Gov. Gavin Newsom on Saturday signed California’s budget to close an estimated $46.8-billion deficit through $16 billion in spending cuts and temporarily raising taxes on some businesses.

Lawmakers passed the budget Wednesday following an agreement between Newsom and legislative leaders in which both sides made concessions and also had wins as they were forced, for the second year in a row, to pare back or delay some progressive policies that had been fueled by record-breaking surpluses during the COVID-19 pandemic.

“This is a responsible budget that prepares for the future while investing in foundational programs that benefit millions of Californians every day,” Newsom said in a statement. “Thanks to careful stewardship of the budget over the past few years, we’re able to meet this moment while protecting our progress on housing, homelessness, education, health care and other priorities that matter deeply to Californians.”

The deficit was about $32 billion in 2023 before growing even bigger this year, with more deficits projected in the nation’s most populous state. Saturday’s signing came just two years after Newsom and Democratic lawmakers were boasting about surpluses that totaled more than $100 billion, the product of hundreds of billions of dollars of federal COVID-19 aid and a progressive tax code that produced a windfall of revenue from California’s wealthiest residents.

But those revenue spikes did not last as inflation slowed the economy, contributing to rising unemployment and a slowdown in the tech industry, a sector that has driven much of the state’s growth. The Newsom administration then badly miscalculated how much money California would have last year after a seven-month delay in the tax filing deadline.

California has historically been prone to large budget swings, given its reliance on its wealthiest taxpayers. But these deficits have come at a bad time for Newsom, who has been building his national profile ahead of a potential run for president and has been tapped as a top surrogate for President Biden’s campaign.

The budget includes an agreement that Newsom and lawmakers will try to change the state Constitution to let California put more money in reserve for future shortfalls.

Republicans, however, said they were left out of negotiations. They criticized the tax increase on businesses, which applies to companies with at least $1 million in revenue and will last for three years, bringing in more than $5 billion extra for the state next year. And they criticized Democrats for some cuts to social safety net programs.