California Faces Record $68 Billion Budget Shortfall
by Emmitt Barry, Worthy News Correspondent
(Worthy News) – California is grappling with its largest-ever budget deficit of $68 billion in the upcoming fiscal year, attributed to a significant decline in revenues, the Legislative Analyst’s Office announced on Thursday.
According to the nonpartisan Legislative Analyst’s Office (LAO), projected state revenues for the 2024-2025 fiscal year are expected to fall $58 billion short of the $310 billion state budget passed in June by the Democratic-controlled state legislature and signed by Democrat Governor Gavin Newsom.
“The state remains in a good cash position, and that really wasn’t the case back at the start of the Great Recession. We don’t face the same kind of liquidity challenges that we had at that time, and so I would stop short of describing it as a crisis,” LAO Analyst Gabriel Petek told reporters.
Newsom is now confronted with the possibility of declaring a budget emergency to access the state’s rainy-day fund and address the deficit.
If Newsom would declare a fiscal emergency, as reported by the LAO, it would grant the Legislature access to $24 billion in general-purpose reserves, one of the various reserve accounts maintained by the state.
The governor has refrained from such actions since June 2020, during the height of the COVID-19 pandemic, when California was grappling with a $54.3 billion budget shortfall.
“Both the Governor and the Legislature face a significant challenge with the 2024 budget,” the department’s spokesman, H.D. Palmer, said in a statement following the release of the LAO projections. “The Administration will present its plan to close the budget gap when the Governor sends his proposal to the Legislature next month.”
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