When Governor Gavin Newsom two months ago offered a $ 322 billion state budget For exercise 2025-26, he projected what was represented as a “modest surplus” of $ 363 million.
Anyone who knows anything about the budgeting of the state knows that it is impossible to determine with precision such a small figure, barely a tenth of 1% of the overall budget. It could have been a number of people from the air so that the budget appears balanced.
In fact, the budget figures have revealed that the expected administration’s income would drop several billion dollars to cover its expected expenses. The deficit would be covered by a raft of budget and off -budget, plunged into state emergency reserves and Accounting gimmicksAs to repel the wage bill of June 2026 a month later during the year 2026-27, thus reducing the expenses from 2025 to 26 billion dollars.
Overall, the surplus of $ 363 million cited in January is only a smaller version of the surplus of $ 97.5 billion that Newsom boasted of having in 2022, but it turned out to be a mirage due to extremely inaccurate multi -year income projections. In the end, the administration acknowledged that the State would be receive 165 billion dollars less over four years that it had supposed.
As the administration now concedes, the harsh reality is that the state faces gaps of several billion dollars indefinitely – At least $ 10 billion per year – Between income and Outgo, largely thanks to the Rafale of Newsom spending and the legislature adopted on the excess presumption of $ 97.5 billion.
One of these major expenses increases – Expansion of medical coverage For all 1.6 million undocumented residents – is already felt.
Expansion costs $ 2.8 billion more than expected. When combined with other cost factors, Medi-Cal has a deficit of $ 3.4 billion, which will be temporarily covered with a loan Other state funds.
Meanwhile, Newsom and legislators have also approved the expenses $ 2.5 billion on costs related to Los Angeles Forest Fire – The money they hope will be reimbursed by President Donald Trump, without guarantee that this will be the case.
Although income has been operating so far on 2024-25, this wave of figures suggests that when Newsom revises its 2025-2026 budget in May, that “a modest surplus” will turn into a substantial additional deficit-in addition to the deficit that it and the legislature have drawn with $ 11 billion in various “solutions”.
Feeling an opening, the Republicans hammer Newsom for the increase in costs of supply of medical coverage to undocumented immigrants.
“Democrats and the governor choose priorities, and they favor people who have entered our country illegally on people who have legally immigrants here, citizen people”, the republican leader of the Senate Brian Jones said.
Aside from the political zincs, this multi -year saga indicates that Newsom and its budgetary staff are not very competent when it comes to estimating income and expenses. The fact that the surplus of 97.5 billion ghost dollars comes from the hypothesis that an increase in income while the state economy is emerged from the COVVI-19 pandemic would be a permanent increase of around 40 billion dollars per year compared to the pre-countryic levels.
Find out more: California budget whiplas: a record surplus to a massive deficit in one year
Why they made such an erroneous hypothesis remains a mystery. The administration blames the volatility of the state income system – in particular its unbalanced dependence On very high income taxpayers – for error.
This longtime factor should have done Newsom, and Al, more cautious about the realization of long -term income projections, but they have rather launched caution in the wind in its precipitation to boast that “no other state of American history has never experienced a excess as important as it”.
It is a boastful which will continue to torment the budgetary planning of California long after Newsom has given up the governor to someone else.