With potential recession looming, California estimates $25-billion deficit next year
SACRAMENTO —
Driven by high inflation and the threat of a recession, the state faces a potential $25-billion budget deficit next year that could at minimum curb some recent spending increases for essential safety-net programs that help Californians most in need.
The state’s Legislative Analyst’s Office, which advises lawmakers on California’s fiscal outlook, delivered the sober news Wednesday. It comes months after an estimated historic budget surplus provided Gov. Gavin Newsom and the Democratic-led Legislature with an abundance of riches to expand government assistance.
The previous projection — a $97-billion surplus — led to the expansion of Medi-Cal eligibility to all immigrants in 2024, paid family leave, free preschool for 4-year-olds and a boost in the earned income tax credit.
Newsom and lawmakers in June also approved a $17-billion relief package to help families, seniors, low-income Californians and small businesses — including $9.5 billion in stimulus payments to Californians struggling with high gasoline prices and increased inflation.
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