How Newsom solves California budget that went from a $97.5 billion surplus to $31.5 billion deficit

California Governor Gavin Newsom has unveiled a plan to tackle the state’s budget deficit, which has gone from a projected $97.5 billion surplus to a $31.5 billion deficit due to the COVID-19 pandemic. The revised budget, which was announced on May 14, 2023, aims to address the state’s immediate needs while also laying the groundwork for long-term economic growth.

Newsom’s plan includes a mix of spending cuts and revenue-raising measures. The governor has proposed reducing spending by $8.7 billion, which would primarily come from cuts to health care, education, and social services. However, Newsom has also proposed increasing spending on programs that he deems essential, such as affordable housing and wildfire prevention.

In addition to spending cuts, Newsom has proposed a number of revenue-raising measures. These include a tax on sugary drinks, which is expected to generate $2.4 billion in revenue over the next five years, and an increase in the state’s gas tax, which is expected to generate $1.8 billion in revenue per year.

Newsom has also proposed a new tax on high-income earners, which would generate an estimated $7.5 billion in revenue per year. The tax would apply to individuals making more than $1 million per year and couples making more than $2 million per year.

While Newsom’s plan has received criticism from some quarters, with opponents arguing that it relies too heavily on tax increases, the governor has defended his approach. In a statement released alongside the budget, Newsom said that the plan “prioritizes the things that matter most to Californians while also addressing the urgent needs of our state in the short-term.”

Overall, the revised budget represents a significant challenge for Newsom and his administration. However, the governor has expressed confidence that his plan will help California to weather the economic storm caused by the pandemic and emerge stronger in the long run. As Newsom put it, “We have a lot of work to do, but we are up to the challenge.”

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