Budget

California faces a $2.9 billion budget deficit for the next fiscal year, one that’s drastically smaller than an $18 billion shortfall forecast last fall, according to Governor Gavin Newsom’s January budget proposal released on Friday.

The development comes after a Republican-led campaign delayed key tax increases in the bill.

As talk of a possible AI bubble grows, so does uncertainty around an important source of California tax money.

Local agencies have shelved planned services and upgrades to buildings amid funding uncertainties.

Republicans who have blocked new tax revenues now argue emergency funds might be needed.

President Donald Trump and the Republican-controlled Congress have cut funding to Medicaid, which pays for many services for students with disabilities. Trump also gutted the Office of Civil Rights, which helps enforce disability law.

California’s $17.5 billion prison system is over budget, contributing to a projected state deficit. Some groups want him to close more prisons.

The program has been put to the test with the recent government shutdown and an earlier fight over the federal budget.

Oregon has two reserve funds meant to ensure state agencies and services remain whole and public school budgets aren’t throttled.

A group of financial stakeholders is meeting regularly to advise the governor on how to prepare for reduced federal funding for Medicaid. The program is funded by taxpayers and insures one in three Oregonians.

Potential cuts across state agencies could mean service reductions for Oregonians and more work for current employees.

California lawmakers faced a difficult budget year, but they still managed to put hundreds of millions of dollars in earmarks in the state budget to benefit their districts — and help them get re-elected.