Should Newsom Stay or Should He LAO? California’s 2024-2025 Budget

The FY 2024-25 budgeting cycle in California was far less chaotic than the previous year, when a record $100 billion budget surplus morphed into a widening deficit. This time, Democratic Gavin Newsom and the Democratic controlled legislature had to tackle that mounting deficit as the state’s economy stalled, specifically among the wealthiest Californians, who fund a large portion of the state’s government. Neither Newsom nor the two new Democratic legislative leaders had experienced a budget deficit in office, which made coordination additionally tricky. The state is in much better shape than previous deficits, however, with a large reserve and strong budget resilience among its leaders. One problem- the governor increasingly reports different budget numbers than the state’s nonpartisan Legislative Analyst Office (LAO), which assesses the administration’s budget for the legislature.