{"id":1743332,"date":"2022-11-18T06:03:16","date_gmt":"2022-11-18T11:03:16","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1743332"},"modified":"2022-11-18T07:03:18","modified_gmt":"2022-11-18T12:03:18","slug":"california-faces-25-billion-budget-deficit-could-be-worse-if-recession-hits","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-faces-25-billion-budget-deficit-could-be-worse-if-recession-hits\/","title":{"rendered":"California Faces $25 Billion Budget Deficit, Could Be Worse If Recession Hits"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcalifornia-faces-25-billion-budget-deficit-could-be-worse-if-recession-hits%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1743332&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p><a href=\"https:\/\/www.theepochtimes.com\/t-california\">California<\/a> could face a $25 billion <a href=\"https:\/\/www.theepochtimes.com\/t-budget\">budget<\/a> deficit in 2023\u201324, despite raking in a record-setting $98 billion budget surplus this year, according to an analysis that comes days after midterms election, in a state where the Democratic party enjoys a supermajority.<\/p>\n<p>\u201cThe budget problem is mainly attributable to lower revenue estimates, which are lower than budget act projections from 2021\u201322 through 2023\u201324 by $41 billion. Revenue losses are offset by lower spending in certain areas,\u201d said the nonpartisan Legislative Analyst\u2019s Office (LAO) of California in its annual fiscal outlook (<a href=\"https:\/\/lao.ca.gov\/reports\/2022\/4646\/CA-Fiscal-Outlook-111622.pdf\">pdf<\/a>). The estimated numbers look dismal especially when the analysis has not factored in the inflation or an economic <a href=\"https:\/\/www.theepochtimes.com\/t-recession\">recession<\/a>.<\/p>\n<p>\u201cWhile our lower revenue estimates incorporate the risk of a recession, they do not reflect a recession scenario.\u201d The report forecasts that deficits would decline from $17 billion to $8 billion over the subsequent three years.<\/p>\n<p>The revenues and transfers for 2023\u201324 come around $208 billion, nearly the same as the last fiscal. The expenditures are about $226 billion, a decrease of nearly $3.6 billion. However, during 2022\u201323, there was a $19 billion fund balance from the prior term, which resulted in a total negative balance of $6.7 billion.<\/p>\n<p>For the upcoming fiscal, the prior year fund balance will be negative $2 billion. Hence, the total deficit will run up to $24.926 billion.<\/p>\n<p>If a recession hits the economy, which many analysts claim is already happening, the state\u2019s revenue could be \u201c$30 billion to $50 billion below\u201d the report\u2019s outlook, which would translate to a worsened situation for California.<\/p>\n<p>\u201cAs such, we suggest the Legislature begin planning the 2023\u201124 budget without using general purpose reserves,\u201d said the report.<\/p>\n<h2>California Economy<\/h2>\n<p>A booming stock market and thriving tech sector played its part in making California one of the richest states in the country, and helped Governor Gavin Newson present a record $97.5 billion budget surplus this year. California relies heavily on the capital gains of its wealthiest citizens\u20141 percent of whom account for nearly half of the state\u2019s income taxes.<\/p>\n<p>However, recent downturns spurred by rising interest rates and mortgage rates had led to dampening demand across the economy, and has negatively affected state revenues.<\/p>\n<p>In this scenario, Newson along with other state legislators will need to decide which programs to slow down and where to make the critical cuts.<\/p>\n<p>The LAO report pointed to a $13 billion estimated reduction in general fund spending on schools and community colleges for 2021\u201322 through 2023\u201324 to offset budgetary issues.<\/p>\n<p>However, according to legislative analyst Gabriel Petek, California has about $23 billion in \u201cgeneral purpose reserves,\u201d which could mean school funding will not need to be cut. \u201cWe don\u2019t think of this as a budget crisis, we think of this as a budget problem,\u201d he told reporters during a news conference.<\/p>\n<p>The general purpose reserves are adequate to make up for upcoming budget deficits, but \u201cnot if a recession occurs,\u201d said the report.<\/p>\n<p>The Legislative Analyst\u2019s Office recommended the state begin planning for the upcoming fiscal year without using general purpose reserves, and \u201cconsider saving reserves for a recession when the budget problem could be twice as large as the one identified in our outlook.\u201d<\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-naveen-athrappully\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/NaveenAthrappully.jpg\" alt=\"Naveen Athrappully\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Naveen Athrappully is a news reporter covering business and world events at The Epoch Times.\n<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>California could face a $25 billion budget deficit in 2023\u201324, despite raking in a record-setting $98 billion budget surplus this year, according to an analysis that comes days after midterms<\/p>\n","protected":false},"author":1,"featured_media":1695609,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1743332","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1743332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1743332"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1743332\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1695609"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1743332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1743332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1743332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}