By @Ophelia Szigeti
On March 14, Senate Democrats unveiled a fiscal strategy for 2024 and 2025 dubbed Shrink the Shortfall, aimed at swiftly addressing the looming budget deficit prior to the June 15 budget deadline. This plan aims to significantly reduce the anticipated deficit range of $38-53 billion to a narrower range of $9-24 billion. The Shrink the Shortfall plan aligns with the Governor’s budgetary proposals, encompassing a mix of program reductions, revenue generation, borrowing, fund reallocations, and temporary financial adjustments while safeguarding essential services.
In addition to leveraging $12.2 billion from the state’s rainy-day fund, the Senate proposal entails $2.1 billion in program cuts and $4.6 billion in postponed and deferred expenditures. The delayed funding targets several areas, including the Governor’s Climate Innovation Program, investments in Strategic Reliability Assets, fund transfers from the Greenhouse Gas Reduction Fund, hydrogen grants, residential solar and storage programs, and broadband funding, among others.
On March 20, Governor Newsom, Senate President pro Tempore Mike McGuire, and Assembly Speaker Robert Rivas reached consensus on budgetary measures to address the state’s fiscal shortfall. The Governor expressed support for the Senate’s proactive approach, anticipating swift progress on the proposal. Conversely, critics argue that the plan’s expenditure levels are unsustainable, warning that the budget deficit could have repercussions beyond 2024 and 2025. Nonetheless, Senate Democrats are confident that their plan will yield $17.1 billion in budgetary solutions for the current and upcoming fiscal years.
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