It was fun while it lasted. But 2023 will be the year that reality comes back to the California budget.
For the last several years, the state has enjoyed record budget surpluses thanks to a soaring stock market and investment earnings from the state’s wealthiest taxpayers. Just last year the state forecast a surplus of $100 billion and Gov. Gavin Newsom had so much money to spare he could send “inflation-relief” checks to most Californians.
Now the good times appear to be winding down. Because of continued high inflation, rising interest rates and declines in the stock market, the Newsom administration is, for the first time, planning to cut or delay spending to close a projected $22.5-billion deficit. This will be a test for Newsom and legislators — can the state manage the revenue slowdown and possible recession without slashing the investments California needs for a sustainable and prosperous future?
