What a difference a year makes, as the state’s Legislative Analyst Office said early last December that California had a $68 billion budget deficit, but now that deficit is down to just $2 billion.It’s been one hell of a three-year period for the State of California’s financial yo-yoing. Back in 2022, the state was boasting a gaudy $97.5 billion surplus. But by January 2023, that had been squandered down to a $22.5 billion deficit. By December 2023, that deficit had been shockingly revised upwards by the state’s Legislative Analyst Office to an all-time record $68 billion deficit. But a combination of budget cuts and increased tax revenue have yanked things the other direction yet again. The Chronicle reports that the current projected California budget deficit is down to just $2 billion.“It’s really been driven by income gains among high-income taxpayers, which are benefiting a lot from very strong stock market trends,” state legislative analyst Gabe Petek said on a Wednesday call, per the Chronicle. “We describe the state’s budget condition as being in fair shape, and we would describe it as being roughly balanced.”Though Petek added, “But there’s really no new capacity for new commitments.”To be clear, we are still in deficit times. But it may be that all of the cutting that needs to happen has indeed happened. And that’s got to be good news, considering that President-Elect Trump is in position to wreck the California economy with his promised mass deportations.“No state has more to lose,” Governor Gavin Newsom said at a press conference last month, as the Chronicle reports. “If Donald Trump is successful with mass deportation, no state will be more impacted from a fiscal perspective, an economic perspective.”The state must also brace for getting less federal disaster relief under Trump, potential litigation costs over lawsuits challenging Trump’s policies, and the unknown effects of Trump’s tariff proposals. But as it looks now, the state budget will at least have a little more wiggle room to weather these and other storms.Related: State of California Now Running a Record $68 Billion Deficit [SFist]LOS ANGELES, CALIFORNIA - OCTOBER 27: California Governor Gavin Newsom speaks during a press conference at Raleigh Studios unveiling a vast expansion of California’s Film and Television Credit Program on October 27, 2024 in Los Angeles, California. Newsom and Los Angeles Mayor Karen Bass announced a proposal which would expand the program to $750 million annually, a major increase from the $330 million currently allocated, amid sluggish film and TV productions in Hollywood and across California. (Photo by Mario Tama/Getty Images)