California Gov. Gavin Newsom answers a reporter’s question about his revised 2024-25 state budget during a news conference in Sacramento, Calif., Friday, May 10, 2024. The much-revised 2024-25 state budget that Gov. Gavin Newsom released last week contains hundreds of spending reductions and other actions to close what he says is a $44.9 billion deficit.
The budget he signed a month later was even larger, $307 billion, with immense new commitments, including cash payments to poor families and expansions of health care and early childhood education. “Due to the revenue spike from 2019-20 to 2021-22, the budget acts of 2021 and 2022 were based on forecasts that projected substantially greater revenues in the last two fiscal years than occurred,” the budget declares.In 2022, Newsom’s budget staff evidently looked at a spike in tax revenue as the state’s economy recovered from the pandemic, mostly due to massive amounts of federal relief funds, and concluded that the cornucopia would continue indefinitely.
That’s an enormous amount of money that Newsom thought the state would be receiving but didn’t – a phantom surplus that fueled unsustainable spending.
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