The Image illustrates California state budget
for the year 2023 AD.
Trying times ahead for California .
AS CALIFORNIA grapples with the idea of paying (1)>>"reparations" to black -african Americans , there is a looming shadow of State Economic collapse . Six months ago, while proposing a revised state budget, (2)>>Gov. Gavin Newsom bragged about the state’s having a $97.5 billion surplus that would finance some landmark expansions of social and educational services.“No other state in American history has ever experienced a surplus as large as this,”Newsom told reporters as he unveiled a 2022-23 fiscal year budget that topped $300 billion and, with a few tweaks, was eagerly adopted by the Legislature. The grim news isn’t as shocking as the numbers — the entire nation is grappling with inflation and soaring interest rates, and (3)>>Gov. Gavin Newsom has played with numbers for almost three years how rosey the budget is .Unlike the federal government, the state must balance its budget yearly and not run a deficit.Yet still giving free health insurance to illegal immigrants, reparations to people who were never slaves, paying black and pacific Islanders to have babies, paying people to be homeless and about to start paying people to be trans.The estimate is part of the LAO’s 2023-2024 fiscal outlook, which is typically released at this time of year to help guide state lawmakers as they begin putting together budget proposals for the upcoming fiscal year. The office noted, less spending will help offset revenue losses like the state is expected to experience. The starker outlook poses a new set of (4)>>challenges for Democratic Gov. Gavin Newsom after years of flush budgets buoyed by a booming stock market and thriving tech sector. And advocates who scored massive victories over two years of skyrocketing surpluses are now worried the money will dry up.The California Department of Finance has said revenue is down for several reasons, beginning with the state’s highest earners, which generally includes those who make more than $500,000 a year. The state's progressive tax structure heavily relies on them.The announcement underscores California’s volatile tax revenue system, which has whiplashed between record deficits and surpluses since the COVID-19 pandemic struck in 2020. (5)>>That year, the state legislature cut spending to fill a $54 billion deficit in what lawmakers and analysts now acknowledge was an overcorrection.In 2021 and 2022, lawmakers had close to $100 billion in surplus funds and federal aid, which they (5.1)>>used to boost spending on education, homelessness, health care for undocumented residents and more. The budget also included a $17 billion inflation relief package with rebates between $200 and $1,050 for middle and low-income taxpayers. California governor Gavin Newsom seems oblivious to these statistics. Rather than focusing budget priorities on addressing these nuts-and-bolts deficiencies, including the lack of accountability within state government, Newsom continues to pursue spending on areas of his own interest, such as climate change, in which California green energy policies have raised the cost of energy to consumers and businesses. He also has proposed using $125 million for women who come to California from another state for abortions. Irrespective of one’s position on this issue, this is an inappropriate use of taxpayer funds. Newsom’s fiscal responsibility is to the citizens of California, period.A spokesperson for the Department of Finance said in September the combination of a shrinking unemployment rate and declining income tax revenues likely means the state is feeling the effects of job losses in higher-earning industries such as tech. Those job losses will likely have a disproportionate impact on state revenues.Earlier this fall, (6)>>Newsom vetoed dozens of bills that would have put the state on the hook for new, unbudgeted spending, citing lower-than-expected revenues. California was the state with the biggest exodus in the nation, causing it to lose a House seat for the first time in history. Now analysts are seeing the results of all these households and businesses that aren’t paying taxes — the biggest black eye being Tesla and Hewlett Packard, both setting up shop in Texas.California’s 40 million residents depend on less than 1 percent of the state’s taxpayers to pay nearly half of the state income tax, which for California’s highest tier of earners tops out at the nation’s highest rate of 13.3 percent.In other words, California cannot afford to lose even a few thousand of its wealthiest individual taxpayers. Something's got to give in California! As politicians are wont to do, the Dems in CA are generous with other people's money. Housing prices keep going up but they put out the welcome mat - as a sanctuary state - for untold thousands of mainly poor and uneducated illegals then provide them with Medi-Cal, education for their children, etc. It's the overburdened and shrinking middle class & upper middle class that have to pay the increasing tax burden to keep the state afloat. No wonder so many of them pull up their stakes and head to better-run states.
NOTES AND COMMENTS:
(1)>>"reparations" to black -african Americans . A non-slave state is going to take money from their white , non black working taxpayers who never owned a slave in a state that prohibited slavery when it entered the union and give it to people who were never slaves. Perhaps money should be paid to the families of those in the state who made sure California entered as a non-slave state. Where is this money going to come from? Will it push more people and companies out of CA? Force bankruptcy on the state? Should people have a say on how their tax dollars are spent? Interesting questions... Where will the answers come from ??? Right now I don't think California can fund this without issuing general funds bonds. Those require a statewide proposition and majority vote to pass. History would also tell us that this would have to be passed by the courts. It seems like a stunt from a governor that has presidential aspirations. Hey, if Californians pass it then expect other services to be cut. Personally, I don't get anything from this state and any excuse to raise rents ( like higher taxes). He refuses to allow a property tax exemption for totally and permanently disabled veterans because the price tag is too high at $30 million. Yet he wants to pay out hundreds of thousands to buy votes. Newsom has aggressively pushed his plan to provide financial reparations to Black Californians whom he says must be financially compensated for decades of discrimination.The California Reparations Task Force's five member economic consultant team reported that under the initiative, qualifying Black residents in the state could qualify for $223,200 per person. All at the Taxpayers of California's expense. How and why the people of California put up with this stuff is absolutely incredible. Cost more than the state total budget they are insane .(2)>>Gov. Gavin Newsom bragged about the state’s having a $97.5 billion surplus. Six months ago, while proposing a revised state budget, Gov. Gavin Newsom bragged about the state’s having a $97.5 billion surplus that would finance some landmark expansions of social and educational services. “No other state in American history has ever experienced a surplus as large as this,” Newsom told reporters as he unveiled a 2022-23 fiscal year budget that topped $300 billion and, with a few tweaks, was eagerly adopted by the Legislature. Legislature’s budget advisor, Gabe Petek, issued a sobering report on the state’s finances, saying revenues are likely to fall $41 billion short of what Newsom and legislators anticipated, leaving the state with a $25 billion projected deficit for the 2023-24 budget. Moreover, he said, if recession hits, as many economists expect, the gap between income and outgo could be much higher.If it’s just a $25 billion problem — as large as that number might seem — it could be handled relatively easily with some adjustments, such as throttling back on some of the spending the current budget contains. (3)>>Gov. Gavin Newsom has played with numbers for almost three years how rosey the budget is . Gov. Newsom's budget never makes any sense , if you been following it for the last three years . Back in 2020 , California faced a 50 billion dollar deficit , that somehow was wiped out the following year . In 2021, the governor enjoyed an also-significant $76-billion surplus. As the news site CALmatters reported, Newsom went on a “spending spree” in advance of a failed recall election: “He wants to spend $12 billion to house the homeless … $3.4 billion to expand preschool to all 4-year-olds … $1.5 billion cleaning up blight.” He just happened to make each announcement at a relevant location for a photo opportunity. Go figure. The mad money this year is the never-dreamed-of tax surplus of $97.5 billion projected by July 2023. Yes, that’s nearly $100 billion over what the state needs to fund what it planned.It begs the question: Why not just return the excess money to taxpayers?Part of the answer: “Only” $49 billion is discretionary money. The lion’s share of the rest legally must go to schools — $37 billion.A large amount of the surplus comes from stock gains and options. Next year that will mostly be gone. Soon Ca. will be writing IOU's again. (4)>>challenges for Democratic Gov. Gavin Newsom . Now, the surplus is gone and California is facing a sizable budget deficit. The fun is over. A Politico story captured the weeping and gnashing of teeth in Sacramento, as Democratic leaders vowed to protect every penny of spending from the budget ax. None of this should have been a surprise, given that “warning signs have been flashing for months.” The publication pointed to long-obvious falling tax revenues and layoffs at Bay Area tech companies. For years Gov. Gavin Newsom has boasted about billions in surplus while creating pricey programs for green energy and eradication of the homeless and crime. Last year he invited the world’s homeless to California, saying they would be cared for by taxpayers.Yet the high cost of living coupled with a yearlong COVID-19 shutdown was too much to handle for 101,000 households who fled the state in 2021, according to a Forbes study.(5)>>That year, the state legislature cut spending to fill a $54 billion deficit in what lawmakers and analysts now acknowledge was an overcorrection. I believe that California is bankrupt , the huge deficit was swept under the rug .$54 billion deficit of 2020 didn't just go away with a magic wand . That figure is higher than the deficit during the Great Recession and obliterates the state’s once-healthy reserves.Without sugar-coating how hard the prolonged shutdown of businesses during the pandemic hurt the state . Gov. Gavin Newsom’s administration released bleak projections on key statewide indicators: 18% unemployment rate for the year, 21% drop in new housing permits and nearly 9% decline in California personal income. The budget that lawmakers approved in June anticipated a 15% drop in tax collections because of the pandemic. But so far, tax collections are 9% higher than last fiscal year, with the state bringing in $11 billion more than expected. The result is a one-time windfall estimates at $26 billion in loss revenues by 2023 but that said could fluctuate between $12 billion and $40 billion depending on what happens. (5.1)>>used to boost spending on education. As of July 2022 , California spending for education has now taken half of the State spending . California spends more on education than any other state in the union. So far California has tripled its Ed spending . This year California’s public schools would see more than $20,000 per student in state funding under Gov. Gavin Newsom’s $102 billion education budget boost proposal, with significant funding to help districts weather the ongoing pandemic. Has now become too bloated .But California can’t keep increasing education spending while losing students and failing to produce significant achievement gains. Here’s my problem with money. It doesn’t necessarily mean better test scores or outcomes. Yes I agree teachers should be paid more. However, nearly half of California students can’t read at grade level. $128 billion to education, ranks 40th in the nation, below Arkansas, Kentucky, Tennessee, Georgia, Kansas, Missouri, Iowa, Florida, North Carolina, Nebraska, Indiana....you know, the flyover states.While administration has gotten bonuses and pay raises, the public side of education keeps getting budget cuts instead. It's pretty clear where the money is going and its not going to the future generations.(6)>>Newsom vetoed dozens of bills that would have put the state on the hook for new, unbudgeted spending, citing lower-than-expected revenues. Economic uncertainty at the state and national level is prompting him to keep a tighter hold on spending. Meanwhile, state financial experts are preparing for a time when the Golden State does not have a nearly $100 billion surplus. But Newsom hypocrisy is manifested when Nearly a dozen bills the governor has rejected in recent weeks include a letter cautioning lawmakers against spending unbudgeted funds. Some of those measures would have done things like provide free transit passes for students, limit preschool fees for low-income families, and create a pilot to fund outreach for behavioral health services to certain Medi-Cal patients. People at the lower end were gutted out in vetoed . The governor’s veto message says bills sent to his desk add up to more than $30 billion in one-time and ongoing spending not accounted for in the state budget, which was approved last June.The Department of Finance predicted in last May revise that the state’s good fortunes wouldn’t last forever, citing the war in Ukraine, inflation, global supply chain disruptions and the stock market as potential warning signs.
