California governor proposes tapping reserves and cutting some spending to close nearly $38B deficit

abcnews.go.com:

California Gov. Gavin Newsom is announcing a $291 billion state spending plan with an estimated $37.9 billion deficit

SACRAMENTO, Calif. — California Gov. Gavin Newsom is announcing a $291 billion state spending plan with an estimated $37.9 billion deficit.

That’s a significantly lower budget hole than the Legislative Analyst’s Office predicted in December. It estimated the state would face a $68 billion deficit.

That difference is likely due in part to a rebounding stock market.

The proposal Newsom is laying out Wednesday outlines how he wants to spend taxpayer dollars and other state money for the fiscal year starting July 1. He’ll spend the next six months hashing out a final plan with the Legislature, also controlled by Democrats.

The governor is proposing to draw $13 billion from the state’s reserves to cover some of the deficit.

He’s also proposing $8.5 billion in spending cuts. Nearly $3 billion of that would come from climate programs and another $1.2 billion from housing programs.

The nation's most populous state is weathering a revenue downturn that could have major consequences for 5.8 million public school children.

Unlike the federal government, California law says the state must pass a balanced budget — meaning it can't spend more money than it has. Newsom and lawmakers were able to avoid major spending cuts last year through a combination of making smaller cuts, borrowing and pushing some expenses to future years. But as the deficit continues to grow, Newsom and lawmakers could be forced to make tough choices to balance the budget.

Those decisions will be particularly fraught given this year's election, when many lawmakers will ask voters to keep them in Sacramento. Every decision Newsom makes, meanwhile,