"California will face a nearly $18 billion budget deficit in the new fiscal year due to higher than expected spending, despite an economic boon largely driven by AI enthusiasm and strong revenue, the nonpartisan Legislative Analyst's Office said Wednesday. To make things worse, the $17.7 billion shortfall could balloon to an annual $35 billion by fiscal year 2027-28, as spending continues to grow and debts come due, the office warned in its annual fiscal outlook."
"The gloomy forecast is a refreshed look at California's financial future since June, when the state Department of Finance projected a $17.4 billion deficit for the upcoming fiscal year. The widened budget gap could undercut the legacy of Gov. Gavin Newsom, as he will likely be forced to make tough budget choices in his last year as governor. It also means that for the fourth year in a row in his tenure, California is projected to have a deficit despite revenue growth."
The Legislative Analyst's Office projects a $17.7 billion shortfall in the coming fiscal year and warns the gap could reach $35 billion annually by 2027-28 as spending and debts increase. Strong revenue driven in part by AI-related economic activity produced $6 billion more than projected between July and October, but constitutional rules will direct most gains to K-12 schools, community colleges and state reserves. The widened gap may force difficult budget choices for Gov. Gavin Newsom in his final year. Lawmakers expressed competing views, urging responsible budgeting and criticizing unsustainable spending from surplus-era programs.
Read at San Jose Inside
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