SACRAMENTO, Calif. (CN) — California Governor Gavin Newsom rolled out his $291.5 billion 2024-25 budget proposal Wednesday, which he said will cut a projected $68 billion deficit to $37.8 billion.
That $37.8 billion gap will be bridged by drawing from reserves, reducing spending and delaying and deferring certain expenditures.
Almost $19 billion will come from reserve funds, while almost $12 billion will be from reduced spending. The latter was prefaced in a recent letter to state department heads telling them to, among other actions, freeze new contracts, stop buying new IT equipment and halt the purchase of new nonessential vehicles.
The remainder of the gap, about $7.2 billion, will come from delaying and deferring certain expenditures, like some construction projects slated for the judicial branch.
“Along with the rest of state government, the judicial branch must be part of the solution to close our anticipated statewide budget deficit,” California Supreme Court Chief Justice Patricia Guerrero said in a statement. “This proposal includes returning unspent judicial branch funds and deferring funding for several construction projects while still protecting essential funding for our critical programs and services.”
California’s judicial branch would get $5.2 billion under Newsom's proposal — compared to the $5.3 billion earmarked in January 2023. Under the 2024-25 budget, $3.2 billion would come from the general fund and $2 billion from other sources. Out of the total $5.2 billion, $3 billion would go toward trial court operations.
Wednesday marked the deadline for Newsom to reveal his budget, though dark clouds appeared on the fiscal horizon after Thanksgiving, when the Legislative Analyst’s Office forecast a $68 billion deficit. That deficit includes gaps in this fiscal year and the upcoming one.
A big reason for last year’s gap was delayed tax receipts, as many Californians had until November to submit their returns. Additionally, because California's tax scheme relies heavily on revenue collected from its wealthy residents, the state is especially susceptible to downturns in the stock market — as was seen in 2022.
Newsom pointed to the delayed tax receipts as affecting the financial forecast. However, he noted an additional $8 billion in taxes that has now been collected that — along with $10 billion in savings from Proposition 98 money, $2 billion in adjusted projections, $7.8 billion in reduced costs and $15.3 billion more in expected revenue — brings the new forecast deficit to $37.8 billion.
“This has been a hard year,” Newsom said, adding moments later: “I hope the story is one of resilience. This is a story of correction and normalcy.”
The $291.5 billion proposed budget is almost $20 million less than the $310.8 billion enacted for fiscal year 2023-24.
Newsom will issue his revised budget proposal in May, after tax revenue for 2023 for starts rolling in.
“Cautious and mindful — that’s the phrase that we need to keep at the forefront as we look at our state revenues and spending, legislation, and how we approach this fiscal year,” Senate President Pro Tempore Toni G. Atkins, a San Diego Democrat, said in a release. “I’m appreciative that the governor’s January budget proposal is guided by that thinking as well.”
California’s Republican minority has an idea how to close the budget gap. They want the state to stop spending $4 billion a year to give immigrants in the United States illegally access to Medi-Cal.
To that end — and before even seeing Newsom's budget proposal — Republican Assemblymember Bill Essayli of Corona introduced Assembly Bill 1783, which would prohibit all state funding for all immigrants here illegally.
“It is unconscionable to spend billions of taxpayer dollars to give universal health care to illegal immigrants when our own citizens cannot afford their own health care,” Essayli posted on X, formerly Twitter.
Assemblymember James Gallagher — the Yuba City Republican minority leader — called Newsom’s decision to expand Medi-Cal to the remaining demographic beginning Jan. 1 “insane” in an X post.
“No other state (even blue states) are doing this,” Gallagher said. “What will he cut? Education, public safety, wildfire prevention? Raise more taxes on struggling Californians?”
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