Opinion: Budget deficit requires more hard choices
Gov. Gavin Newsom on Friday released his $307 billion May budget revision and the news is grim. The state is facing a $31.5 billion shortfall — $9 billion higher than the governor had predicted when he unveiled his budget in January. Obviously, this means that Newsom and the Legislature will need to roll make some tough choices before the June budget deadline.
Yet California businesses already are struggling and many of them are scaling back operations. The top 1% of earners pay nearly 50% of state income taxes, which leads to the boom-and-bust cycles whereby officials boost spending programs and then pare them back during downturns. Fortunately, the administration is paring back some of its most aggressive spending plans, including a plan to spend $54 billion over the next five years for various climate-change proposals. Also encouraging: Newsom remains firmly opposed to tapping the state’s rainy day fund — money that’s needed if a recession takes hold.
On the bad side, Newsom also is committed to staying the course on ramped up spending for a host of social-spending programs. To continue on that path, the governor is proposing various budget gimmicks that, as the Mercury News reported, largely shift general-fund spending to other sources — such as tapping special funds such as the Greenhouse Gas Reduction Fund.
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