From CalMatters: Gov. Gavin Newsom opened [2025] with a rosy forecast: Buoyed by $17 billion more in revenue than previously planned, the state would have a modest surplus... But life turns on a dime. The January wildfires that ripped through Los Angeles forced the state to spend billions in disaster aid and delay tax filings for LA residents. The cost of Medi-Cal, the state-run health insurance program for low-income residents, ballooned to $6 billion more than anticipated...
California is facing $6 billion in extra spending next year, including at least $1.3 billion because the state must now pay more to cover Medi-Cal benefits under Trump’s budget bill. The state also stands to lose more housing and homelessness funding from the federal government... The LAO [Legislative Analyst's Office] notes that solving an ongoing structural budget problem requires either finding more sustainable revenue streams, or making serious cuts, or both.
Full story at https://calmatters.org/politics/2025/12/california-budget-primer/.
Under the state constitution, Gov. Newsom must propose a budget for 2026-27 sometime this week.
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