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Newsom Proposes Spending Cuts In Revised Budget

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Sacramento, CA — Gov. Gavin Newsom proposes a $288 billion May revised budget proposal while announcing a $27.6 billion deficit he hopes to tackle with spending cuts and eliminating 10,000 vacant state jobs.

“We have a math problem. Is this what I want to do? No. We can eliminate our expansion of healthcare. We can eliminate wages. We can do furloughs. We can do layoffs. We can do a lot of things,” stated Newsom at a press conference in Sacramento on Friday. “I don’t want to do those things, so these are the things that, in the absence of those other things, are difficult to do.”

Newsom is proposing over $30 billion in ongoing and one-time spending cuts, including to education and climate objectives, while promising to keep core social service programs untouched. It also includes one-time reductions of $2 billion for broadband expansion, $272 million for employment services for the state’s welfare program, and $500 million for water storage. However, not the controversial tunnel project in the Sacramento-San Joaquin Delta, which he supports.

Continuing cuts would save $81 million by closing housing units across 13 state prisons, removing $300 million in pandemic-related aid to public health departments, $510 million from a scholarship program for middle-class college students pursuing teaching credentials, and suspending the net operating loss tax deduction for businesses.

“These are programs, propositions that I’ve long advanced—many of them,” Newsom stressed. “But you’ve got to do it. We have to be responsible. We have to be accountable. We have to balance the budget.”

The $38 billion deficit predicted by Newsom in January is smaller due to $17.3 billion in cuts in agreed-upon actions lawmakers took to close the gap. State tax collections from personal income, corporations, and sales dropped over $6 billion below the previous estimate, affecting the deficit. One thing he will not support is new taxes.

“I don’t see there’s real evidence in need right now to increase general taxes in the state, put more burden on working folks, and our competitive posture, so no, I would’ve laid that out if I believed that I do not believe we need that this year or next year,” stated Newsom.

Republicans criticized Newsom for failing to responsibly manage the state’s spending.

“California’s budget situation is a mess,” said Republican Assemblyman Vince Fong, vice chair of the chamber’s budget committee and a congressional candidate. “I have said repeatedly that budget gimmicks, cost shifts, and more borrowing only creates more problems in the future.”

In January, Newsom advised that the state’s revenues for 2022–23 to 2024–25 have been coming in $42.9 billion lower than they estimated. The governor says his plan will address both this year’s deficit and a projected $28.4 billion deficit for the following year. The state legislature’s deadline to pass a balanced budget or lose its pay is June 15. The fiscal year starts on July 1st.