California’s budget is now manageable, and the multibillion-dollar deficit can be resolved, according to the Legislative Analyst’s Office.
California’s Fiscal Year Budget Resolves Projected Deficit, Legislative Analyst’s Office Finds
In the 2023–24 fiscal year spending plan review (pdf) released on Aug. 16, the Legislative Analyst’s Office (LAO) revealed that the state’s budget will successfully address the projected deficit. Ann Hollingshead, principal fiscal and policy analyst for the LAO, stated that “no further solutions are required to balance the 2023-24 budget at this time.”
This latest analysis by the LAO contradicts their previous estimates in May, which suggested that California could not afford the current fiscal year budget. At that time, analysts calculated a $31 billion deficit. However, after further review, the LAO discovered an error in their initial estimate, resulting in a slightly lower budget problem than previously stated.
Related Stories
The state’s current deficit follows two years of significant surpluses. According to the report, deficits must be addressed by reducing spending or increasing revenue, as mandated by the State Constitution. The budget also utilizes reserves to cover expenditures and shifts costs between funds or fiscal years. Approximately $10.3 billion in costs have been shifted for this year’s budget.
The budget deficit for this year is primarily attributed to lower-than-expected revenues, including a decline in personal income tax and investment in California businesses. Additionally, new discretionary spending accounts for $4.5 billion of the deficit.
To address the deficit, the Legislature has made cuts of $5.6 billion in previously approved policies and programs. Notable reductions include a $750 million payment on the state’s unemployment insurance loan, which has burdened businesses with nearly $19 billion in debt payable through increased taxes per employee. Other cuts include $549 million for low-income families’ utility bills and $280 million for water recycling projects.
Furthermore, projected costs of $6.7 billion for various programs have been postponed. These include funding for zero-emission school buses, higher education housing, and broadband in rural communities.
On the revenue side, the budget includes the renewal and increase of the managed care organization tax, which is expected to generate over $19 billion by 2026.
While the budget deficit for the 2023 fiscal year can be resolved, the report highlights the need for lawmakers to reconsider $12.5 billion in temporary spending for this year, as well as $9.4 billion in 2024–25 and $4.1 billion in 2025–26. These temporary expenditures were authorized during times of surpluses and should be re-evaluated given the current economic climate.
“To the extent budget problems persist—as we anticipate is likely—the Legislature would have to revisit these and other spending augmentations in the future,” the report advises.
" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
*As an Amazon Associate I earn from qualifying purchases
Now loading...