The chickens are leaving the roost

That’s one reason; there are more

California Projected To Have Massive Budget Shortfall As Businesses Flee The State

California is expected to have a $25 billion budget deficit in 2023-2024 as people and businesses leave the state in droves, according to a projection by the state’s Legislative Analyst’s Office (LAO).

LAO predicted in a Wednesday report that the California budget will operate in a deficit due to tax revenue falling $41 billion below budget projections from fiscal year 2021-2022 through fiscal year 2023-2024. Recent statistics show that there is less corporate and start-up activity in the state, with corporate tax revenue expected to decline by $6 billion from fiscal year 2021-2022 to fiscal year 2023-2024, according to LOA.

“Under our outlook, the Legislature would face a budget problem of $25 billion in 2023‑24. The budget problem is mainly attributable to lower revenue estimates, which are lower than budget act projections from 2021‑22 through 2023‑24 by $41 billion. Revenue losses are offset by lower spending in certain areas,” according to the report.

California had a budget surplus of $52 billion in fiscal year 2022-2023, according to last year’s LAO report. [California’s 2022-23 budget is $286.4 billion — Ed]

Flush with federal cash “COVID” payments, the state’s legislature went on a spendimg binge. That got them all re-elected, but now the cash is gine, the expanded social programs are still around, and inflation is soaring. Gee, why didn’t anyone warn them?

The defect could be tough for white-privileged car mechanics, but Pepe Gonzales and his 63 relatives needn’t worry:

The deficit will likely lead to some painful spending decisions in the nation's most populous state. But it likely won't affect the state's biggest expansions of government services - including free kindergarten for 4-year-olds and free health care for low-income immigrants living in the country without legal permission.

Revenue has increased steadily in California for the past decade. This year, a $72.4 billion surplus pushed total state spending to more than $300 billion for the first time.

But tax collections have slowed significantly since Democratic Gov. Gavin Newsom signed that budget into law. This year, revenue is $41 billion below expectations, according to an outlook published Wednesday by the nonpartisan Legislative Analyst's Office.

Democratic-controlled California taxes rich people more than other states, and most of the drop in revenues is because the uber-wealthy aren't making as much money as they used to. The S&P 500, a key indicator of the health of the stock market that drives the incomes of the super rich, has fallen more than 17% since its peak in January.