Brown bought the state back from the brink by making cuts to various programs and slashing salaries, along with getting voters to approve a measure to raise taxes on the wealthy. It also helped that the soaring economy and jump in capital gains tax revenues from the surging stock market flowed into the state's coffers.
Still, S&P Global Ratings cautioned in a report last month that "despite eight years of an improving budget position, California remains vulnerable to significant fiscal stress in a recession." It said the state's "volatile revenue structure is California's primary fiscal risk factor."
The S&P report points out "there is little evidence to suggest a recession is imminent." It points out the state continues to add new jobs and tax revenues through September were running ahead of budget forecasts by more than $1 billion.
California is considered the economic engine of the U.S. economy, with the state's current economic output of $2.75 trillion an estimated 14.1 percent of overall U.S. GDP. The blue state's job growth has outpaced the nation since early 2012 on a year-over-year basis.
But California's export volumes have started to slow as the trade war begins to take a toll on the state's exports of agricultural goods and raw materials. And Los Angeles-based independent research firm Beacon Economics last month forecast that job growth would slow in all five of the state's top metropolitan areas in 2019, including Los Angeles and the San Francisco Bay region.
Newsom is scheduled to take the reins of state government Jan. 7, coming into office with California enjoying a budget surplus of several billion dollars and about $14 billion reserved for the so-called rainy day fund for the next economic downturn.
"Previous governors that we can remember here, except for [Democrat] Gray Davis when he took over, have inherited a huge budget deficit," Zaremberg recalled. "And so here we have a situation where Gavin Newsom is not inheriting a deficit. It's not like you have to turn things around. You just have to make sure that you don't screw things up."