CA will likely end its streak of annual surpluses with a $25B deficit next year

California will likely have a $25 billion budget deficit next year, marking the end to its run of annual surpluses. State officials warn this may be an early sign of a recession.

The S&P 500, a key indicator of the health of the stock market that drives the income of the superrich, has fallen more than 17% since its peak in January. State revenues are now $41 billion below expectations, according to an outlook published Wednesday by the nonpartisan Legislative Analyst's Office. The estimated deficit is lower because some of those revenue losses were offset by lower spending in other parts of the budget.

The shortfall won't endanger some of California's major expansions of government services, including free kindergarten for 4-year-olds and free health care for low-income immigrants living in the country without legal permission.