US EditionCalifornia is a high-tax state. Are more taxes a balm for its budget deficits?
Despite AI-driven revenue surges boosting tax income by $6 billion, California faces a nearly $18 billion deficit due to higher spending and federal funding cuts, analysts said.
- Wednesday, the nonpartisan Legislative Analyst's Office warned that California faces an almost $18 billion budget problem in 2026-27 despite $6 billion more in tax receipts fueled by AI investors and tech companies.
- Years of temporary fixes like internal loans from special funds and reliance on constitutionally mandated allocations limit California's ability to close an $18 billion deficit, LAO said.
- The LAO projects the shortfall could widen to about $35 billion annually by 2027-28, with the state spending $6 billion more next year, including $1.3 billion for implementing the federal budget changes.
- Tough budget choices loom, as officials say closing the gap will require spending cuts or tax increases, and homelessness agencies warn thousands could lose subsidized housing amid funding pressures.
- Petek warned the AI-fueled revenue spike may be temporary, characterizing recent gains as a spike driven by AI investment that could implode and noting the LAO outlook can differ from the State Department of Finance's January projection.
17 Articles
17 Articles
DAN WALTERS: California sees revenue uptick, but not enough to erase its chronic budget deficit
In the four months since the Legislature and Gov. Gavin Newsom enacted a new state budget, revenues — primarily from personal income taxes — have outstripped expectations by several billion dollars.
California is still in the red with another big budget deficit projected for next year
California will face a nearly $18 billion budget deficit in the new fiscal year due to higher than expected spending, despite an economic boon largely driven by AI enthusiasm and strong revenue, the nonpartisan Legislative Analyst’s Office said Wednesday.
California is still in the red with another big budget deficit projected for next year
California will face a nearly $18 billion budget deficit in the new fiscal year due to higher than expected spending, despite an economic boon largely driven by AI enthusiasm and strong revenue, the nonpartisan Legislative Analyst’s Office said Wednesday.
Hanford Sentinel
Lompoc RecordCalifornia is a high-tax state. Are more taxes a balm for its budget deficits?
Dan Walters Commentary: California has long had the reputation — backed by copious data — of being a high-tax state, which made Gov. Gavin Newsom’s declaration last June, in a prerecorded State of the State address, a bit startling.
California's budget shortfall may hit $35 billion by 2028
By Yue Stella Yu Gov. Gavin Newsom addresses the media during a press conference unveiling his revised 2025-26 budget proposal at the Capitol Annex Swing Space in Sacramento on May 14, 2025. Photo by Fred Greaves for CalMatters California will face a nearly $18 billion budget deficit in the new fiscal year due to higher than expected spending, despite an economic boon largely driven by AI enthusiasm and strong revenue, the nonpartisan Legislativ…
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