Stock Windfall Erases California Deficit in Boom-Bust Shift (1)

California Governor Gavin Newsom unveiled a budget proposal with a modest $363 million discretionary surplus, ending a two-year streak in which state lawmakers needed to plug significant spending shortfalls.

The governor’s $322.2 billion proposal includes $228.9 billion in general fund spending, which is about $3 billion less than the current year. The state’s nonpartisan Legislative Analyst’s Office in November had pegged the deficit at about $2 billion but noted that it was “roughly balanced.”

The governor’s office has projected that tax revenue for this year came in $16.5 billion above estimates as a booming stock market and income growth boosted ...