California faces a record $68 BILLION budget deficit thanks to soaring inflation tanking its property market and extreme weather, as residents flee the crime ridden, Dem-led state

California is facing a record $68 billion deficit due to a “severe” drop in revenue as residents continue to flee the crime-ridden state.

The Golden State is in an “unprecedented” budget crisis, according to a report from the independent Legislative Analyst's Office.

The budget deficit has increased exponentially in just a few months, to more than $54 billion, compared to $14.3 billion in June.

Worse-than-expected economic conditions and a slowdown in tax collections due to the extreme weather that hit the state earlier this year were responsible for the deficit.

The budget problem is the largest ever in state dollars, but not as a percentage of spending.

California faces largest budget deficit ever at $68 million, due to 'severe' revenue decline

The Legislative Analyst's Office said the budget crisis is due to difficult economic conditions, lower revenues and tax collection delays due to extreme weather events in the state earlier this year.

“Specifically, we estimate that 2022-2023 revenues will be $26 billion lower than budget law estimates,” the LAO said.

“This creates unique and difficult challenges, including limiting the Legislature's ability to address the budget problem.”

Lawmakers have been told to cut spending on schools and colleges or draw on the state's $24 billion in reserves.

However, there were warnings from the LAO that reserves are “unlikely to be sufficient to cover the state's multi-year deficits”, which the watchdog said averaged $30 billion a year.

It comes as hundreds of thousands of Californians have fled the state amid rising crime rates in many major cities.

Earlier this year it was announced that 500,000 people had left the country, equivalent to a population decline of one percent since the start of the pandemic.

The LAO report does not link the exodus to the deficit, but instead points to economic headwinds the state faced.

Rising inflation hampered real estate sales after the Federal Reserve took action to cool it, slowing the economy in a number of ways, including driving up the cost of mortgages.

Rising inflation and the Federal Reserve's attempts to curb it had a chilling effect on California's economy, with home sales falling and investment in startups and technology companies hit.

The shortage comes as crime rates in California cities are spiraling out of control, contributing to a mass exodus from the state

An analysis of official figures and other research shows that San Francisco could lose hundreds of millions of dollars due to an exodus of businesses and the inability to recover from the coronavirus crisis.

California's dependence on startups and technology companies also makes it particularly sensitive to financial conditions.

Meanwhile, hundreds of businesses are leaving their cities amid skyrocketing taxes and rampant crime.

Top retailers such as Nordstrom, H&M and Gap withdrew from San Francisco in recent months, while the owner of two major hotels, including the largest in San Francisco, announced they would also leave the city.

While in Oakland, restaurateurs revealed that rising crime had forced them to close their doors as diners were robbed and carjacked mid-meal.

Democrat Gavin Newsom, California's governor, “has maintained strict fiscal responsibility since taking office,” Erin Mellon, his communications director, told Fox News Digital.

She added that this includes building up the state's reserves to the maximum allowed under the constitution, and paying off debts.

“Federal tax collection delays forced California to adopt a budget based on forecasts rather than actual tax revenues. Now that we have a clearer picture of the state's finances, we now need to resolve what would have been last year's problem in this year's budget,” she said.

“In January, the Governor will introduce a balanced budget proposal that addresses our challenges, protects vital services and public safety, and focuses more attention on how the state's investments are implemented, while ensuring accountability and the judicious use of taxpayer dollars,” it added them to it. .