(FOX40.COM) — California is projected to face a multi-billion-dollar deficit next year. It’s one of the top issues lawmakers are expected to address when they return to Sacramento from their winter recess.

The Legislative Analyst’s Office has released a report projecting the state will face an $18 billion deficit in the coming fiscal year and an annual $35 billion deficit each year after that through the end of the decade.

The budget is one of the most important parts of government because it determines how much California spends on key programs — everything from education to fire prevention to water storage.

California Legislative Analyst Gabe Petek said state revenues are coming in higher than anticipated, but he also stressed the state is spending more than it’s taking in.

His recommendation to state leaders is to reduce the level of ongoing spending or increase the level of ongoing revenues.

Lawmakers will return to the state Capitol in January and begin hearings about how best to address the issue. Around the same time, Gov. Gavin Newsom will unveil his preliminary spending plan for the coming year.

“Leaders from both sides of the aisle acknowledge the state’s budget situation is not in good shape,” Petek said. “Both sides stress difficult decisions lie ahead all as the blame game has already begun.”

Assembly Speaker Robert Rivas said the Trump administration’s policies are hurting California’s coffers.

“Trump’s cuts and tariffs are squeezing California’s budget even harder,” Rivas said. “…We must invest limited dollars on sustainable, vital essentials — health care, food aid, housing, [and] education.”

GOP State Senator Tony Strickland disagreed with Rivas’s assessment.

“Only in politics can you blame someone else for a job that you don’t do well,” Strickland said. “California doesn’t have a revenue problem. It’s a wasteful spending problem. We keep spending more than we take in. That’s just a basic math issue.”

The California Department of Finance says Newsom is working on the budget and will finalize his proposed spending priorities in the coming weeks.

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