California's budget reveals a deficit of nearly $20 billion for the 2025-26 fiscal year, contrary to earlier claims of a $12 billion gap. Projected revenues are $208.6 billion while expenses total $228.4 billion. A $7.1 billion shift from reserves was incorrectly included as revenue, highlighting the state’s structural deficit of $10 billion to $20 billion annually. The increasing gap results from political decisions, particularly a past erroneous claim of a $97.5 billion surplus, which led to overspending without a sustainable revenue increase.
The budget projects that the state will receive $208.6 billion in general fund revenues during the fiscal year that began on July 1, but it will spend $228.4 billion.
The deficit isn't a genuine emergency because it resulted from irresponsible political decisions, particularly Newsom's declaration in 2022 that the state had a $97.5 billion budget surplus.
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