Not just the state, but California cities face tough times as they craft budgets for fiscal year 2025-26, which begins on July 1.
Yesterday Gov. Gavin Newsom released the May Revision of his budget, clocking at $226 billion in general-fund spending, with a $12 billion deficit.
Newsom can try to blame the deficit all he wants on President Trump’s tariffs, but Newsom’s budget still spends 61% more than Gov. Jerry Brown’s last budget of $140 billion for fiscal 2018-19 — in just six years. Newsom’s overspending is the real problem.
Most Southern California cities are not prepared for this shock. Los Angeles: a nearly $1 billion deficit, with Mayor Karen Bass proposing 1,600 layoffs. San Diego: $300 million deficit, which City Councilmember Kent Lee said “may be fairly rosy.” Long Beach: $20 million deficit. Anaheim: $41.1 million deficit. Santa Ana: $35 million deficit. Riverside: $856,100 deficit.
But smaller cities are having problems, too. Cerritos projects a $2.9 million deficit. On the positive side, the city of San Bernardino expects a modest surplus of $204,760. That’s a big turnaround from its 2012 bankruptcy. And Irvine’s adopted two-year budget for 2025-26 forecast a $451,543 surplus.
All these numbers are preliminary and don’t reflect more major cuts by the state or the federal government. But overall, they indicate all cities, even those with modest surpluses, likely are going to need more spending cuts.
A problem with federal funding is it commonly becomes a semi-permanent part of city and county budgets, former state Sen. John Moorlach told us; he’s currently director of the Center for Public Accountability at the California Policy Center.
The way it’s supposed to work, he said, is the federal funds support a project, but when the project is no longer needed, “then you just remove it from the budget. But what’s profound about government in this state, because it’s union-controlled, is government is so easy to expand, but it can’t seem to contract.”
Well, cities are now going to have to figure out how to do just that.
These are tough times not just for California cities, but for most people in the state. Whatever the governor’s excuses, belt-tightening is needed, and long overdue.
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