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California Faces $42 Billion Deficit Amid Revenue Drop

5/25/2025

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Summary

Story summary

California Governor Gavin Newsom's revised budget projects a $12 billion revenue drop from tariffs and rising Medi-Cal costs.
Previous budget forecasts have consistently fallen short, resulting in an annual structural deficit of $10 billion to $30 billion.
Medi-Cal expenses surpassed estimates by over $6 billion, exacerbating the deficit.
The Legislative Analyst’s Office predicts the deficit may hit $42 billion by 2028-29.
Newsom's revenue assumptions face skepticism due to historical inaccuracies.

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Story summary

California Governor Gavin Newsom's revised budget projects a $12 billion revenue drop from tariffs and rising Medi-Cal costs.
Previous budget forecasts have consistently fallen short, resulting in an annual structural deficit of $10 billion to $30 billion.
Medi-Cal expenses surpassed estimates by over $6 billion, exacerbating the deficit.
The Legislative Analyst’s Office predicts the deficit may hit $42 billion by 2028-29.
Newsom's revenue assumptions face skepticism due to historical inaccuracies.