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California Faces Escalating Budget Crises in Cities, Schools, and State Government

Structural deficits, economic stagnation, and rising costs drive multibillion-dollar shortfalls across California's government entities.

  • California's state government is grappling with a structural deficit, with revenues unable to match spending mandated by law, leading to projections of indefinite multibillion-dollar shortfalls.
  • An overestimated revenue forecast in 2022, later corrected to reflect a $165 billion error over four years, contributed to inflated spending and worsening fiscal challenges.
  • Major cities like Los Angeles and San Francisco report significant budget gaps, with LA facing a $300 million overspending issue and San Francisco working to address a $1 billion overspending target over three years.
  • School districts across the state are struggling with declining enrollment, reduced state aid based on attendance, and the expiration of federal pandemic relief funds, exacerbating financial difficulties.
  • Options for addressing these deficits include spending cuts, potential layoffs, and school closures, but tax increases are unlikely to gain voter approval given rising living costs.
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