"California's budgetary woes are worse than expected, forcing state lawmakers to grapple with a nearly $18 billion shortfall next year, according to a new report from the Legislative Analyst's Office. This figure is $5 billion more than previous estimates in June. Despite improvements in state revenue, the report said mandatory spending requirements under Proposition 98, which sets minimum annual funding for public schools, and Proposition 2, which specifies reserve deposits and debt payments, almost entirely offset any gains, according to the legislative analysis."
"While enthusiasm for artificial intelligence companies has pushed the stock market to record highs, increasing state tax revenue, the report warned the boost likely won't last. "With so much exuberance surrounding AI, it now appears time to take seriously the notion that the stock market has become overheated," the report states. "History suggests that the stock market is prone to overreact to major technological advances, even if the technology itself turns out to be revolutionary.""
The Legislative Analyst's Office projects a nearly $18 billion California budget shortfall next year, $5 billion higher than June estimates. Mandatory obligations under Proposition 98 and Proposition 2 largely negate recent revenue improvements. Estimated Medi-Cal and CalFresh costs are about $1.3 billion higher than expected due to federal cuts from the "Big, Beautiful Bill" signed in July. AI-driven stock market gains have boosted tax revenue but are assessed as likely temporary and possibly reflective of an overheated market. The LAO recommends increasing revenue and reducing spending, stressing that ongoing solutions are preferable to temporary fixes.
Read at Los Angeles Times
Unable to calculate read time
Collection
[
|
...
]