SACRAMENTO, Calif. — Facing a projected $22.5 billion budget deficit in the upcoming fiscal year, Gov. Gavin Newsom on Tuesday announced plans to reduce investments in the state’s move to zero-emission vehicles, make cuts to other climate change programs and delay funding for 20,000 new child-care slots as California transitions from a time of economic surplus to shortage.
The governor’s administration blamed high inflation, the Federal Reserve raising interest rates and volatility in the stock market as the major forces causing state revenues to drop well below projections from last summer when he anticipated an $100 billion surplus in the current budget year.
His $297 billion budget plan for 2023-24 relies on delaying multiyear investments and shifting funding to bonds to offset the shortfall. Newsom said he was careful to preserve the state’s rainy day fund and its other budgetary reserves given warnings about a nationwide recession and possibility that California’s financial problems could become more dire in the months and years ahead.
