Governor Gavin Newsom announced that the estimated budget deficit for the state of California has been revised from $68 billion to $37.9 billion.
However, Newsom assured that core programs will not be subjected to drastic cuts.
The proposed budget for 2024-2025 totals $291.5 billion, with a general fund of $208.7 billion covering various program expenditures such as education, health and human services, criminal justice, and transportation.
To address the deficit, the governor’s plan includes a combination of strategies:
- Implementing reduced spending of $8.5 billion, which includes $2.9 billion from climate programs, $1.2 billion from housing programs, and $500 million for school facilities. Additionally, cost-saving measures such as freezing new contracts, cell phones, technology equipment, and nonessential fleet purchases and travel will be implemented.
- Generating $5.7 billion from new revenues and borrowing, including a managed care organization tax of $3.8 billion to support Medi-Cal.
- Utilizing $13.1 billion from reserve funds.
- Implementing funding delays of $5.1 billion, including $1 billion for transit and inter-city rail projects and $550 million for kindergarten facilities grants.
- Shifting expenditures to special funds amounting to $3.4 billion, of which $1.8 billion will be allocated to reduce greenhouse gas emissions linked to climate warming.
- Deferring spending of $2.1 billion, including $499 million for the University of California and California State University systems.
- Implementing reduced spending of $8.5 billion, which includes $2.9 billion from climate programs, $1.2 billion from housing programs, and $500 million for school facilities. Additionally, cost-saving measures such as freezing new contracts, cell phones, technology equipment, and nonessential fleet purchases and travel will be implemented.
Last year, California faced an unprecedented transition from a $97.5 billion budget surplus to a $22.5 billion deficit, which increased to $31.5 billion by May. The governor’s revised proposal for the budget was subsequently approved by lawmakers in June.