SACRAMENTO, California — California lawmakers aren’t sure how big their budget deficit is, but on Thursday they decided it’s big enough to go ahead and cut spending by about $17 billion.
The vote represents a preemptive strike by Democratic Gov. Gavin Newsom, who is trying to get ahead of a stubborn deficit that is widening every month and will likely extend into next year and beyond — when the second-term governor could be eyeing a campaign can keep. for the White House.
During his first term, Newsom enjoyed a series of historic surpluses and oversaw a massive expansion of government services. But that growth came to an end last year, when the state ran a deficit of nearly $32 billion.
Things got worse in January when Newsom announced another $38 billion deficit. The nonpartisan Legislative Analyst’s Office said the deficit was actually $58 billion because they believed Newsom should have made some cuts to state education spending. Subsequently, in February, the LAO revised its budget deficit budget to $73 billion after state revenues fell below forecasts.
Since then, Newsom and his Democratic allies in the state Legislature have done everything they can to shrink that deficit. Last month, they imposed a tax on the companies that manage the state’s Medicaid program to raise an additional $1.5 billion.
There were no notable cuts to the reductions lawmakers approved Thursday. Despite California’s recent budget woes, Democrats in charge have refused to raise income taxes or impose steep cuts to the most expensive programs, including health care and public education.
Instead, most savings come from canceling or deferring expenses that were approved in previous years but not yet spent. It also uses a number of accounting tricks to make the deficit appear smaller, including shifting paychecks for state workers by one day from June 30 to July 1 so that the state will receive $1.6 billion in salaries for the next fiscal year can count.
In doing so, Democrats are assuming that California’s budget problems are only temporary. The state is known for its wild swings in revenues, especially given its overreliance on wealthy taxpayers who make most of their money from the stock market.
“We’re trying to make thoughtful choices here,” said Jesse Gabriel, a Democrat and chairman of the Assembly Budget Committee. program that serves our most vulnerable people and to realize later that you didn’t have to make that cut.
Republicans have long complained about Democrats’ handling of budget deficits, arguing that lawmakers need to make structural changes to state spending to better match the reality of state revenues. On Thursday, Republican Assemblymember Vince Fong said this crisis “just pushes this crisis into the future.”
Yet Democrats have been saying for months that they will likely be forced to make “tough decisions” on the budget later this year. The LAO has forecast a $30 billion deficit for next year, which would be the third consecutive year of a multi-billion dollar deficit.
“We are no longer going to solve this problem by just cutting one-time spending,” said Democratic Assemblywoman Cottie Petrie-Norris.