Source: Sacramento Bee
After back-to-back historic budget surpluses, California analysts on Wednesday projected that Gov. Gavin Newsom and state legislators could be forced to navigate a $25 billion budget deficit next year. That shortfall, according to a new report from the state’s independent Legislative Analyst’s Office, could be followed by continued annual budgetary gaps between $17 billion and $8 billion for the subsequent three years. If the forecast holds true through June, when the state’s next budget must be passed, Newsom and legislators may have to make some tough calls. Those include how far to dip into the state’s reserves, where to make potential spending cuts and what projects and programs to slow down. Luckily, the state has stashed away billions of dollars in reserves in recent years to help cope with it.
Assemblyman Phil Ting, D-San Francisco, chair of the Assembly Budget Committee, said the state is in a good position to maintain those critical investments. California has a long history weathering financial crises, and, in many ways, is more prepared now than ever before. Since 2015, the state has stashed away billions of dollars in a rainy-day account in the general fund and has been accumulating cash reserves in other areas to prepare for an economic downturn. “We ensured that we didn’t over-commit in terms of ongoing expenditure for exactly this reason,” Ting said Wednesday. “... And we are ready to ensure that we don’t have to make those cuts that we had to make, unfortunately, over 12 years ago during the last Great Recession.”