Newsom's even more wrong on the budget than previously thought

The California Legislative Analyst’s Office (LAO), a government agency that analyzes the budget for the state legislature, estimates in a report published last week that Newsom’s forecast undershot the mark by about $7 billion, thanks to about $10 billion less in tax revenues than expected.

“In particular, using recent revenue collections and economic data, we estimate there is a two‑in‑three chance that state revenues will be lower than the governor’s budget estimates for 2022‑23 and 2023‑24,” writes Gabe Patek, the legislature’s budget analyst. “Our best estimate is that revenues for these two years will be roughly $10 billion lower — implying a larger budget problem by about $7 billion.”

Tax revenues are already much lower this year than the prior one. In January, California’s monthly tax revenue was about $14 billion lower than during the same month last year. Meanwhile, tax revenue in the current fiscal year, which started July, is about $23 billion lower than in the previous year, according to the Wall Street Journal.

[Newsom at one point thought the state would have an extended surplus. That turned into a turnaround deficit, thanks to Newsom’s spending spree, and now the impact of California’s regulatory and tax environment is being felt in revenue shortfalls. There are consequences from driving the middle class out of the state. — Ed]