"California legislators are facing a fifth straight budget where spending would outstrip its revenues, amid warnings of multibillion-dollar deficits stretching well into the future unless they either reduce outlays or increase income. Legislative Analyst Gabe Petek, in his overview of Gov. Gavin Newsom's proposed $349 billion 2026-27 budget, says the deficits totaled $125 billion over the last four years and have persisted even as the state's economy and revenues have grown, underscoring that the problem is structural rather than cyclical."
"The proposed budget projects $227 billion in general fund revenues and $248 billion in general fund spending. Newsom has promised that when the budget his last as governor is revised in May, it will close not only its deficit but address the ongoing deficits. Petek and Newsom's Department of Finance project them in the range of $20 billion to $35 billion a year."
California faces a fifth consecutive budget in which projected spending exceeds revenues, signaling structural fiscal imbalance rather than cyclical effects. Deficits totaled $125 billion over the past four years despite economic and revenue growth. The proposed 2026–27 budget projects $227 billion in general fund revenues and $248 billion in general fund spending. Officials project ongoing annual deficits in the $20 billion to $35 billion range unless outlays are reduced or income is increased. The governor pledged to close the current shortfall and address persistent deficits when the budget is revised in May. Lawmakers are debating sharp cuts, tax increases, and ways to manage volatile personal income tax receipts.
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