In a recent interview, California Assemblywoman Diane Dixon discussed the state’s growing budget deficit and the challenges facing policymakers. Mrs. Dixon noted that Governor Newsom’s initial budget projected a $38 billion deficit, but the Legislative Analyst’s Office estimated it to be $58 billion.
The deficit has since grown to an estimated $73 billion for the 2024-25 fiscal year. Mrs. Dixon attributed this largely to declining tax revenues as high-income individuals and businesses leave the state. Data from the IRS shows California lost around $50 billion due to outmigration.
Mrs. Dixon argued the state lacks sufficient spending cuts and relies too heavily on deferrals to balance the budget in the short term. As a former city council member, she believes California should match spending to projected revenues like local governments are required to do.
The assemblywoman expressed concern that many organizations are lobbying to preserve state funding, with education alone taking up 78% of the budget. She suggested conducting audits to evaluate program effectiveness.
Looking ahead, Mrs. Dixon said the governor faces difficult choices between cuts, tax increases, or pursuing a proposed constitutional amendment to lower the vote threshold for local tax hikes. However, any tax increases would further burden residents and businesses in the current economic climate.
Overall, Mrs. Dixon’s interview provided insight into the complex challenges facing California policymakers as they work to close a massive budget gap amid economic uncertainty. A balanced approach will be needed.
*Views expressed in this video/article are opinions of the author and do not necessarily reflect the views of California Insider.