OAN Roy Francis
8:04 AM – Saturday, May 13, 2023
California Governor Gavin Newsom said that the budget deficit in his state has reached nearly $32 billion on Friday, which is $10 billion higher than he had said earlier in 2023.
“We have a $31.5 billion challenge, which is well within the margin of expectation and well within our capacity to address,” Newsom (D-Calif.) said at a press conference on Friday.
The Governor announced a new plan that he hopes would cover the shortfall that his state is experiencing.
Newsom said his new proposed plan would cut spending by about $10.6 billion without any major tax increase for individuals in the state, or any spending cuts in the state’s important programs, which include public education, health care, and homelessness.
The plan would cover the rest of the deficit through borrowing and delaying certain spending, as well as shifting certain expenses to different sources.
“This was not an easy budget,” Newsom said. “But I hope you see we will try to do our best to hold the line and take care of the most vulnerable and most needy, but still maintain prudence.”
Despite the Governor claiming the new proposal would not cut spending towards homelessness programs, it would however, cut around $700 million in funding which goes to nonprofits that are working on affordable houses to address the state’s housing crisis.
“Its disappointing that the governor is not taking bigger measures to fight California’s worsening housing crisis,” Michelle Pariset, Director of legislative affairs for Public Advocates, a nonprofit law firm and advocacy group, said. “Until we address the housing issues in our communities at the scale of the problem, we will see more and more of our neighbors struggling, displaced and pushed into homelessness.”
The new plan would balance the budget of the state for 2023, however, it would also place the state in a deficit in the future. Under Newsom’s new plan, the deficit would be at $5 billion in 2024, and it would rise to $14 billion by 2027.
The Governor has faced criticism for his overspending, and being fiscally irresponsible, without planning ahead. The state’s progressive tax code is also under fire due to It being dependent on the wealthy residents of the state. The California tax code receives nearly half of the all revenues from the top one percent of residents in the state.
Republican Assembly member Vince Fong, who also serves as Vice Chair of the Assembly Budget Committee criticized the governor saying that he continues overspending with no regards for the future.
“The fact that the Governor continues to overspend creating structural deficits in future years is fiscally irresponsible,” he said.
Newsom defended the tax code, saying that it is not the reason that the state is in a deficit.
“A progressive tax system allows us to stack away billions and billions of dollars for exactly this moment,” Newsom said.
The Governor also faced backlash for his proposed cuts to the state’s drought programs.
“His cuts to drought programs are dangerous, his ‘fiscal gimmicks’ are shortsighted and his words about good government and efficiency are yet another empty promise. Californians deserve better,” Republican Assembly Leader James Gallagher said.
The new budget proposal is now awaiting approval from the Democrat-controlled state legislature.
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