California is facing an ‘unprecedented’ budget crunch according to the Legislative Analyst’s Office Economic headwinds curbing revenue and a delay to collecting taxes due to bad weather were blamed for the massive discrepancyLawmakers will be forced to slash spending on schools and colleges or dip into reserves to tackle the deficit
The Golden state is in an ‘unprecedented’ budget crunch, according to a report by the independent Legislative Analyst’s Office.
The deficit has ballooned exponentially in a matter of months, up more than $54 billion from $14.3 billion in June.
Poorer than expected economic conditions and a delay in tax collection due to the extreme weather which hit the state earlier this year were blamed for the deficit.
The budget problem is the state’s biggest ever in dollar amount although not as a percentage of spending.
‘Specifically, we estimate that 2022-23 revenue will be $26 billion below budget act estimates,’ The LAO said.
‘This creates unique and difficult challenges—including limiting the Legislature’s options for addressing the budget problem.’
Lawmakers have been advised they will need to slash spending on schools and colleges or dip into the state’s $24 billion reserves.
However, there were warnings from the LAO that the reserves are ‘unlikely to be sufficient to cover the state’s multiyear deficits’, which which average $30 billion per year according to the watchdog.
It comes as hundreds of thousands of Californians have fled the state amid soaring crime rates in many major cities.
Earlier this year it was revealed 500,000 people had left, equivalent to a population of one percent since