California is no stranger to economic booms and busts. But 2022 may be a prime example of how quickly and drastically the state’s fiscal outlook can change.

Earlier this year, a historic projected budget surplus of nearly $100 billion allowed Governor Gavin Newsom and the Democratic-led Legislature to expand government programs and financial assistance.

But a report released by the nonpartisan Legislative Analyst’s Office forecasted the state could be faced with a nearly $25 billion “budget problem,” an estimate they say is the weakest revenue performance California has seen since the 2008 Great Recession.

This report is only a projection, but how did the state’s fiscal outlook change so drastically in just one calendar year? Does it mean a recession is on the horizon?

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