If California’s economy is booming, as Newsom boasts, one might wonder why the state’s unemployment rate is the third highest in the nation, with more than a million jobless workers, and why its poverty rate is the nation’s highest.
One might also wonder why, if California’s economy is so healthy, the state budget is experiencing chronic multi-billion-dollar deficits.
Newsom must tell the Legislature this month how he would alter the 2025-26 budget he proposed in January, touching off the annual whirlwind of negotiations to produce a more-or-less final version for adoption by June 15.
The January budget proposed at least $11 billion in short-term fixes, including off-the-books borrowing, dips into the state’s budget reserves and accounting gimmicks to close the gap between projected income and the spending dictated by current law.
Tax revenues are running a bit ahead of expectations so far this year, but not nearly enough to close the deficit, which has widened due to spending on Medi-Cal, California’s health care system for the poor that’s far exceeding the level of the 2024-25 budget enacted last June.
Overall, Medi-Cal expenditures are over $6 billion higher than expectations, with a major chunk caused by higher-than-expected enrollment of undocumented immigrants.
Therefore the May revise, as it’s dubbed, is likely to contain even more expedient fixes that may postpone the day of fiscal reckoning until Newsom’s governorship ends two years hence but will continue to plague his successor and the Legislature.
The Medi-Cal situation exemplifies the underlying reason why California’s budget is unhealthy while the state’s economy continues to grow, albeit without producing many new jobs.
The pertinent data is to be found in a recent publication by the Legislature’s budget analyst, Gabe Petek, called “CalFacts 2024.”
One might also wonder why, if California’s economy is so healthy, the state budget is experiencing chronic multi-billion-dollar deficits.
Newsom must tell the Legislature this month how he would alter the 2025-26 budget he proposed in January, touching off the annual whirlwind of negotiations to produce a more-or-less final version for adoption by June 15.
The January budget proposed at least $11 billion in short-term fixes, including off-the-books borrowing, dips into the state’s budget reserves and accounting gimmicks to close the gap between projected income and the spending dictated by current law.
Tax revenues are running a bit ahead of expectations so far this year, but not nearly enough to close the deficit, which has widened due to spending on Medi-Cal, California’s health care system for the poor that’s far exceeding the level of the 2024-25 budget enacted last June.
Overall, Medi-Cal expenditures are over $6 billion higher than expectations, with a major chunk caused by higher-than-expected enrollment of undocumented immigrants.
Therefore the May revise, as it’s dubbed, is likely to contain even more expedient fixes that may postpone the day of fiscal reckoning until Newsom’s governorship ends two years hence but will continue to plague his successor and the Legislature.
The Medi-Cal situation exemplifies the underlying reason why California’s budget is unhealthy while the state’s economy continues to grow, albeit without producing many new jobs.
The pertinent data is to be found in a recent publication by the Legislature’s budget analyst, Gabe Petek, called “CalFacts 2024.”
