California’s longest-ever period of economic growth is slowing, Gov. Gavin Newsom said Thursday, warning that next year’s budget may not be as flush as this year’s.
“You’re already seeing the plane land in terms of the the slowdown,” Newsom told reporters. “I think it’s going to reflect in a more sober look at next year’s budget.”
His 2020 budget blueprint is due in January.
This year, he rolled out his budget plans in an exuberant press conference where he pledged to spend more on many of his top priorities. Much of that came to fruition in the final $215 billion budget he signed in June.
This year’s budget built up California’s reserves to more than $19 billion in anticipation of the next recession. Record surpluses allowed the governor to boost health care, housing and education spending and grant asks from many lawmakers, such as making the first two years of community college tuition-free for California students.
He also used the surplus to pay down debt, including making billions of dollars in extra payments to state pension funds to reduce long-term debts at CalPERS and CalSTRS.
On Thursday, he says he’s seeing a slowdown as revenues come in closer to projections after months of coming in well over. He mentioned several of the state’s revenue streams — the personal income taxes, sales taxes and corporate taxes — and said some are coming in a little higher, some lower and others basically on target. Overall, that means a recession is likely on the horizon.
The national economy has been growing since June 2009.
“‘Folks, we’re about to begin our descent,’” Newsom said, mimicking a airplane pilot addressing passengers over a loudspeaker. “We’re still at 36,000 feet, but we’re about to begin our descent.”