Newsom proposes billions in spending cuts as California confronts $22.5B budget deficit

California faces a $22.5 billion budget deficit, Gov. Gavin Newsom said Tuesday as he proposed billions in cuts and deferred spending amid a significant drop in capital gains tax revenue.

After the state’s revenue boomed a year ago due largely to a capital gains tax rate that reached nearly 10 percent, that revenue is now down by $29.5 billion year-over-year, as the capital gains rate fell to roughly 5.5 percent.