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California Faces Record $68B Budget Deficit

33 points by dcgudeman 3y ago

1letterunixname 3y ago
Even with the so-called "substantial reserves", California is fucked. And this story effectively sinks Newsom's POTUS chances for a cycle or 2. Californians can expect even higher taxes, shittier services, more people kicked out onto the streets, more crime, more chaos, and no end to high interest rates, layoffs, and crushing inflation.
- deleted 3y ago
  [deleted]
- georgeplusplus 3y ago
  Talking to some friends who are from California, and everything you pointed out, Californians don’t think applies to them or their state. There is a serious disconnect
  - infamouscow 3y ago
    According to Dietrich Bonhoeffer's theory of stupidity, change in California will only happen after it completely collapses: https://www.youtube.com/watch?v=ww47bR86wSc https://www.youtube.com/watch?v=ww47bR86wSc
up2isomorphism 3y ago
They got what they voted.
aplummer 3y ago
Rarely is there a simple, one line cause (and solution) to a complex problem. However, I think stopping base erosion and profit shifting is it.
RecycledEle 3y ago
Suggestion: A constitutional amendment that says if the budget did not balance at the end of the year, then next year's tax rates all increase from this last year's rates by double the percentage that would have been required to balance last year's budget. This would override all measures by the legislature to set tax rates.
- soganess 3y ago
  Increase for whom? A uniform split of the change-in-rate across all tax brackets would result in a more regressive tax system. That maybe your thing, that may not be. To be clear, I'm not trying to get into another tech-person-pretends-they-really-get-economics-on-hn discussion (frankly, I don't get economics well enough). Instead, I'm attempting to highlight that even this simple idea, if compounded a few years in a row, may have wide-reaching knock-on effects.
- kyboren 3y ago
  I disagree. One of California's big problems is exactly all the fucking around with taxes and spending in propositions amending the constitution with formulaic mandates. Particularly notable offenders include Proposition 98 distorting education spending and Proposition 13 distorting property tax revenue.
benf76 3y ago
How is this possible just last year newsom was touting their budget surplus! He can’t be that incompetent, and he would never lie. Hmmm https://calmatters.org/commentary/2022/11/remember-that-budget-surplus-never-mind/ https://calmatters.org/commentary/2022/11/remember-that-budg...
polski-g 3y ago
Do they have reserves left over from last year's huge surplus?
- kyboren 3y ago
  Yes, the state has two "rainy day" funds: The Budget Stabilization Account (BSA) for the general fund and a separate reserve fund for Proposition 98 (i.e. school funding). The BSA currently has roughly $21B[0] and the Prop. 98 Reserve is over $8.5B[1]. However, due to "the significant downward revenue adjustment to 2022‑23", the state will actually continue contributions to, not make withdrawals from, the BSA[0]. [0]: https://www.lao.ca.gov/Publications/Report/4819 https://www.lao.ca.gov/Publications/Report/4819 [1]: https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Education.pdf https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Educati...
kyboren 3y ago
Get rid of Prop. 98 and cut the education budget ($108B)[0] budget back to 2011 levels ($47B)[1]. Boom, I just saved $61B and nearly balanced the budget. It's not like that money actually improved outcomes, anyway. [0]: https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Education.pdf https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Educati... [1]: https://ebudget.ca.gov/2021-22/pdf/BudgetSummary/K-12Education.pdf https://ebudget.ca.gov/2021-22/pdf/BudgetSummary/K-12Educati... (see chart on p. 5)
ZeroGravitas 3y ago
Original source of the numbers, which seems quite readable: https://www.lao.ca.gov/Publications/Report/4819 https://www.lao.ca.gov/Publications/Report/4819 Of particular relevance to HN: > In particular, investment in California startups and technology companies is especially sensitive to financial conditions and, as a result, has dropped significantly. For example, the number of California companies that went public (sold stock to public investors for the first time) in 2022 and 2023 is down over 80 percent from 2021. As a result, California businesses have had much less funding available to expand operations or hire new workers.

33 points by dcgudeman 3y ago

Even with the so-called "substantial reserves", California is fucked. And this story effectively sinks Newsom's POTUS chances for a cycle or 2. Californians can expect even higher taxes, shittier services, more people kicked out onto the streets, more crime, more chaos, and no end to high interest rates, layoffs, and crushing inflation.

deleted 3y ago
[deleted]
georgeplusplus 3y ago
Talking to some friends who are from California, and everything you pointed out, Californians don’t think applies to them or their state. There is a serious disconnect
- infamouscow 3y ago
  According to Dietrich Bonhoeffer's theory of stupidity, change in California will only happen after it completely collapses: https://www.youtube.com/watch?v=ww47bR86wSc https://www.youtube.com/watch?v=ww47bR86wSc

up2isomorphism 3y ago

They got what they voted.

aplummer 3y ago

Rarely is there a simple, one line cause (and solution) to a complex problem. However, I think stopping base erosion and profit shifting is it.

RecycledEle 3y ago

Suggestion: A constitutional amendment that says if the budget did not balance at the end of the year, then next year's tax rates all increase from this last year's rates by double the percentage that would have been required to balance last year's budget. This would override all measures by the legislature to set tax rates.

soganess 3y ago
Increase for whom? A uniform split of the change-in-rate across all tax brackets would result in a more regressive tax system. That maybe your thing, that may not be. To be clear, I'm not trying to get into another tech-person-pretends-they-really-get-economics-on-hn discussion (frankly, I don't get economics well enough). Instead, I'm attempting to highlight that even this simple idea, if compounded a few years in a row, may have wide-reaching knock-on effects.
kyboren 3y ago
I disagree. One of California's big problems is exactly all the fucking around with taxes and spending in propositions amending the constitution with formulaic mandates. Particularly notable offenders include Proposition 98 distorting education spending and Proposition 13 distorting property tax revenue.

benf76 3y ago

How is this possible just last year newsom was touting their budget surplus! He can’t be that incompetent, and he would never lie. Hmmm https://calmatters.org/commentary/2022/11/remember-that-budget-surplus-never-mind/ https://calmatters.org/commentary/2022/11/remember-that-budg...

polski-g 3y ago

Do they have reserves left over from last year's huge surplus?

kyboren 3y ago
Yes, the state has two "rainy day" funds: The Budget Stabilization Account (BSA) for the general fund and a separate reserve fund for Proposition 98 (i.e. school funding). The BSA currently has roughly $21B[0] and the Prop. 98 Reserve is over $8.5B[1]. However, due to "the significant downward revenue adjustment to 2022‑23", the state will actually continue contributions to, not make withdrawals from, the BSA[0]. [0]: https://www.lao.ca.gov/Publications/Report/4819 https://www.lao.ca.gov/Publications/Report/4819 [1]: https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Education.pdf https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Educati...

kyboren 3y ago

Get rid of Prop. 98 and cut the education budget ($108B)[0] budget back to 2011 levels ($47B)[1]. Boom, I just saved $61B and nearly balanced the budget. It's not like that money actually improved outcomes, anyway. [0]: https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Education.pdf https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Educati... [1]: https://ebudget.ca.gov/2021-22/pdf/BudgetSummary/K-12Education.pdf https://ebudget.ca.gov/2021-22/pdf/BudgetSummary/K-12Educati... (see chart on p. 5)

ZeroGravitas 3y ago

Original source of the numbers, which seems quite readable: https://www.lao.ca.gov/Publications/Report/4819 https://www.lao.ca.gov/Publications/Report/4819 Of particular relevance to HN: > In particular, investment in California startups and technology companies is especially sensitive to financial conditions and, as a result, has dropped significantly. For example, the number of California companies that went public (sold stock to public investors for the first time) in 2022 and 2023 is down over 80 percent from 2021. As a result, California businesses have had much less funding available to expand operations or hire new workers.