California Faces $18 Billion Shortfall Next Year

Photo by: BJ Hansen

Sacramento, CA — The non-partisan California Legislative Analyst has released a new report that dives into the state’s finances.

Under the current trajectory, California will spend more money than it is anticipated to take in via tax revenue.

The report notes that California is facing a projected $18 billion budget shortfall for the upcoming fiscal year 2026-27 that starts on July 1st. It is about $5 billion more than was anticipated in June by state lawmakers.

It adds, “Starting in 2027-28, we estimate structural deficits to grow to about $35 billion annually due to spending growth continuing to outstrip revenue growth.”

Continuing, “We advise the Legislature to address the budget problem through a combination of ongoing solutions—namely, achievable spending reductions and/or revenue increases.”

There are issues cited, such as market uncertainty, and federal cuts to programs like MediCal and CAL Fresh.

California Republican Assembly Leader, Heath Flora, who represents communities like Copperopolis, La Grange, and Oakdale, has released the statement. He argues, “This is the result of (Governor) Newsom’s own choices. He refuses to take responsibility and is leaving California taxpayers to pay the price. It is a completely self-inflicted failure.”