When Jerry Brown was governor, he justified trimming social programs by citing the Willie Sutton Rule: “Because that’s where the money is.” This principle implies that to address financial shortfalls, one should target the most significant expenditures.
California’s budget deficit has been estimated between $27.6 billion and $73 billion. Excessive state spending is the primary cause, and the solution is to cut spending in significant areas like education, social services, and climate change initiatives.
Until recently, Governor Gavin Newsom has relied on borrowing and funding delays to manage the deficit. With the release of the May budget revision, he has proposed over $30 billion in ongoing and one-time spending cuts while aiming to protect core social services. Newsom’s reluctance to raise taxes is noteworthy, as California already has some of the highest tax rates in the nation, particularly for high earners. Increasing taxes could harm economic growth and his political ambitions.
The legislative response to Newsom’s proposal has been tepid, reflecting their preference for higher spending and taxes. Despite this, the Legislature has begun addressing the shortfall with $17 billion in savings, primarily through new revenue, internal borrowing, and funding delays. This approach still leaves a deficit of close to $45 billion.
Newsom’s plan includes an 8 percent cut to the state’s staffing budget by eliminating 10,000 open positions, delaying expanding a subsidized child-care program, potentially postponing a minimum wage increase for healthcare workers, and reducing some school facilities spending. Despite these cuts, most climate programs remain largely intact. Given the state’s $53.9-billion multi-year commitment to climate initiatives, these programs may be a future target for budget reductions.
California faces a significant budget deficit due to excessive spending. Governor Newsom’s recent proposal includes substantial cuts but avoids increasing taxes. The Legislature’s lukewarm reception indicates a preference for continued high spending and taxation. Critical areas like climate programs may be targeted for further cuts to address the deficit.
