Gov. Gavin Newsom and the California Legislature, facing a swift reversal in fiscal fortune, will have to make tough choices as they confront looming budget deficits. Just a year ago, the governor was boasting, “No other state in American history has ever experienced a surplus as large as this.” Now, the state is facing a budget deficit of over $22 billion, perhaps more.

Though they may pull tricks to get around actually doing this, state lawmakers face a constitutionally-mandated deadline of June 15 to pass a state budget.

Leading up to this, the numbers aren’t looking very good.

Reflective of the state’s fiscal challenges, in March, the state’s Department of Finance reported that statewide revenues were $5 billion below projections of what they ought to have been in February.

Meanwhile, Gabriel Petek, the state’s legislative analyst, has noted this past Wednesday that, “If the economy enters a recession, the possibility of a sharp downward revision to revenue estimates — we have estimated by as much as $30 billion to $50 billion — cannot be dismissed.”

This is a major problem considering the state’s discretionary reserves are about $27 billion.

On the one hand, reserves are helpful to mitigating the need for sharp cuts to popular and justifiable programs.

On the other, it’s hard to know when the right time is to tap them. Relying on reserves too early could leave the state exposed in the event of a full-on budget recession, necessitating steep cuts and/or steep tax increases (at the worst possible time).

And to be clear, the Legislative Analyst’s Office’s stance is that, “the economy is at a heightened risk of going into a recession, which could cause the state’s budget problem to metastasize.”

Next month, the governor will release the “May revise” to his budget proposal released earlier this year with updated projections and budget plans.

There’s no doubt it will look dramatically different from last year, when the state was boasting of $100 billion surpluses which lawmakers used to go on spending sprees.

The political and tangible impacts of budget shortfalls will spur some difficult political fights over the coming months as lawmakers and interest groups jockey for whatever share of money they can get.

“As revenues continue to fall short, expectations will have to shrink further, the competition for money among budget stakeholders will become more intense and the pressure on Newsom and legislators will increase,” noted CalMatters columnist Dan Walters.

Newsom faced backlash this past week over plans to cut planned funding increases to the Court Appointed Special Advocates program which helps foster kids. Expect these kinds of battles to rage on.

This editorial board has long warned against profligate spending by Sacramento. From giveaways to the state’s favored public sector unions to wasteful boondoggles like the high-speed rail project, state lawmakers have consistently favored spending big over showing restraint and failing to prioritize needs over wants.

There are real world consequences to wasteful spending, as every individual knows. If only Sacramento lawmakers were as responsible with taxpayer money as they probably are with their own.

— Los Angeles Daily News