Despite the record surplus, the analyst warns of a “fiscal break” CA.

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Despite announcing a record budget surplus of nearly $ 100 billion on Friday, California Gov. Gavin Newsom’s plan to spend the money is likely to push the state to a “fiscal break” next year that could cost billions of dollars. in the form of a budget cut, a state analyst told Monday.Newsom, the latest budget proposal, known as the “May Review”, will leave the state $ 3.4 billion above the constitutional spending limit this year and more than $ 20 billion more than next year’s limit. according to the analysis of non-partisan legislatures. Analytical Office. “The May governor’s review has no plan to meet that demand of about $ 25 billion,” the Office of Legislative Analysts wrote in a report released Monday. “As a result, next year the state is likely to face a significant budget problem, which may require cuts in programs.” | RELATED | See here the revised budget plan for Governor Newsom in May. News boasted during a news conference on Friday that his spending plan would leave the state with $ 37.1 billion in reserves. But LAO notes that nearly $ 10 billion of that money is in a special public education account that can’t be used to solve budget problems. The state’s primary savings account will be about $ 23.5 billion, which is less than the $ 25 billion projected by LAO. LAO “urged” lawmakers to invest more money in savings than News suggested. They also recommended rejecting some of his budget proposals to keep staff below the spending limit this year. The Newsham administration believes the governor’s budget proposal “positions the state” well to counter this potential crisis, according to H. D. Palmer, a spokesman for the California Department of Finance. In addition to the billions of dollars in reserve, Newsham’s budget proposal will spend 95% of the state’s surplus this year plus another $ 15 billion in future years on projects that do not require recurring funding. “It can be canceled if needed,” Palmer said, describing one-time costs as an “insurance policy”. Potential problems with California’s budget are the result of a unique California law that restricts how lawmakers can spend money beyond a certain limit known as the “Anna’s limit” after conservative political activist Paul Gunn, who helped persuade voters to approve it in 1979. The limit is recalculated each year based on inflation and population growth. For decades, California has had no problem staying below the limit. But that has changed in recent years, as the state’s population has shrunk slightly and incomes have soared at an unprecedented rate – as a result of a growing stock market that makes rich people even richer in a place that taxes them more than other states. There are only a few things lawmakers can do to get back below the limit. They can reduce taxes, spend money on things that are not included in the limit, such as roads, bridges and other infrastructure projects; or they can return the money to the taxpayer. This year’s limit is $ 136 billion. California has revenue of $ 252 billion affected by the limit. Newsham’s budget proposal spends $ 113 billion on things excluded from the limit, including $ 5.5 billion in tax cuts for businesses, $ 39 billion in government surplus on transportation and environmental projects, and $ 11.5 billion in discounts to taxpayers who own cars. That leaves the state about $ 3.4 billion above the limit, according to LAO. The law gives News and the legislature two years to figure out how to reach the limit. But the Bureau of Legislative Analyst notes that the state cannot “get out” of the problem. Other constitutional norms approved by voters require lawmakers to spend a certain amount of money on public education, setting aside enough to pay off debts and replenish state reserves. This means that for every dollar that the state exceeds the limit, he has to spend $ 1.60 to get it back. “This means that if revenues are higher than the governor’s budget suggests, the state will be in an even worse fiscal position,” – writes LAO. Democrats in the state Senate have proposed an amendment to the Constitution to “harmonize and modernize” Anna’s restrictions, “to ensure that basic programs such as health care, higher education and public safety can continue to be funded rather than artificially restricted due to Anna. Voters must approve this change, a proposal that is unlikely to go to the polls by 2024. Senate Democrats believe the deadlines still give them enough time to avoid budget problems. Newsom said on Friday that he supported the amendment, calling it “long overdue”, noting the irony that the state has so much money that it may require budget cuts. “It’s an extremely high-end problem, isn’t it?” he said. Why CA minimum Wage growth is expected next year

Despite announcing a record budget surplus of nearly $ 100 billion on Friday, California Gov. Gavin Newsom’s plan to spend the money is likely to push the state to a “fiscal break” next year that could cost billions of dollars. in the form of a budget cut, a State Analyst said Monday.

Newsama last budget proposalknown as the “May Review”, will leave the state $ 3.4 billion above the constitutional spending limit this year and more than $ 20 billion above the limit next year, according to analysis from the non-partisan Office of Legislative Analyst.

“The May revision of the governor has no plan to meet that demand of about $ 25 billion,” the Office of the Legislative Analyst wrote in a report released Monday. “As a result, next year the state is likely to face a significant budget problem that may require cuts in programs.”

| RELATED | See Governor Newsham’s revised budget plan in May here

News boasted during a news conference on Friday that his spending plan would leave the state with $ 37.1 billion in reserves. But LAO notes that nearly $ 10 billion of that money is in a special public education account that can’t be used to solve budget problems. The state’s primary savings account will be approximately $ 23.5 billion, which is less than the $ 25 billion projected by LAO.

LAO “urged” lawmakers to invest more money in savings than News suggested. They also recommended rejecting some of his budget proposals to keep the state below the spending limit this year.

The Newsham administration believes the governor’s budget proposal “positions the state well” to counter this potential crisis, according to H. D. Palmer, a spokesman for the California Treasury Department. In addition to the billions of dollars in reserve, Newsham’s budget proposal will spend 95% of the state’s surplus this year plus another $ 15 billion in future years on projects that do not require recurring funding.

“It can be canceled if necessary,” Palmer said, describing one-time costs as an “insurance policy”.

Potential problems with California’s budget are the result of a unique California law that restricts how lawmakers can spend money beyond a certain limit known as the “Anna’s limit” after conservative political activist Paul Ghana, who helped persuade voters to approve it in 1979.

The limit is recalculated each year taking into account inflation and population growth. For decades, California has had no problem staying below the limit. But that has changed in recent years as the state’s population has shrunk slightly and incomes soared at an unprecedented rate – as a result of stock market growth, which has made rich people even richer in a place that taxes them more than other states.

There are only a few things lawmakers can do to get back below the limit. They can reduce taxes, spend money on things that are not included in the limit, such as roads, bridges and other infrastructure projects; or they can return the money to the taxpayer.

The limit this year is $ 136 billion. California has revenue of $ 252 billion affected by the limit. Newsham’s budget proposal spends $ 113 billion on things that are out of the limit, including $ 5.5 billion in tax cuts for businesses, $ 39 billion in government surpluses on transportation and environmental projects, and $ 11.5 billion in taxpayer discounts. owning cars.

That leaves the state about $ 3.4 billion over the limit, according to LAO.

The law gives News and the legislature two years to figure out how to get under the limit. But the Legislative Analytical Bureau notes that the state can not “get out” of the problem.

Other constitutional norms approved by the electorate require lawmakers to spend a certain amount of money on public education, setting aside enough to pay off debts and replenish state reserves. This means that for every dollar that the state exceeds the limit, he has to spend $ 1.60 to get it back.

“This means that if revenues are higher than the governor’s budget suggests, the state will be in an even worse fiscal position,” – writes LAO.

Democrats in the state Senate proposed an amendment to the Constitution to “harmonize and modernize” Anna’s restriction, “to ensure that major programs such as health care, higher education, and public safety can continue to be funded rather than artificially limited to the aging Anna’s Border.”

Voters must approve the change, a proposal that is unlikely to go to the polls by 2024. Senate Democrats believe the deadlines still give them enough time to avoid budget problems.

On Friday, Newsom said he supported the amendment, calling it “long overdue”, noting the irony that the state has so much money that a budget cut may be needed.

“It’s an extremely high-end problem, isn’t it?” he said.

| MORE OF THIS | Why the CA minimum wage is expected to increase next year

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