Two seemingly diametrically opposed things were both true about California’s budget in 2023.
The state had to pare down its spending as it confronted a nearly $32 billion deficit for 2023-24. Nonetheless, the final spending plan for the general fund was still the second largest on record — $308 billion in total. As recently as 2019, the budget was less than $200 billion.
How did the state pull it off despite the colossal revenue dip?
Not by raiding its reserves, which this year grew to a record level of $37.8 billion. That money will be useful in the event state tax revenues fall below projections during the current fiscal year, sparing Sacramento from having to make “drastic reductions to core programs that marked the state’s past efforts to close significant deficits,” the governor’s office wrote after he and lawmakers finalized the spending plan.
The fiscal imprecision stems from a quirk in tax deadlines. Because of natural disasters that ransacked most of the state, the Internal Revenue Service extended the deadline almost all Californians had to file from April to October and then to November. The state Franchise Tax Board followed suit. That means the money the state typically collects is reaching its coffers later than usual.
Read more at CalMatters