With potential recession looming, California estimates $25-billion deficit next year and it doesn’t look like there’ll be much relief in sight in the near future.
The state’s economy, however, has been on an upswing for more than a decade.
According to the latest report from the state Controller’s Office, California is projected to have added 6.3 million net new jobs since 2010, with a 6.2 percent unemployment rate.
And, in the first nine months of this year, the state added an estimated 2.9 million jobs from an estimated 4.7 million new positions created in the entire year.
Last year, the unemployment rate dipped as low as 3.8 percent in April, but has since risen to 4.4 percent in June.
The state expects its full-year employment growth to continue. But, the report says, California’s economy is not growing fast enough to offset the loss of jobs.
Gov. Brown is warning of potential layoffs as the state struggles to maintain services during the next recession-level downturn, which could bring millions more people into the state and wipe out the state budget deficit already forecast for 2016, according to a report released Friday.
“It may not be possible to avoid layoffs,” Brown wrote in a memo to state lawmakers and top legislative leaders.
“It will mean an immediate reduction in services, programs, and funds, with the potential for layoffs,” he said.
The Legislature is in the midst of a budget cycle, with lawmakers set to spend another $24.2 billion to avoid the worst-case scenario for the state budget as it faces a potential recession in 2017, according to the report.
The state has projected an $18.1-billion budget shortfall in 2016 and $15.6 billion deficit for 2017.
California’s budget shortfall, the report says, is the largest since the 1980s.
The report forecasts a roughly $25-billion budget deficit in 2016, when the forecasted deficit for the year exceeds the amount the state will receive in grants from the federal government. State lawmakers have already passed a budget that sets aside $6.5 billion to help