{"id":127301,"date":"2026-01-09T23:49:10","date_gmt":"2026-01-09T23:49:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/127301\/"},"modified":"2026-01-09T23:49:10","modified_gmt":"2026-01-09T23:49:10","slug":"ai-windfall-helps-california-narrow-projected-3-billion-budget-deficit","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/127301\/","title":{"rendered":"AI windfall helps California narrow projected $3-billion budget deficit"},"content":{"rendered":"\n

SACRAMENTO\u00a0\u2014\u00a0California and its state-funded programs are heading into a period of volatile fiscal uncertainty, driven largely by events in Washington and on Wall Street. <\/p>\n

Gov. Gavin Newsom\u2019s budget chief warned Friday that surging revenues tied to the artificial intelligence boom are being offset by rising costs and federal funding cuts. The result: a projected $3-billion state deficit for the next fiscal year despite no major new spending initiatives.<\/p>\n

The Newsom administration on Friday released its proposed $348.9-billion budget for the fiscal year that begins July 1, formally launching negotiations with the Legislature over spending priorities and policy goals. <\/p>\n

\u201cThis budget reflects both confidence and caution,\u201d Newsom said in a statement. \u201cCalifornia\u2019s economy is strong, revenues are outperforming expectations<\/a>, and our fiscal position is stable because of years of prudent fiscal management \u2014 but we remain disciplined and focused on sustaining progress, not overextending it.\u201d<\/p>\n

Newsom\u2019s proposed budget did not include funding to backfill the massive cuts to Medicaid and other public assistance programs by President Trump and the Republican-led Congress, changes expected to lead to millions of low-income Californians losing healthcare coverage and other benefits.<\/p>\n

\u201cIf the state doesn\u2019t step up, communities across California will crumble,\u201d California State Assn. of Counties CEO Graham Knaus said in a statement.<\/p>\n

The governor is expected to revise the plan in May using updated revenue projections after the income tax filing deadline, with lawmakers required to approve a final budget by June 15. <\/p>\n

Newsom did not attend the budget presentation Friday, which was out of the ordinary, instead opting to have California Director of Finance Joe Stephenshaw field questions about the governor\u2019s spending plan.<\/p>\n

\u201cWithout having significant increases of spending, there also are no significant reductions or cuts to programs in the budget,\u201d Stephenshaw said, noting that the proposal is a work in progress.<\/p>\n

California has an unusually volatile revenue system \u2014 one that relies heavily on personal income taxes from high-earning residents whose capital gains rise and fall sharply with the stock market. <\/p>\n

Entering state budget negotiations, many expected to see significant belt tightening after the nonpartisan Legislative Analyst\u2019s Office warned in November that California faces a nearly $18-billion budget shortfall. The governor\u2019s office and Department of Finance does not always agree, or use, the LAO\u2019s estimates. <\/p>\n

On Friday, the Newsom administration said it is projecting a much smaller deficit \u2014 about $3 billion \u2014 after assuming higher revenues over the next three fiscal years than were forecast last year. The gap between the governor\u2019s estimate and the LAO\u2019s projection largely reflects differing assumptions about risk: The LAO factored in the possibility of a major stock-market downturn.<\/p>\n

\u201cWe do not do that,\u201d Stephenshaw said.<\/p>\n","protected":false},"excerpt":{"rendered":"SACRAMENTO\u00a0\u2014\u00a0California and its state-funded programs are heading into a period of volatile fiscal uncertainty, driven largely by events…\n","protected":false},"author":2,"featured_media":127302,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[65846,7,9,8,65847,2424,943,37008,65849,3290,65848,346,3230,20390,65851,65850,65852],"class_list":["post-127301","post","type-post","status-publish","format-standard","has-post-thumbnail","category-california","tag-9-billion-budget","tag-california","tag-california-headlines","tag-california-news","tag-fiscal-risk","tag-friday","tag-governor","tag-lao","tag-massive-cut","tag-newsom","tag-next-fiscal-year","tag-office","tag-plan","tag-revenue","tag-revenue-projection","tag-state-funded-program","tag-strong-revenue"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/127301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=127301"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/127301\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/127302"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=127301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=127301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=127301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}