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California Governor Gavin Newsom (D) announced a revised budget plan to address the state’s $32 billion deficit.
Since January, the state’s deficit has grown by $10 billion, as reported by the AP. While the state’s budget is balanced this year, in the coming years the state is committed to spending more money than it will receive from taxpayers.
In the current tax system, the state receives 50 % of its taxpayer dollars from 1% of the population. When the economy and stock market are doing well, the state will receive more in taxes, but when the economy is on the brink of a recession, the wealthy will pay less in taxes.
The press release states:
While the May Revision does not forecast a recession, it recognizes increased risks to the budget since January that could significantly change the state’s fiscal trajectory in the near term. Taking this into account, the plan reflects $37.2 billion in total budgetary reserves, including $22.3 billion in the Budget Stabilization Account.
“This was not an easy budget, but I hope you see we will try to do our best to hold the line and take care of the most vulnerable and most needy, but still maintain prudence,” Newsom said.
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