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.