Newsom’s new budget will worsen California’s deficit, while the state considers a large reparations package.

California Faces $31.5 Billion Deficit, Despite Reparations Plan

Governor Gavin Newsom Announces Worsening Budget Shortfall

California Governor Gavin Newsom announced on Friday that the state is facing a greater-than-anticipated budget deficit. In a press conference, Newsom revealed that his budget proposal for the upcoming year had ballooned from $297 billion in January to $306.5 billion, resulting in a potential deficit of roughly $31.5 billion dollars. This is a $9 billion increase from the $22.5 billion deficit in the budget he proposed in January. The worsening budget shortfall comes even as the state proposes a gigantic reparations plan that dwarfs the state budget.

“This was not an easy budget, but I hope you see we tried to do our best to hold the line and take care of the most vulnerable, most needy, but still maintain prudence,” Newsom said during the press conference. “I have been very mindful of how concerned people have been about the impact on these fundamental core issues: education, homeless housing, healthcare, mental health, climate policy, public safety, broadly, and of course the issues of economic development, jobs, workforce development.”

Newsom Plans Cuts and Offsets to Mitigate Borrowing

Newsom has planned a series of cuts and offset spending in an effort to mitigate the state’s need to borrow. The revised budget pares back an additional $1.1 billion in spending, on top of the $5.7 billion in “reductions” to key pillars of his agenda. However, much of the “reductions” are rollbacks of planned increases, not actually cutting spending below current levels. Furthermore, part of the additional $1.1 billion paring comes from moving unused monies into the state’s general fund.

In addition to rolling back spending increases, the budget proposal plans to add $7.4 billion in deferred spending for child care, transportation, and education. It also delays some $695 million in spending until later years. The plan also includes $3.9 billion in “trigger reductions,” temporary cuts he can re-instate if California’s fiscal state improves later.

The budget closes the remaining gaps with $4.9 billion in borrowing and new revenue, $7.5 billion from shifting funds around, and $450 million from the state’s safety net reserves, leaving $450 million remaining. Newsom plans to add to the reserves to hedge against a future recession, which is part of why the budget increased despite an increasing deficit.

Reparations Plan Could Double California’s Annual Budget

Even as Newsom plans to use financial gimmicks and moving money around in order to make his state’s ends meet, California’s Reparations Task Force proposed its plan to repay residents who were descended from slaves or victims of discrimination. The nine-member panel advanced the plan recommendations in Oakland, California. The draft includes calculated dollar figures based on categories ranging from mass incarceration to housing discrimination, and other alleged injustices.

Based on a New York Times analysis, a black person living in California for 71 years — the average life expectancy of Black residents in California in 2021 — could receive up to $1.2 million. Some economists projected to The Associated Press that California could owe more than $800 billion in reparations, which more than doubles the state’s annual budget.

Newsom himself lauded the principle of the committee, but did not endorse the proposed payouts.

Brandon Drey contributed to this report.

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