Gavin Newsom faces $18 billion California budget shortfall

California is reported to be facing an $18 billion budget shortfall that officials say could grow in coming years amid years of higher spending, reduced federal funding and weaker revenues; Governor Gavin Newsom will present a plan to address the gap in a planned major speech.

California is confronting a reported $18 billion budget shortfall that officials say could expand in the years ahead. The Legislative Analyst attributes the gap to a combination of multi-year state spending increases, cuts in federal funding, and weaker revenue collections. Governor Gavin Newsom is expected to unveil measures to address the shortfall in a planned major speech. Key reported points: - The Legislative Analyst projects an $18 billion shortfall now that could grow to about $35 billion in coming years. - The article attributes the shortfall to years of expanded state spending, reductions in some federal funding, and a decline in revenue sources such as capital gains taxes. - The report says state leaders have drawn on reserves and in some cases borrowed to cover costs, and that state hiring and compensation rose notably since 2019. - State Auditor reports and other analyses cited in the article raised concerns about outcomes from large homelessness spending and about significant past fraudulent unemployment payments. Summary: The reported shortfall would put pressure on funding for programs the state has already committed to and could affect budget decisions over multiple years. Governor Newsom plans to outline his response in a major speech; details of proposed measures and how the Legislature will respond are undetermined at this time.