California Deficits Roar Back as Stock Rout Hits Taxes (1)

Governor Gavin Newsom said California will face a $22.5 billion budget deficit in the coming fiscal year, the first for the most populous US state since 2018 as the global stock market rout and efforts to cool inflation hammer its tax collections.

Newsom detailed the shortfall in a $223.6 billion budget he proposed Tuesday for the fiscal year that begins July 1. His general-fund blueprint fills the gap mostly by tapping one-time funds.

Gavin Newsom speaks during his inauguration in Sacramento, Calif., on Jan. 6.

Photographer: José Luis Villegas/AP Photo

The deficit brings an abrupt reversal for California, which enjoyed remarkable surpluses in the wake of the pandemic as the stock market rallied on the back ...