone to wild budget swings, given its reliance on its wealthiest taxpayers. But these deficits come at a bad time for Newsom, who has been building his national profile for a possible presidential run and has been tapped as a top appointee to President Joe Biden’s campaign.

The budget includes an agreement that Newsom and lawmakers will attempt to amend the state constitution to allow California to set aside more money for future deficits.

Republicans, however, said they were excluded from the negotiations. They criticized the business tax increase, which applies to businesses with at least $1 million in revenue and will last three years, bringing in more than $5 billion more to the state next year. And they criticized Democrats for some cuts to welfare programs.