Newsom Takes First Baby Steps to Deal with $73 Billion Deficit

Gov. Gavin Newsom having completed his Clintonesque statewide listening tour to address California’s massive $73 billion deficit, was all smiles in joining Democrat Legislators in Sacramento to announce a $17 billion baby-step cut of budget deficit.  

What Newsom learned over his 5-day tour was 57% of Californians now believe the budget deficit is “extremely serious” and 32% believe it is “somewhat serious.” according to the latest UC Berkeley Institute of Governmental Studies poll.

Newsom continues to deny reality and continue to claim the budget deficit is just $38 billion, but he wants to reassure Californians that his conservative management has retained “budget reserves of close to $38 billion.” Newsom acknowledged that there is “still work to be done” to build the California of the future.”

Coupled with Legislators agreeing to release $12.2 billion from state reserves, the highest estimate of “savings” in the governor’s latest plan only reduces the $73 billion deficit by $29.5 billion, or 40%.

The real deficit issue in California is the state’s huge reliance on capital gains taxes paid by its highest earners make revenues highly variable and difficult to predict. 

Republican Leader James Gallagher called the budget deal “a swing and a miss from Democrats.” Republicans continue to criticize the lack of state budget transparency and specifically blame the real cash crisis on Democrats expanding Medi-Cal on Jan 4, 2024 to cover 700,000 illegal immigrants.

Newsom promises to deliver a detailed budget on April 11.