California Governor Gavin Newsom (D) claimed the state would have a modest budget surplus next year – although he still planned to dip into the emergency “rainy day” fund, and warned against President-elect Donald Trump’s spending cuts.
Last year, Newsom faced heavy criticism after transforming what was once a $100 billion surplus — thanks, in part, to coronavirus relief money from the Biden-Harris administration – in a deficit of almost 50 billion dollars. Now, thanks to rising incomes for wealthy taxpayers, Newsom says there will be a surplus. But he warned that the surplus could be threatened by Trump’s spending cuts, fueled by the efforts of Elon Musk and Vivek Ramaswamy at the Department of Government Effectiveness (DOGE), which plans to reduce trillions in federal waste.
THE Chronicle of San Francisco note:
The budget outlook outlined by Newsom is a major turnaround from last year’s $47 billion deficit and the year before that’s $32 billion deficit. Newsom and the nonpartisan Legislative Analysts Office, which makes budget projections for the Legislature, both attribute the improvement to stock market gains among the state’s wealthiest taxpayers and reductions from previous years.
But, Newsom warned, Trump’s promised drastic federal spending cuts could darken the bright picture he has painted of California’s economy. Newsom said the new president could impact California’s budget depending on how its trade, tariffs and immigration policies evolve. This happened the last time Trump was in office, Newsom said.
THE Los Angeles Times reported that even though Newsom predicts a surplus, he still plans to withdraw $7 billion from the state’s “rainy day” fund, which is intended for emergencies and not years of fiscal health:
Gov. Gavin Newsom touted higher-than-expected tax revenues and a “modest surplus” in an unconventional preview of his $322.2 billion spending proposal for the next fiscal year, but his office said he still planned to draw money from the state’s rainy day reserves to pay for it. for political priorities.
…
Newsom’s office said he plans to withdraw an additional $7.1 billion from California’s rainy day reserves in the next fiscal year, after declaring a budget emergency last year to withdraw $5.1 billion. dollars to balance the current budget and an additional $900 million from a safety net reserve.
The decision to dip into the state savings account was part of a deal reached last year with lawmakers to also delay programs, cut spending and rely on occasional accounting tricks to resolve a $46.8 billion deficit. California leaders were forced to close a $31.7 billion deficit the previous year.
Newsom’s budget includes a $420 million tax break for Hollywood and $25 million to pay legal fees for illegal immigrants who want to fight deportation by the new Trump administration after years of open border chaos.
Joel B. Pollak is a senior editor at Breitbart News and host of Breitbart News Sunday on Sirius XM Patriot Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of The Agenda: What Trump should do in his first 100 daysavailable for pre-order on Amazon. He is also the author of Trumpian Virtues: The Lessons and Legacy of Donald Trump’s Presidencynow available on Audible. He is the recipient of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.
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