California legislators discover strategy to reduce upcoming budget shortfall by $17 billion

Gov. Gavin Newsom (D-CA) and Democratic lawmakers in California reached an agreement Thursday to slash the state’s massive budget deficit by $17.3 billion through an array of cuts, delays, and deferrals.

Though the state’s exact budget deficit is uncertain, the Legislative Analyst Office reported it was $73 billion earlier this year, while Newsom says it’s $38 billion. In any case, lawmakers have found a way to begin filling the shortfall after state Senate leaders proposed a “Shrink the Shortfall” plan last month, which included Newsom’s budget suggestions from January.

The agreement proposes $3.6 billion in cuts to areas of welfare, climate programs, and some schools. It also maps out $5.2 billion in delays and deferrals, including public transportation.

Another $3.4 billion in expenses will be covered by state funds instead of the general fund and $5.2 billion in revenue and borrowing, the Sacramento Bee reported.

“We are able to meet this challenge thanks to our responsible fiscal stewardship over the past years, including record budget reserves of close to $38 billion. There is still work to do as we finalize the budget and I look forward to the work ahead together to continue building the California of the future,” Newsom said in a statement.

However, Assembly Republicans knocked the early action budget deal, calling it “gimmicky.”

“This deal is a swing and a miss from Democrats,” Republican Assemblyman James Gallagher said in a statement. “California’s budget has major league problems and Newsom is proposing JV solutions. With a $73 billion deficit, this gimmicky agreement is not the homerun Gavin thinks it is. The emotional, real truth of this budget is visceral to the Californians who will pay the price for Newsom’s delusions and exaggerations.”

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The proposed budget cuts come after Newsom and Democratic lawmakers approved a managed care organization tax on health insurers, which would allow them to gain access to $1.5 billion from the federal government. Republican lawmakers questioned the Democrats’ $1.5 billion ask to boost funding for Medi-Cal and asked them to stop funding Medi-Cal for the 1.4 billion illegal immigrants who are now eligible under the program.

Newsom is expected to present a revised budget sometime in May, and lawmakers will pass the budget by June 15, according to the Associated Press.