Editors at the Washington Examiner scrutinize California’s dubious financial figures.
When the Internal Revenue Service granted Californians an extension on 2022 taxes due to bad weather, Gov. Gavin Newsom (D-CA) was forced to guess how strong his state’s economy was and how much tax revenue the government would collect.
The state’s nonpartisan Legislative Analyst’s Office provided the real numbers last week, and they show how badly the Golden State is being run. California’s economy is far weaker than Newsom guessed it was, so there is $26 billion less revenue than he assumed.
As a result, California not only faces a $68 billion near-term deficit, but must also solve annual $30 billion deficits from now on. Newsom and the Democratic Party that runs California have spent the state to the edge of crisis. Now it will have to make painful choices.
It didn’t have to be this way. When Newsom became governor in 2019, the state spent $223 billion a year. Four years later, the number is above $300 billion, while the state lost population for the first time in history.
In addition to plowing more money into inefficient clean energy projects and throwing billions of dollars at a high-speed train to nowhere, Newsom created a health insurance program for millions of illegal immigrants living in the state’s sanctuary cities. This is instructive about Democrats’ priorities, for the LAO estimates that school spending cuts will save $17 billion.
California has an additional $24 billion in reserves from previous years when the state ran a surplus. But to get access to that money, Newsom would have to declare a fiscal emergency, which would be inconvenient as he crisscrosses the country touting his economic record.
If Newsom were to declare a fiscal emergency to tap the reserves, it would draw attention to California’s steadily rising unemployment rate since July 2022, a trajectory moving in the opposite direction as the national average.
