Friday 18 November 2022 02:47 AM Go woke, go broke! California warns state budget will plunge $25 billion into ... trends now
After two years of budget surplus, the state of California will likely face a $25 billion budget deficit next year driven primarily by high inflation and a weakened economy.
The 2023-2024 fiscal year deficit projection comes despite a projection in May that forecast a surplus of just under $100 billion for the current fiscal year.
The predicted shortfall comes from the nonpartisan Legislative Analyst's Office. Their report indicates that California may be heading for its weakest yearly performance since the Great Recession.
The deficit is primarily being driven by a significant decline in income tax revenue and stock market drop-offs, though the analysts noted that the ongoing layoffs in the tech sector are also contributing to the deficit.
Gabriel Petek of the Legislative Analyst's Office says the predicted budget deficit is a 'notable budget problem,' but not yet a 'crisis'
Petek's office has suggested pausing funding for certain climate programs until the state's revenue streams, and therefore budget, have stabilized
The significant drop in income tax revenue signals that those in the state's highest tax brackets are not making as much money as they once were.
The Democratic-controlled state has one of the highest tax rates in the country and has, for the last two years, collected more than anticipated in taxes. During the last year, the state collected $55 billion more than it was expecting to, leading in part to the $100 billion surplus.
Legislative analyst Gabriel Petek told reporters that, in his opinion, it is not yet time to panic, despite the forthcoming deficit.
'It's not insignificant, but it's also manageable,' he said. 'We don't think of this as a budget
