State Budget Update: Scandal, Calls to Resist Cuts Mask State’s Growing Budget Shortfall

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At the same time the Analyst’s office was warning about the growing deficit, the Assembly was trying to sweep under the rug a self-inflicted scandal about oversight of the Department of Justice budget.

California’s budget problem is growing at an alarming rate.

A new report recently released by the nonpartisan Legislative Analyst’s office forecasts, based on updated revenue projections that the stat will face “a large budget problem by about $7 billion” over what Gov. Newsom projects for the 2022-23 and 2023-24 fiscal years.

Calling the Governor’s January budget “likely unaffordable in future years,” the Analyst’s office foresees operating deficits of $9 billion in 2024-25, $9 billion in 2025-26, and $4 billion in 2026-27.  Tax revenue would need to be about $20 billion higher in 2024-25 than the administration projects to fund its currently proposed levels of spending.

PRI senior fellow in business and economics Dr. Wayne Winegarden has chided Newsom’s plan for “avoid(ing) some of the tough budget choices these uncertain economic times requires.”

Based on these projections, you would think that alarm bells would be going off at the offices of the Senate and Assembly Budget Committees.  But a recent scandal at the State Capitol has overshadowed the news of the state’s rapidly deteriorating budget picture.

At the same time the Analyst’s office was warning about the growing deficit, the Assembly was trying to sweep under the rug a self-inflicted scandal about oversight of the Department of Justice budget.

Asm. Mia Bonta, D-Oakland, was appointed by Speaker Anthony Rendon to chair the budget subcommittee overseeing the budget of the very same Department of Justice run by her husband, Attorney General Rob Bonta.  This was an obvious conflict of interest.

When questioned about the appropriateness of this, Bonta hid behind advice from the Legislature’s own lawyer – hardly independent advice – to say that she was not required to recuse herself in overseeing the DOJ budget.  After a media firestorm generated negative statewide headlines, Bonta ultimately reversed course and recused herself.  This week, oversight of the Department of Justice budget was removed from the budget subcommittee she chairs entirely.

Having the proverbial fox guarding the henhouse isn’t just Sacramento politics as usual.  Winegarden argues that “particularly in these tough times, every dollar must be stretched far”, which means that “meaningful program evaluation and oversight must guide this year’s budget debate.”  The Bonta scandal shows lawmakers are already failing on that account.  But this is nothing new.  While aggressive oversight is a hallmark of Congressional committees, Sacramento lawmakers rarely investigate state agencies with the same zeal.

Meanwhile, members of the budget subcommittees that weren’t dodging scandals took the opportunity to publicly oppose some of the minor proposed spending cuts to their favorite state spending.

For example, Assembly education budget subcommittee chair Kevin McCarty, D-Sacramento, proclaimed at a Tuesday hearing that the legislature would reject proposed cuts for afterschool programs, declaring the funding was “a top priority for the Legislature, and we absolutely are not going to adjust that in the negative.

There’s no doubt that afterschool programs are worthy budget priorities, but so is every line of spending in the state budget for someone.  The more lawmakers draw lines in the sand around their favored spending, the more that must be cut in other areas.

It’s not as if McCarty and his fellow legislative liberals are OK with spending cuts elsewhere in the budget.  They would surely promote using the budget reserve to prevent budget cuts, ignoring the advice of Analyst’s office to resist tapping into these funds until the state is fully in a recession.

Lawmakers should heed the Analyst’s warning and look for more budget cuts, not fewer, to prevent painful cuts that are looming just around the corner in the May Revise.

Tim Anaya is the Pacific Research Institute’s vice president of marketing and communications.



Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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