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California, neighbors going in opposite directions

As Newsom spars with media over deficit, other states tout surpluses.

Tim Hearden

January 17, 2024

2 Min Read
California State Capitol
California State Capitol.Tim Hearden

The beginning of a new year marks budget deliberations in many states around the country, and the differences between California and some of its neighbors couldn’t be more striking.

With a projected $68 billion deficit for fiscal 2024-25, Gov. Gavin Newsom’s reaction appears to be a combination of accounting gimmickry and spitting contests with the media. The ledger he proposed on Jan. 10 assumes a $37.9 billion deficit – much less than the shortfall projected in December by the Legislature’s independent budget analyst.

As long-time political guru Dan Walters of CalMatters notes, the smaller projection enables Newsom “to cover it with an array of budgetary gimmicks often used in the past, such as borrowing money from special funds, tapping reserves and delaying some budgeted expenditures.”

Newsom proposes only $8.5 billion in cuts by delaying spending and taking $13 billion from reserves, Walters explains. The governor’s ambitious climate project remains largely intact, facing only a 7% cut to $48.3 billion. Meanwhile, he’s taken verbal shots at the Wall Street Journal and other media for reporting the $68 billion figure, saying they are “intentionally” undermining “the health of the state.”

Yet all one has to do to gauge California’s fiscal health is to look at some of its neighbors. For instance, Idaho, which ended 2023 with a $99 million surplus, is responding to record population growth (much of it from California) by pondering up to $150 million in new property tax relief, according to Boise’s KTVB-TV.

Montana – which has enjoyed over two years of unemployment under 3% -- is considering what Gov. Greg Gianforte calls “the largest tax cut in state history” after recording a $2.5 billion surplus last year. Wyoming Gov. Mark Gordon responded to what he expects will be a season of declining state revenue by providing $20 million in expanded property tax relief and bolstering energy spending in his two-year state budget.

Colorado, which had a $3.57 billion surplus in 2022-23, is considering what Gov. Jared Polis calls historic funding for agricultural programs, including a disaster preparedness, response and recovery programs.

Under Newsom’s budget, California’s Department of Food and Agriculture would see its general-fund allocation cut from $496 million this year to $429.7 in 2024-25, although its overall revenue is expected to rise slightly and staffing will remain flat. The agency would get $22 million to address fruit fly infestations around the state, which pleases new California Farm Bureau president Shannon Douglass.

Legislative budget analyst Gabe Petek’s projection suggests California’s problems are structural, as revenue shortfalls in 2022-23 and 2023-24 may be coming home to roost. These problems will persist as long as California entertains policies that drive farmers and others out of the state, and the Golden State’s losses will continue to be its neighbors’ gains.

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