Facing a substantial state budget deficit projected to be worth upwards of $68 billion, Peninsula representatives shared confidence in the state’s ability to weather its uncertain financial storm.
An initial projected budget deficit has ballooned to $68 billion, according to an updated report released Thursday from the Legislative Analyst’s Office. Despite celebrating a $98 billion budget surplus in previous years, this past fiscal year’s deficit was $31.5 billion and covered by cuts, delays and borrowing. State officials, however, had braced for budget shortfalls by growing the state’s reserves to a historic $40 billion and avoiding expansion.
Now, local officials say the state’s economic future, and preserving spending on vital areas like education, climate resiliency and homelessness, will hinge on pragmatic spending in other areas.
“It’s what people want from their government right now, for us to figure out how we’re going to spend most effectively,” said state Sen. Josh Becker, D-Menlo Park, who sits on the Senate Budget and Fiscal Review Committee and chairs the Senate Budget Subcommittee on Resources, Environmental Protections and Energy. “Now we’re going to have to recalibrate and figure out which programs are the most important and most effective.”
Assemblymember Diane Papan, D-San Mateo, who started her first year in office immediately following the windfall surplus, said the state may be “white knuckling it” through 2025 as future collections are assessed.
She and Becker both noted the state is still early in its budgeting process, meaning a clearer financial picture is yet to be developed. The governor will release a proposed budget in January with negotiations taking place through June when a final budget for the 2024-25 fiscal year will need to be approved.
“I think we are going to have to sharpen our pencils and make sure the taxpayers get the best bang for their buck, ” Papan said. “We’re going to have to be flexible and surgical about things.”
Becker and Papan said they weren’t surprised by the deficit’s dollar amount with Becker noting many wealthy Californians have left the state, despite what some may argue, causing a major hit to California’s tax revenue.
As for what areas could be possibly cut to help balance the budget, Papan, Becker and Assemblymember Marc Berman, D-Palo Alto, did not provide insight into that matter. Instead, the officials reiterated their intent to protect funding for areas of concern for their constituents — public safety, education, climate resiliency, transportation, homelessness and housing, among other areas.
“The significantly lower than anticipated revenues means that we have some difficult decisions ahead. The good news is that over the last decade California has diligently prepared for leaner times, accumulating healthy reserves that will allow us to adopt a budget that is reflective of our values,” Berman said. “I am confident that we can pass a balanced budget that maintains the investments we’ve made in education funding levels and protects our most vulnerable communities during these challenging times.”
(2) comments
Hold onto your wallets, folks, I can already see the multitude of measures asking for more of your hard-earned money after squandering their budget surplus. Of note, Papan saying, ““I think we are going to have to sharpen our pencils and make sure the taxpayers get the best bang for their buck...” which I read as they haven’t done so in the past. For those who can afford to, the time to get out of CA is now or the near future. CA wants more of your money to waste and it’s best you leave before then.
I would begin with cutting HCD it was greatly expanded and has been a real pain point to local government. The money spent here has shown little given the amount of money spent. Many people remain unhoused or underhoused while the intellectuals have their philosophical arguments and produce reports instead of housing.
Welcome to the discussion.
Log In
Keep the discussion civilized. Absolutely NO personal attacks or insults directed toward writers, nor others who make comments.
Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't threaten. Threats of harming another person will not be tolerated.
Be truthful. Don't knowingly lie about anyone or anything.
Be proactive. Use the 'Report' link on each comment to let us know of abusive posts.
PLEASE TURN OFF YOUR CAPS LOCK.
Anyone violating these rules will be issued a warning. After the warning, comment privileges can be revoked.