STATE — The California Legislative Analyst’s Office released Friday a grim outlook concerning the state’s budget for Fiscal Year 2022-23.
The LAO, an independent state agency, projects a massive $26 billion budget deficit and is expected to carry over into the 2023-24 cycle. Over a three-year period covering fiscal years 2022-25, the LAO is projecting a deficit of $58 billion.
Several reasons for the budget shortfall include higher borrowing costs, reduced investments, economic downturn and higher mortgage payments, to name a few.
“In an effort to cool an overheated U.S. economy, the Federal Reserve has taken actions over the last two years to make borrowing more expensive and reduce money available for investment,” the LAO report states. This has slowed economic activity in a number of ways. For example, home sales are down by about half, largely because the monthly mortgage to purchase a typical California home has gone from $3,500 to $5,400.”
