Big Trouble for Big Blue State

(DailyEmailNews.com) – Confirming Democrats only know about how to mismanage whatever office they hold, the state of California is currently grappling with a huge budgetary shortfall.

After enacting liberal policies that only fire up the Democratic base, the blue state projects a $73 billion deficit for the fiscal year 2024 driven by a $24 billion decrease in tax revenue as residents depart the state.

Experts suggest that California’s ability to balance its budget is in question if it does not make temporary financial moves.

Facing steep challenges to reduce expenses due to potential blowback from state unions and increasing taxes, California may have to resort to various “budget tricks,” as described by John Moorlach, former state senator and director at the California Policy Center.

These tricks include delaying expenditures and internal borrowing. However, Moorlach warned about this approach, saying, “But, internal borrowing is in the bag of tricks. I believe it was Gov. Davis who borrowed against the tobacco settlement funding stream to balance one of his annual budgets.”

California’s constitution requires the governor to present an annual budget by January 10 and calls for additional financial plans if a deficit is expected, with a deadline for budget approval by June 15.

Gov. Gavin Newsom has said he remains confident, as he says “California is the tent pole of the American economy — in terms of American recovery — in terms of job creation, innovation, entrepreneurial spirit.”

In response to the fiscal challenge, Newsom and the state legislature agreed on initial budget reductions totaling $17.3 billion, with only a fraction representing actual cuts.

Wayne Winegarden, a senior fellow at the Pacific Research Institute, criticizes the plan for deferring the problem through fund shifts, borrowing and delays. “Under their approach, just 21% of the $17.3 billion in solutions in the plan that is expected to be voted on this week are actual cuts — $3.6 billion,” he said.

California grapples with significant financial burdens, including nearly $24 billion spent on homelessness over five years and plans for a high-speed rail project estimated to cost between $88 billion and $128 billion.

The state’s previous $97.5 billion surplus has been allocated to various initiatives, including drought mitigation, abortion measures and inflation relief.

California has seen its population decline, particularly high-income tax filers, by 538,000 from July 2020 to July 2023 who are leaving blue states for red ones like Florida and Texas.

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