Calif. suffers $1bn shortfall due to stock market slump

Calif. suffers $1bn shortfall due to stock market slump

The state of California faces a major cash crunch due to a recent slump in the stock market, a spokesperson for the Golden State's Department of Finance revealed.

Department of Finance spokesperson H.D. Palmer said the department received around a billion dollars less than what was originally projected for the month of April. He pegged the department's originally projected figure at around $14.9 billion.

Revealing the shortfall, Palmer said, "We projected that we were going to take in about $14.9 billion from personal income taxes in the month of April -- the most important revenue month for the state. We took in about a billion dollars less than that."

He explained that the billion dollar hit was primarily caused by capital gains, which can be described as the taxes that people pay to the government after selling stocks at a profit.

Capital gains are an important source of revenue for California, accounting for roughly two-thirds of the state's overall budget. The shortfall is expected to affect some key services, such as healthcare.

Meanwhile, Gov. Jerry Brown's administration is facing demands for increase in funding for services like child care. Sen. Hannah-Beth Jackson, a Democrat from Santa Barbara, is asking for $800 million for childcare. She said additional money was essential for providing a hike in rates for child care providers. There are also demands for additional funding for Denti-Cal that serves low-income residents.