BabyBoomer50s
Capitalist
- Joined
- Nov 27, 2018
- Posts
- 12,015
Eight months ago, energized by projections of a nearly a $100 billion surplus, Gov. Gavin Newsom and the Legislature wrote a $307 billion budget that lavished money on new and expanded services and rebated billions of dollars back to taxpayers.
Newsom crowed that “no other state in American history has ever experienced a surplus as large as this.”
My how fast times change. Last month Newsom gulped as he projected a whopping $22.3 billion deficit, and just last week, the state Legislative Analyst’s Office (LAO) warned that even that depressing forecast is likely too rosy. California relies on the top one half of one percent for 40% of its tax receipts. With a marginal rate of 13.3% on earners who make more than $1 million, the state’s coffers are recklessly vulnerable to market volatility and its effect on capital gains taxes. The problem is compounded by declining corporate tax revenues and Silicon Valley layoffs coupled with an exodus of companies and wealthy individuals leaving the state.
The biggest problem however is spending. The governor and state legislature have been on a reckless spending binge and the hangover is setting in. As the LAO notes, “even after adjusting for inflation, anticipated revenues for 2023-24 remain about 20 percent higher than before the pandemic.”
https://calmatters.org/commentary/2023/02/budget-deficit-may-be-larger/
Newsom crowed that “no other state in American history has ever experienced a surplus as large as this.”
My how fast times change. Last month Newsom gulped as he projected a whopping $22.3 billion deficit, and just last week, the state Legislative Analyst’s Office (LAO) warned that even that depressing forecast is likely too rosy. California relies on the top one half of one percent for 40% of its tax receipts. With a marginal rate of 13.3% on earners who make more than $1 million, the state’s coffers are recklessly vulnerable to market volatility and its effect on capital gains taxes. The problem is compounded by declining corporate tax revenues and Silicon Valley layoffs coupled with an exodus of companies and wealthy individuals leaving the state.
The biggest problem however is spending. The governor and state legislature have been on a reckless spending binge and the hangover is setting in. As the LAO notes, “even after adjusting for inflation, anticipated revenues for 2023-24 remain about 20 percent higher than before the pandemic.”
https://calmatters.org/commentary/2023/02/budget-deficit-may-be-larger/
