California's Looming $68 Billion Budget Deficit Sparks Economic Crisis

California is facing a projected $68 billion budget deficit next year, with tax revenues plummeting and a structural deficit of about $30 billion annually. Governor Gavin Newsom's previous declaration of a $97.5 billion surplus has turned into a $22.5 billion shortfall. The state will need to make spending cuts and dip into reserves to close the gap. The Legislative Analyst's Office attributes the revenue decline to factors such as interest rate hikes, stock market declines, and tech layoffs. The progressive tax system, with the top 1% of taxpayers paying 50% of state income tax, exacerbates the budget shortfall. While the state has built up reserves, the deficit poses a serious challenge that may require tax hikes and long-term solutions.