The biggest challenge facing lawmakers and Gov. Gavin Newsom is the state budget deficit 鈥� and it just got bigger.
Tuesday, the Legislative Analyst鈥檚 Office , or $73 billion.
The analyst鈥檚 office had pegged the 2024-25 deficit at $58 billion in January, using Newsom鈥檚 revenue estimates when .
On Friday, Newsom鈥檚 Department of Finance in January were $5 billion below (or nearly 20%) the governor鈥檚 budget forecast. Unless state tax revenues pick up significantly, the bigger number will make it more difficult to balance the state budget just through dipping into reserves and targeted spending cuts.
But exactly how the state can dig its way out 鈥� at least in the Assembly 鈥� remains to be seen. Speaker told reporters that the budget has been at the forefront of conversations among Assembly Democrats and that he is very concerned with the growing deficit.
He praised the governor鈥檚 commitment to preserving classroom funding, and said he didn鈥檛 see a way to avoid dipping into the state鈥檚 reserves, as the governor鈥檚 鈥� though the speaker urged a prudent approach to using rainy day savings in case the budget picture worsens in future years.
鈥淲e are very concerned about short-term fixes for long-term problems,鈥� said Rivas, who , just days after the Legislature and Newsom reached a deal on the after .
鈥淐learly, we need to prioritize oversight and curb spending and our investments,鈥� Rivas added.
In the coming weeks, Rivas鈥� plan calls for an oversight budget subcommittee he formed in December to review the state鈥檚 spending on housing, he said.
But, as legislative leaders and the governor have noted, the budget deficit won鈥檛 be addressed just through oversight and cuts. It鈥檒l also mean tougher paths for bills lawmakers introduce this year 鈥� including the return of the single-payer healthcare effort by Democratic Assemblymember Ash Kalra.
鈥淚t鈥檚 a good idea, but it鈥檚 a tough, tough sell, especially in the budget climate that we are experiencing now,鈥� he said.
And while the governor has shot down any attempt to raise taxes or create new ones to increase state revenues, Rivas did not take a position.
鈥淲e look at all of the strategies when it comes to ensuring that we have a balanced budget 鈥� there are many of those tools that are available,鈥� he said. 鈥淲hich ones are appropriate, I鈥檓 not going to comment on that yet. That鈥檚 what we鈥檙e trying to figure out now.鈥�
But Rivas may have to make some decisions soon: A spokesperson for Newsom鈥檚 Department of Finance issued a statement later today calling on the Legislature to take early action on $8 billion in savings to address the looming deficit. Newsom will propose an updated budget in May before negotiations with legislative leaders and a final spending blueprint in June.
The updated deficit projection also prompted concern and criticism of Democrats from the Republican caucus. Sen. , vice-chairperson of the Senate budget committee, echoed the sentiment on oversight, in a statement; 鈥淚t鈥檚 time for a course correction and a renewed commitment to responsible budgeting that puts the needs of our residents first.鈥�
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