Gov. Gavin Newsom announces his 2024-2025 state budget proposal, including his plans to deal with a projected $68 billion deficit, at the Secretary of State Auditorium in Sacramento on Jan. 10.

In a few weeks, Gov. Gavin Newsom will unveil his updated budget plan for the fiscal year that begins July 1.

Pray for the best but expect the worst.

After several years of unprecedented budget surpluses — buoyed by federal stimulus funds and a stock market on steroids — California’s financial outlook has turned grim. This may seem counterintuitive: the stock market recently soared to record highs. But California is suffering from a unique combination of factors. It significantly overestimated its revenues last year — largely because the Internal Revenue Service pushed back by seven months the deadline for most Californians to file their 2022 tax returns due to intense winter storms — and now has to course-correct. And it’s still reeling from high interest rates, which depressed investment in the tech industry and start-up companies on which California’s economy heavily depends.

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When Newsom presented his budget draft in January, his administration estimated the state faced a $38 billion shortfall. The nonpartisan Legislative Analyst’s Office, which advises state lawmakers on financial issues, projected a deficit of $73 billion. The actual shortfall will largely depend on how much revenue California collected last week when personal income taxes were due.

Although receipts are still being tallied, the state appears to be on........

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