US EditionNew California budget papers over $20 billion deficit, ignores day of reckoning
CALIFORNIA, JUL 17 – California's budget uses $7.1 billion from emergency reserves and accounting shifts to cover a structural deficit over $20 billion, masking long-term fiscal challenges, officials said.
- Last month, Governor Gavin Newsom and legislative leaders worked on the 2025-26 state budget, addressing what they characterized as a $12 billion shortfall.
- Recent budget documents reveal that the previously reported $12 billion deficit understates the true shortfall, which is closer to $20 billion when factoring in accounting adjustments and loan shifts.
- The budget relies on assumptions that revenues will rise enough to cover spending and debts, despite last year's Finance Department forecast of $165 billion revenue shortfall over four years.
- The state anticipates bringing in $208.6 billion from the general fund this fiscal year but plans expenditures of $228.4 billion, resulting in an ongoing structural deficit estimated to range between $10 billion and $20 billion annually.
- Experts warn that if California’s economy stays sluggish and spending outpaces revenues, a fiscal reckoning will occur, requiring tough policy choices like a Fiscal Responsibility Amendment and spending reductions.
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No Escape From Washington’s Fiscal Doomsday Machine - LewRockwell
If you don’t think Washington is in the maws of a Fiscal Doomsday Machine, think again. And the place to start is with the 30-year CBO projections—expressed as the dollar increase from the current $29 trillion level of publicly held US Treasury debt. To wit, if Washington does nothing except leave current tax, spending and structural deficit policies in place (i.e. baseline policy), the publicly-held debt will grow by $102 trillion over the next…
San Diego Union Tribune
New California budget papers over $20 billion deficit, ignores day of reckoning
When Gov. Gavin Newsom and legislative leaders were drafting a more-or-less final 2025-26 state budget last month, they were closing what they described as a $12 billion deficit, a number that the state’s media repeatedly cited. It was the wrong number; it minimizes the state’s chronic gap between income and outgo, as the state’s official budget summary released this week confirms. The budget projects that the state will receive $208.6 billion i…
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