California faces record $68 billion budget deficit, nonpartisan legislative analyst says

abcnews.go.com:

California is facing a $68 billion budget deficit

SACRAMENTO, Calif. — California is facing a record $68 billion budget deficit, state officials announced Thursday, forcing hard choices for Democratic Gov. Gavin Newsom in his final term as he works to build his national profile.

The nation's most populous state — with an economy that is the fifth largest in the world — has been struggling since last year because of the rising prices of most goods and services and how the U.S. government has been trying to control it.

It is now much more expensive for people and businesses to borrow money, meaning fewer people are buying homes and fewer businesses are hiring workers. That is leading to fewer tax collections for the state.

A series of damaging storms last winter have made the problem worse. The storms were so bad that state officials decided to give people and businesses more time to pay their taxes this year. Californians did not have to pay their 2022 taxes until November of this year. That meant Newsom and the Legislature had to come up with a budget over the summer without knowing how much money the state had to spend.

It turns out that they badly misjudged how much taxes people and businesses would pay. The nonpartisan Legislative Analyst Office said tax collections were off by $26 billion, a major driver of the deficit. When combined with the economic slowdown California has been facing since last year, it leads to a predicted deficit of $68 billion, Legislative Analyst Gabriel Petek announced Thursday.

That is the biggest deficit by dollars in state history, but previous deficits have been larger as a percentage of state spending. California's current budget tops $300 billion, the largest by far of any state.

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