The revision to be released on Friday should offer more insight into the ’tough choices’ made to tame the state’s financial woes.
With California facing a record budget deficit, many are looking to Gov. Gavin Newsom’s release of his revised upcoming budget scheduled for May 10 to offer clarity and solutions.
Questions soon to be answered in what is known as the “May Revise” include what spending cuts will be on the table, whether the governor will seek to raise revenues by increasing taxes or calling for bonds, how lawmakers will respond to his updated proposal, and how severe the deficit truly is.
Though uncertainty has persisted for months, the revision should offer more insight into the state’s finances and will potentially unveil some of the “tough choices” lawmakers from both sides of the aisle have repeatedly spoken about regarding balancing the state’s finances.
Determining the depth of the deficit has proven difficult, as the governor estimated the shortfall at $38 billion with his January budget proposal, while the non-partisan Legislative Analyst’s Office calculated in February a $73 billion gap in spending and revenues.
Some of the discrepancies are related to Mr. Newsom’s initial proposal, which experts said included $58 billion in potential solutions, analyst Gabriel Petek told The Epoch Times. But with tax payments due April 15, analysts and economists now say the deficit could be widening.
Revenues ultimately failed to meet expectations by more than $6.5 billion, according to the state’s finance department, led by forecast misses for personal income, corporate, and sales taxes.
Corporate taxes fell short of the governor’s estimates by about $2 billion—a 15 percent drop from last year—the fourth largest such decline in 40 years, according to analysts.
“Recent shortfalls in corporation and sales tax collections reflect an underlying weakness in these revenue sources,” the analyst’s office said in a May 2 report.
While income taxes increased year-over-year, they failed to meet projections and remain below peaks from the 2021-22 fiscal year.
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