California's Record-Breaking $68B Budget Deficit: Newsom and Lawmakers Grapple with Economic Crisis

California's Legislative Analyst Office has announced that Gov. Gavin Newsom and state lawmakers will need to address a $68 billion budget hole when crafting next year's state budget. While not calling it a crisis, the Legislative Analyst suggested that Newsom consider declaring a budget emergency to tap into the state's rainy-day fund. The deficit, the largest in the state's history by dollar amount, could lead to deep budget cuts by next summer. State leaders have several tools to address the problem, including the $37.8 billion in reserves, but reducing education funding and halting the use of earmarked funds may be necessary. The economic weakness and revenue decline are attributed to factors such as an underperforming stock market, high inflation, and job losses in high-wage sectors. Negotiations on closing the budget gap will take place over the next few months.