California’s Budget Deficit Is Even Worse Than Originally Projected
The shortfall is $73 billion, and Bidenomics appears to be a contributing factor to the deficit expansion.
The last time we checked on California’s budget, the deficit was a whopping $68 billion, which was twice the original amount (due to Bidenomics).
The deficit has grown considerably since that December report. It now stands at $73 billion.
The tug-of-war between California Gov. Gavin Newsom and the nonpartisan Legislative Analyst’s Office [LAO] over the state’s projected budget deficit took a new turn Tuesday, when the LAO announced a revised shortfall of $73 billion — $15 billion more than previously forecast, and significantly more than the $38 billion gap that Newsom has estimated.
The LAO reported that recent revenue collection data “reflect even further weakness” for the state’s financial outcome.
“All else equal, this means the budget problem is likely to be higher” when the governor gives his revised projection of the state’s finances in May, the LAO said in a Tuesday update.
The LAO said that the actual budget shortfall will depend on a variety of factors, such as mandatory Proposition 98 spending on schools and community colleges.
As before, Bidenomics appears to contribute to the deficit expansion.
The LAO notes that tax collections in recent month have deteriorated, rather than improved. “Recent revenue collections data reflect even further weakness relative to [earlier] estimates,” the analyst notes. Corporate tax collections were a third lower in December relative to the year before.
Income tax withholding and estimated payments from capital gains have also been weak. “As California’s tech companies have grown, equity pay withholding has increased as a share of total income tax receipts,” the LAO notes. Yet despite tech stock gains that should boost the amount of tax being withheld from paychecks, it adds, “recent withholding has been underwhelming.”
Perhaps this is due in part to the underperformance of the overall state economy. California’s unemployment rate rose to 5.1% in December from 4.1% a year earlier, while the number of employed workers declined by 108,200. The U.S. jobless rate is 3.7%, and Florida’s is 3%. Sorry, Gov. Newsom.
This is unfortunate timing for Newsom, who appears to be the “Plan B” for the Democrats’ presidential candidate.
President Joe Biden appeared unprepared to be asked if his upcoming trip to California is to brainstorm a back-up plan amid doubts over his viability in 2024.
A reporter asked ahead of Biden’s Los Angeles campaign visit on Tuesday if California Gov. Gavin Newsom should ‘stand by’ to be tapped by the Democratic Party to appear on the ballot.
…Biden, 81, is participating in a campaign reception in Los Angeles on Tuesday evening amid rising concerns over his fitness for office.
Podcaster Joe Rogan predicted that Newsom will end up on the Democrat’s 2024 ticket.
‘I think they’re gonna get rid of him… I’d say they’re setting up Gavin Newsom for it,’ he said last week.
Pres. Biden departs for California campaign swing … first reporter question is about Gavin Newsom .. "Is this coming up with a Plan B for 2024? Does Gavin need to stand by?" pic.twitter.com/XcTqb4XHok
— Howard Mortman (@HowardMortman) February 20, 2024
How high can the state’s deficit go? Put your estimates in the comment sections!
Mark my words (and bookmark this post): when all is said and done, I predict the final deficit will be $85 billion.
Here’s why:
1. Newsom is addicted to spending. He cannot stop. He keeps announcing even MORE spending.
2. Number of illegal immigrants in California, who are… https://t.co/4beZsKpGwC
— Houman David Hemmati, MD, PhD (@houmanhemmati) February 20, 2024
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Comments
The issue is only going to accelerate now as boomers in the public sector retire and take their pensions. The CA public sector pension system is unfunded. Not to mention the free health care for 3 million illegal aliens, free hotel rooms for homeless junkies, and “reparations” for blacks in the form of “community investment”. CA is under single party rule, dem super majority, there will be no course correction. CA is facing lost decade.
The only change I’d make to your comment is “lost decades.”
Its no longer rational for high net worth taxpayers to remain CA resident. Musk said that with the amount of money he is saving on taxes by moving out of CA, he can build colony on Mars.
how many have their 2nd home in California but have a primary residence in some low tax state?
You sound like part time min wage worker who has no understanding of how taxes work. If you own second home in CA, you would still pay property taxes to CA while you owned the home. You would still be taxed by state of CA on any rental income from that home. You will still pay cap gains tax to state of CA on the sale of that home. And yes you can potentially still be forced to pay income tax to state of CA on any other forms of income earned based on the number of days you were in the state of CA part time.
Someone could own a second home in California, and not pay California income tax if there is no California source income. Residency outside the state would have to be well established.
OK buddy good luck trying to claim you only live in CA for 49% of the year and see how that goes. There is such a thing as part time residence tax.
…Biden, 81, is participating in a campaign reception in Los Angeles on Tuesday evening……… when he will announce that he is canceling California’s Deficit.
No need! I’m sure Newsom can find $73B in unused COVID funds kicking around somewhere in his state.
I am surprised that funding wasn’t approved to continue their trillion dollar train “from nowhere to nowhere” once Brandon took office.
Here’s how CA solves the problem.
(1) Apply to the feds for a $5000 “inflation grant” for each person in the state.
(2) Collect a “pretax” and “handling fee” of 50% on each grant.
(3) Californians are happy with $2500 of free money.
(4) State collects 38 MM * $2500 = $95 billion.
(5) State has turned a $73 B deficit into a $20 B surplus to continue to build their high speed RR (and other fun things)
How about a $50/hour minimum wage and a 100% tax on any income over $100,000/year. A lot of his voters would jump for joy at the thought of making $100,000 (which the $50/hour, 40 hour work week, 50 weeks per year, would work out to).
Kamala has devised a plan which will direct Jay Powell, under threat of racism accusations, to initiate a round of quantitative easing and interest rate reduction exclusive to the federal reserve bank in San Francisco. Nancy Pelosi, after being tutored that the billion number is bigger than the million one, will be the new bank president.
CA gov newscum has declared that in the spirit of equity of outcomes, everything in the state must now be free to whoever wants it. CA is woke joke.
In that case, I want his limo and security detail.
The total budget is $291.5B so this represents a 25% shortfall and it seems every week the state promises some new round of freebies for “migrants.”
They already have the highest tax rates in the country and some of their most productive citizens are leaving for low tax states. It is going to be interesting to see how this plays out.
I’ve heard from reliable sources on television this has all been caused by those evil Republicans.
Specific Trump’s fault.
😏
I don’t know who they’re going to use to replace Biden. But, it’s looking increasingly clear it’s not going to be Gov. Crime & Bankruptcy.
no wonder he wants to be president. bring that California Dream to the whole country.
Alternatively, escape to a better job before the chickens come home to roost.
Because what good is being king if you can’t have fun spending everybody else’s money?
When your outgo exceeds your income,
Your upkeep will be your downfall.
– A wise coworker
.
For fun, troll the state by state GDP data. I think this came up a week or so back on growth in red states being the ones holding up the economy.
California has the about the 4th or 5th biggest economy in the world (only a few countries like China exceed it). So Ca not prospering is not a good thing for world…. views on evil aside and the invisible hand b-slapping Newsome and their legislature.
Construction is one of the biggest contributors to red state GDP. Tennessee was on top for growth and real GDP. Giddyup!!! All that New York and Ca money coming in is going into putting up businesses and giant houses. Yay.
Washington was in the top 10. I can see what is happening there- a lot of flight from urban centers (aka Seattle) and relocating outside of the urban run hell holes. That will be interesting because I-5, 405, 167, 18, 16, the ferries are already clogged freeways that can’t really handle any more commuters. They all run about 15 MPH at peak commute times.
The exodus from NY was already heavy before the Trump fine—- but it will continue. I think these blue states will continue to see the exodus because the tyranny of the majority in conjunction with kangaroo courts (Washington’s courts are soooo in the tank- it’s a bananna republic at best) will drive people out. Those who don’t have means now are biding their time.
You’ll see kids go away for jobs or school (to not woke places) and never return- this is how the migration will continue
Skilled knowledge workers moving out, illegal aliens and homeless junkies moving in. What could wrong with blue state policies?
What?!?!?!!
A brain drain of skilled employees from blue states to red, replaced by low skilled military aged invaders who want to live off the productivity of others?
How could that ever be a problem? These are the best and brightest coming from these countries, escaping desolation and disease.
It’s the American Dream, man!!!!
/s
I know it’s George Romero’s!
Well since the big mover is construction, those Red states have plenty enough of keyboard remote refugees coming in and cash heavy new yahkers, what they need is guys who know how to pour foundations, connect pex, bang a shingle and hang drywall.
Sadly these skilled trades people are getting priced out of the exodus.
Incidentally – in my neck of the woods, a lot of the clowns out here who were building in 2007 didn’t debur the copper in the plumbing. Plenty of pin hole leaks in those million dollar homes from that housing boom-crash.
not really over the budget
the left has a no budget policy as established by the american taxpayers and gop acceptance of the Keynesian pov
socialism is now more than 50% of the american economy as the government can and DOES control what businesses can and cant do
production hiring and firing etc etc
people just want to face those facts so we can pretend
and until that pretend shuts us down worse than C19 did
correction:
people just DONT WANT TO FACE THOSE FACTS
Dumb*sses can’t balance a checkbook nor foresee self created issues on the horizon. What, no more COVID slush fund money?
Excellent case study can be done on Barak Obama’s presidency and his wishy-washy policies that resulted in people holding onto their monies 🙂
Surprise! Stupid communists are really bad at managing money.
And spending loads of other people’s money.
Every sustainable practice from the Left ends up being economocally unsustainable without the inclusion of OPM (other people’s money). And if it is legitimately sustainable from the Right, .gov will step in with regulations to make it not so. That is how they are getting rid of dams. Simply regulate it to the point where blowing it up is cheaper. The EPA was mao’s greatest accomplishment. But only if implemented in another country.
There is no sum of money that would slate the left’s thirst for wasting public money.
As a professional economist and Texas resident, I’ll venture my estimate of between 90 and 100 billion based on two overlooked factors. The first is that many high-income earners have left Cali for low-tax jurisdictions such as Yexas and Florida leaving a big and growing gap in tax collections, and the second is the overwhelming number of illegals who have left many states and flocked to Cali where Newsum dishes out evermore benefits. Many of these payments are being made from COVID funds that have been ransacked for other purposes. Newsum is an NEP believer to the tenth degree. He’ll keep up the spending until he can’tborrow or bag any funds. I look forward to Trump cutting off the spigots to Cali and the rest of the big spending blue states after January. I can see Cali in bankruptcy by 2027.