Earlier this month, the governor repeatedly pledged he would not raise taxes to solve the budget crisis—which comes just two years after he boasted a nearly $100 billion surplus—telling reporters that "the answer is no," should Democratic lawmakers bring him tax hike proposals, and that "there’s only so many times I can say no to the tax question." ...

Newsom unveiled his budget proposal on May 10, and the tax policy details the following week. The proposal would, for the next three years, bar businesses earning $1 million or more from deducting operating losses from their taxes while also limiting business tax credits. The provisions are projected to cost California businesses about $18 billion through 2027, although they wouldn’t take effect if tax collections beat expectations. Such a scenario appears unlikely, however, given that California’s tax revenues are massively down thanks to a stagnating economy and exodus of both high-earning residents and businesses.