California Governor Gerry Brown warned on Thursday that the state, which generates revenue largely through volatile capital gains taxes, is overdue for a correction after years of economic expansion.
“Over the past four years, we have increased spending by billions of dollars for education, health care, child care and other anti-poverty programs. In the coming year, I don’t think even more spending will be possible,” he said. “We have ongoing pressures from Washington and an economic recovery that won’t last forever.”
On Wednesday, the state’s controller, Betty Yee, said revenues through April for the fiscal year that began July 2016 were $1.83 billion below initial estimates. Income tax in April lagged projections by about $708 million.
“This is another signal that we may be inching toward an economic downturn, and we must tailor our spending accordingly,” Yee said.