Eyeing Record $68 Billion Deficit, California Institutes State Spending Freeze Until Summer of Next Year

Craig Bannister | December 15, 2023
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Expecting a $68 billion deficit in the upcoming fiscal year, California’s Department of Finance has ordered a spending freeze for the rest of the current fiscal year (FY2024).

That means all state agencies will have to curtain all non-critical expense for over six months, until the current fiscal year ends next Summer, on June 30, 2024.

A California Department of Finance “Budget Letter” issued Tuesday directs “all state entities” to “take immediate action to reduce expenditures and identify all operational savings achieved:

“The State of California anticipates significant General Fund budget deficits in fiscal years 2023-24 and 2024-25. Accordingly, this BL directs all entities under the Governor’s direct executive authority to take immediate action to reduce current-year General Fund expenditures.”

If realized, the $68 billion deficit would be the largest in state history, local station KCRA reports, noting that state Republicans have been warning about California’s spending:

“‘Despite all warnings that it was unsustainable, California’s tax-and-spend majority increased state spending by $116 billion over the last six years, nearly doubling the general fund budget in that short time,’ said Republican State Sen. Roger Niello, who is the vice chairman of the Senate's budget committee.

“He said in part, ‘Republicans cautioned that this level of spending would lead to greater deficits, and it would be more prudent to show restraint. Unfortunately, the majority party ignored those warnings.’”

State agency Secretaries and cabinet-level directors will be required to submit monthly reports detailing all spending exemptions and savings achieved.

Expenditures specifically cited as subject to the spending freeze include:

New Goods and Services Contracts

  • IT Equipment
  • Fleet Vehicles
  • Office Supplies
  • Other (subscription renewals, training costs, furniture purchases, etc.)
  • All non-essential ravel (both in-state and out-of-state)
  • Leave Buy-Back
  • Architectural Revolving Fund (ARF)

 

“Additionally, entities shall re-evaluate expenses related to current IT projects,” the letter states.

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