California Legislature approves budget that slashes spending to address $46.8 billion deficit

SACRAMENTO, Calif. (AP) — California lawmakers approved a budget on Wednesday that slashes spending and temporarily raises taxes on some businesses to close an estimated $46.8 billion budget deficit.

It’s the second year in a row the nation’s most populous state has been forced to pare back or delay some of its progressive policies that had been fueled by record-breaking surpluses during the COVID-19 pandemic.

It was just two years ago that Gov. Gavin Newsom and his fellow Democrats in the state Legislature were boasting about surpluses that totaled more than $100 billion, the product of hundreds of billions of dollars of federal COVID-19 aid and a progressive tax code that produced a windfall of revenue from the state’s wealthiest residents.

Those revenue spikes did not last as inflation slowed the state’s economy, contributing to a rising unemployment rate and a slowdown in the tech industry that has driven much of the state’s growth. The Newsom administration then badly miscalculated how much money the state would have last year after a seven-month delay in the tax filing deadline.

Last year’s deficit was about $32 billion. This year’s deficit swelled to $46.8 billion — with more deficits projected for the future.

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