Newsom Forced To Slash California Budget, Blames Crippling Deficit On "Rain Bombs" And taxation Shortfalls

In the course of 2 years, California has turned a $100 billion surplus into a $73 billion deficit, Forcing politician Gavin Newson (D) to propose Painful (token) spending cuts on Friday While announcing his revised state budget.

California politician Gavin Newsom unveils revised 2024-25 state budget on Friday, May 10 (photo: AP, Rich Pedroncelli)

When asked how the state was able to accomplish specified a monumental failure, Newsom – who claims the default is actually $27.6 billion (to which even AP called him out) – blamed a simplification in taxes from capital gain income, which suggested in 2021 a raging stock marketplace and plummeted in 2022. Then, in 2023, the state 'continued to collect little taxation gross than projected' due to capital failure Carryovers. He besides blamed "unexpected rain bombs" – which caused the IRS to extend the taxation filling deadline for most California taxpayers in 2023 following respective winter storms. erstwhile these taxes Were everually collected, they were 22% below expectations, according to the Governor's office.

Watch:

According to AP, Newsom will cut $6.7 billion set apart for doctors who treat Medicaid patients, cut off healthcare to 14,000 disabled migrants in their home, saving $94.7 million, and slashed $550 million that was headed towards building fresh facilities.

Republican State Senator Brian Dahle called the cuts a “hold gesture, at best,” Adding “The governor’s national ambitions have tripped a massive exodus of people and businesses creating an enthusiastic return shortfall of individual and corporate income taxes.”

‘You can’t have a good government without a strong private sector. Plain and simple, people are being paid out of California from bad policies and mismanagement,’ Dahle continued.

In total, Newsom is proposing $32.8 billion in cuts over 2 years – including an 8% cut to state operations, which he says will shot things up.

Of course, we know that’s bullshit.

Refreshing your memory from early April, Mike Shedlock gives a sobering view into reality;

* * Oh, * *

The City diary founder Ed ringing comments on the Golden State Budget Fantasy

While finalizing the upcoming fiscal year’s state budget back in May 2022, California politician Gavin Newsom buoyed of an extraordinary projected surplus: $97 billion. The politician immediately collabated with an enthusiastic state government to spend it all. Of course, fresh spending on fresh programs and benefits trends to become permanent.

This has happened repeated in California. Between fiscal year 2012–13 and fiscal year 2022–23 (the year with the projected $97 billion surplus), per capita general-fund spending doubled, from just over $3,000 per resident to just under $6,000. (All figures are in 2022 inflation-adjusted dolls.)

The State Office of Legislative Analyst’s latest study projects a $73 billion dollar default for the next fiscal year. It won’t be easy to paper over this debt, but the state may usage its opaque accounting strategy to hide the ball.

California’s general-fund budgets are reported on a cash base. The state’s balance sheet, however, uses “accrual-based accounting.” Without getting besides far into the weeds, this is an apples v. oranges situation. alternatively of the algebraic perfection of private-sector income statements, balance sheets, and cash flows, government accounting provides no easy way to reconcile what you see on the budget.

Some watchdogs, however, have succed in cracking the code. John Moorlach, 1 of the only certified public accountants to service in the California State Senate, just published a review of the state's fiscal health, focusing on the balance sheet. According to Moorlach, California's balance sheet is in trouble.

Moorlach declared in a March California Insider interview that the state “now has the largest unrestricted net deficit in the US: $222 Billion.” In plain English, Moorlach is saying that California's state government accounts have liabilities that excellent assets by $222 billion. No substance how creative Newsom and his financial visions may be, someday that money will should be paid.

A remedy that California has turned to over the years and will undoubledly turn to now is to accumulate additional long-term debit. Emulating the national government, but licking its dollar-printing ability, California’s state and local government and agents have racked up over a trillion dollars in debt, primary in bonds and unfunded pension liabilities. These liabilities, too, must be paid. Since that’s all but impossible, the liabilities must be served with payments that, just as at the national level, will eat up more and more of the operating budgets.

How Much Is California in Debt?

The above link says over a trillion. That’s being very generic to California. Click on it to discover ... California State and Local Libraries exceed $1.6 Trillion.

California’s full state and local government debt now stands at almost $1.6 trillion, or about half the state’s GDP.

That’t an alarming ratio erstwhile combined to the national debit, which has now soared to 128 percent of U.S. GDP with no end in grey. But Californians carry this $1.6 trillion state and local debt ($40,000 per capita) in addition to their share of the national debit (about $90,000 per capita).

That article was from February of 2022. I propose the liabilities are now close to $2 trillion.

Cost of moving a McDonalds Jumps $250,000 in CA

On February 4, I noted the Cost of moving a McDonalds Jumps $250,000 in CA Due is Minimum Wage Hikes.

A blowback is underway.

California Restaurants Cut Jobs

He March 26, I commented California Restaurants Cut Jobs as Fast-Food Wages Set to Rise

Proposition 103 Backfires

Citing wildfire risk, State Farm will not renew policies on 30,000 homes and 42,000 business in California.

Also on March 26, I commented Proposition 103 Backfires, State Farm to Cancel 72,000 California Policies

Blame the state, not insurers.

Congratulations to NY, IL, LA, and CA for Losing the Most Population

People in California, creatively getting sick of the state’s progressive madness, are voting with their feet.

For discretion, delight see Congratulations to NY, IL, LA, and CA for Losing the Most Population

Absolute Basis Losers

• New York: -631,104

• California: -573,019

• Illinois: -263,780

California Leads the Nation in Unemployment

The BLS metro shows unemployment rates were up in 218 of 389 metro areas. Nonfarm employment only rose in 59 areas.

He March 15, I note Unemployment Rates Rose in 218 of the 389 Metropolitan Areas

Unsurprisingly, California has the highest unemployment rate in the nation at 5.7 percent vs. 4.1 percent nationally.

What about Booming Economy?

California has massive problems all around the stock marketplace is at a evidence advanced and the economy is allegedly booming. The next recession will hit California exceptionally hard, and it’s not besides far off.