California Faces Higher-Than-Expected Deficit

California will have a steeper-than-expected budget deficit, according to recent estimates. The worsening of the state’s finances comes as California Gov. Gavin Newsom (D) attempted to frame his state as a leader for innovation and progress while building a national profile.

Overall, the Golden State faces a budget deficit of almost $74 billion after the additional $7 billion hole was announced.

The current budget deficit figure is nearly double the governor’s $38 billion estimate from earlier this year.

Last week the governor announced a plan to cut vacant state jobs as a means to close the yawning budget hole. He also announced an 8% cut to “state operations” and some of the state’s climate programs.

Among the factors that increased the deficit, Newsom partially blamed the effects of climate change.

Newsom said “this is just a reminder of the totality of challenges in the past on the basis of the volatility of our tax structure, the benefits of a progressive tax system during good years, the challenges during years when things are contracting.”

The deficit came after the state ran a $301 billion budget and $97 billion surplus in 2022.

Sacramento has long been criticized by Republicans for having the largest budget in the nation and some of the highest tax rates. The state has seen millions of residents leave over the last decade, often citing the high cost of living and taxation.

The state saw its population decline for the first time in its history in 2020 and has seen a significant outmigration since.

Republican vice chair of the state budget committee Roger Niello said that Newsom’s attempts to frame a smaller budget in the past was “just puzzling to me.”

“And to the extent that you underestimate your deficit, your solutions are going to shoot too low, missing the target. And the consequence of that is bigger deficits in subsequent years,” Niello added.

State Rep. Vince Fong (R-CA) said that the current budget situation “pretty much defines fiscal mismanagement.”