Please ensure Javascript is enabled for purposes of website accessibility
Democrats Pushed to Keep Spending as California's Budget Deficit Grows
By admin
Published 12 months ago on
May 1, 2023

Share

Getting your Trinity Audio player ready...

California’s tax revenues continue to fall short of expectations, its deficit continues to grow and with the June 15 deadline for enacting a new budget, there’s a three-way split among the Capitol’s top Democrats.

In January, Gov. Gavin Newsom declared that the state had a $22.5 billion deficit, just months after bragging about a nearly $100 billion surplus. However, revenues – particularly personal income taxes – have grown even softer since then. When Newsom unveils a revised 2023-24 budget later this month, he’s expected to declare a wider income/outgo gap.

Dan Walters with a serious expression

Dan Walters

CalMatters

Opinion

The problem is exacerbated by two factors: the spending expectations that were raised by last year’s phantom surplus and the lack of revenue clarity because the deadline for filing income tax returns, originally April 18, was extended by six months due to winter storms.

The current budget, passed when surplus projections were soaring, contains dozens of appropriations to create new projects or services, or to expand existing ones, particularly in social welfare and health care fields. The cornucopia of cash pleased advocates for those services, but they were disappointed in January when Newsom proposed to claw back many allocations to close the newly discovered deficit.

Since then, budget stakeholders have been pressing the Legislature not only to resist Newsom’s cuts but increase spending even more. Some of the heaviest pressure is coming from hospitals and mass transit systems, both of which say they face financial collapse if they don’t get billions of dollars from the state.

Last week, state Senate leaders issued their budget plan, entitled “Protect Our Progress,” that, they said, would close the state’s deficit while maintaining last year’s new spending – principally by borrowing money from the state’s stash of uncommitted cash and raising corporate income taxes by more than $7 billion.

“We are, in effect, getting our biggest corporations closer to pay their fair share,” said Sen. Nancy Skinner, an East Bay Democrat who chairs the Senate budget committee.

Spending advocates immediately issued statements of praise for the Senate’s budget framework.

“Senate Democrats’ plan acknowledges that California’s projected budget shortfall will never be solved by putting more burden on those who are struggling, but by asking California corporations to chip in more of their vast wealth – created by working people – to create a stronger economy and deliver on our state’s shared commitment to equity,” Tia Orr of the Service Employees International Union said in one of many supportive statements.

Proposed Tax Hike Slammed

However, business groups denounced the proposed corporate tax increase. “Now is not the time to test California’s ability to withstand the impact of an economic downturn or a recession by placing our economic success at risk,” said Jennifer Barrera, president of the California Chamber of Commerce.

More importantly, Newsom immediately rejected the tax increase. “Governor Newsom cannot support the new tax increases and massive ongoing spending proposed by the Senate today,” spokesperson Anthony York said in a statement. “It would be irresponsible to jeopardize the progress we’ve all made together over the last decade to protect the most vulnerable while putting our state on sound fiscal footing.”

Significantly, the Senate’s plan didn’t have an endorsement from Assembly leaders. In January, Assembly Speaker Anthony Rendon, a Democrat from Lakewood, said he would prefer to tap the state’s “rainy day” reserves if the deficit widened.

“That’s what it’s there for,” Rendon told POLITICO.

So what’s it going to be? Deeper spending cuts? New taxes? Dipping into the reserves?

Whatever they do, Newsom and legislators will be shooting in the dark. They missed badly last year when the supposed surplus turned to dust, and the state’s fiscal picture is even cloudier this year.

About the Author

Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He began his professional career in 1960, at age 16, at the Humboldt Times. For more columns by Walters, go to calmatters.org/commentary.

Make Your Voice Heard

GV Wire encourages vigorous debate from people and organizations on local, state, and national issues. Submit your op-ed to rreed@gvwire.com for consideration. 

 

RELATED TOPICS:

DON'T MISS

$11M State Grant Will Help Fresno’s Emergency Shelter Beds, Mental Health Services

DON'T MISS

City Council Finally Gives New NW Fresno Costco a Green Light

DON'T MISS

Prop 47 Reformers Send Nearly a Million Signatures to Sacramento

DON'T MISS

BTC Scammy Scams, Impact of Blockchain on Global Markets: Crypto The WonderDog Show

DON'T MISS

US Vetoes Full United Nations Membership for Palestine

DON'T MISS

Barbara Corcoran: 1% Interest Rate Drop Will Send Housing Prices ‘Through the Roof’

DON'T MISS

Cavinder Twins Are Returning to Miami for Their Last Season

DON'T MISS

California Sets Long-Awaited Drinking Water Limit for ‘Erin Brockovich’ Contaminant

DON'T MISS

Savannah Bananas Dominate Social Media, Sell Out Stadiums Nationwide Including Fresno

DON'T MISS

Biden is Off on Details of His Uncle’s WWII Death as He Calls Trump Unfit to Lead the Military

UP NEXT

Local Leaders Must Put Their Shoulders Into Making Fresno ‘Education City USA’

UP NEXT

Carbon Capture Isn’t Nearly as ‘Green’ as Fossil Fuel Promoters Make It Sound

UP NEXT

CA’s High Construction Costs Limit Housing. A Supreme Court Decision Might Help

UP NEXT

A Fresno Edition of Monopoly? That’s Capitalism at Work, Baby!

UP NEXT

Biden’s Embrace of Trump’s Tariffs Could Spell Trouble for His Reelection: Fareed Zakaria

UP NEXT

‘Digital Democracy’ Project Penetrates California’s Opaque Political Processes

UP NEXT

While California Politicians Skirmish Over Housing, the Shortage Keeps Growing

UP NEXT

As PG&E Bills Skyrocket, Will California Lawmakers Hold Anyone Accountable?

UP NEXT

Trustees Owe a Nationwide Superintendent Search to Fresno’s Children

UP NEXT

Taxes Are on the November Ballot in Monumental CA Showdown

BTC Scammy Scams, Impact of Blockchain on Global Markets: Crypto The WonderDog Show

13 hours ago

US Vetoes Full United Nations Membership for Palestine

13 hours ago

Barbara Corcoran: 1% Interest Rate Drop Will Send Housing Prices ‘Through the Roof’

14 hours ago

Cavinder Twins Are Returning to Miami for Their Last Season

15 hours ago

California Sets Long-Awaited Drinking Water Limit for ‘Erin Brockovich’ Contaminant

15 hours ago

Savannah Bananas Dominate Social Media, Sell Out Stadiums Nationwide Including Fresno

17 hours ago

Biden is Off on Details of His Uncle’s WWII Death as He Calls Trump Unfit to Lead the Military

18 hours ago

Big Names in Rap, Christian Music, and Comedy Headline Must-See Weekend Entertainment

18 hours ago

US and UK Issue New Sanctions on Iran in Response to Tehran’s Weekend Attack on Israel

18 hours ago

Will State AG Rob Bonta Jump Into 2026 Race for CA Governor?

18 hours ago

$11M State Grant Will Help Fresno’s Emergency Shelter Beds, Mental Health Services

Fresno got a $10.9 million piece of California grant money to shelter people living in encampments. The money from California’s $192 m...

11 hours ago

11 hours ago

$11M State Grant Will Help Fresno’s Emergency Shelter Beds, Mental Health Services

11 hours ago

City Council Finally Gives New NW Fresno Costco a Green Light

12 hours ago

Prop 47 Reformers Send Nearly a Million Signatures to Sacramento

Crypto the WonderDog Show
13 hours ago

BTC Scammy Scams, Impact of Blockchain on Global Markets: Crypto The WonderDog Show

13 hours ago

US Vetoes Full United Nations Membership for Palestine

14 hours ago

Barbara Corcoran: 1% Interest Rate Drop Will Send Housing Prices ‘Through the Roof’

15 hours ago

Cavinder Twins Are Returning to Miami for Their Last Season

15 hours ago

California Sets Long-Awaited Drinking Water Limit for ‘Erin Brockovich’ Contaminant

MENU

CONNECT WITH US

Search

Send this to a friend