California Democrats agree on plan to reduce budget deficit by $17.3 billion

SACRAMENTO, Calif. (AP) — California Democratic leaders announced Thursday they had come to an agreement on a plan that would reduce the state’s staggering multibillion-dollar shortfall by $17.3 billion through a combination of spending cuts, delays and deferrals.

Gov. Gavin Newsom had enjoyed unprecedented surplus budgets of more than $100 billion throughout the COVID-19 pandemic. But the past two years have saddled him with a pair of multibillion-dollar deficits, a less-welcome position for a governor seen as a potential Democratic presidential candidate.

Last year, facing a $32 billion deficit, Newsom and lawmakers were able to avoid major spending cuts by making smaller cuts, borrowing and pushing some expenses to future years. But this year’s deficit could be as large as $68 billion, according to the nonpartisan Legislative Analyst’s Office. Newsom said in January the deficit is actually $37.9 billion — a shortfall that, while still steep, is much easier to manage for a state with revenues expected to exceed $291 billion.

In January, Newsom proposed tapping $13 billion from reserves and cutting $8.5 billion in spending, with about half of those cuts spread across various housing and climate programs. Newsom and Democratic leaders in both houses announced they would take “early action” to address the deficit last month with no details.

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