California governor wants reserves and cuts to fix nearly $38B deficit, mostly sparing schools

California Gov. Gavin Newsom is announcing a $291 billion state spending plan with an estimated $37.9 billion deficit. That’s a significantly lower budget hole than the Legislative Analyst’s Office predicted in December. It estimated the state would face a $68 billion deficit. That difference is likely due in part to a rebounding stock market. The proposal Newsom is laying out Wednesday outlines how he wants to spend taxpayer dollars and other state money for the fiscal year starting July 1. He’ll spend the next six months hashing out a final plan with the Legislature, also controlled by Democrats. The governor is proposing to draw $13 billion from the state’s reserves to cover some of the deficit.