Newsom Pegs Much Smaller California Deficit at $37.9 Billion (1)

California Governor Gavin Newsom proposed spending cuts during the next fiscal year to deal with a $37.9 billion deficit left by inflation and a plunge in tax revenue from wealthy earners, a gap that is much smaller than had been projected by the state’s fiscal analyst.

The $208.7 billion proposal would shrink the state’s general-fund budget by more than 7% from the current fiscal year. Newsom will revise his proposal in May accounting for the latest revenue figures and negotiations with the legislature, which is controlled by fellow Democrats.

The state’s nonpartisan Legislative Analyst’s Office in December had pegged the ...