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California facing a $58 billion revenue shortfall over 2 years

December 3, 2023

By KAREN VELIE

The California Legislative Analyst’s Office on Friday announced a projected revenue shortfall of $58 billion over two years.

With lower tax revenue and the the impact of recent economic weakness, the state now estimate 2022-23 revenues to be $26 billion lower than expected. Receipts of personal, business and sales tax payments have all fallen below projections.

“Collections data now show a severe revenue decline, with total income tax collections down 25% in 2022-23,” according to the state analyst. “This decline is similar to those seen during the Great Recession and dot-com bust.”

In an effort to cool an overheated U.S. economy, the Federal Reserve has raised interest rates multiple times over the past two years. “This has slowed economic activity in a number of ways. For example, home sales are down by about half, largely because the monthly mortgage to purchase a typical California home has gone from $3,500 to $5,400,” according to the analyst’s office.

Policymakers use the Sahm Rule to track the start of recessions in real time, which was triggered in March. The Sahm Rule has accurately indicated the prior six recessions.

This week, the Legislative Analyst’s Office plans to release its fiscal outlook report, which will discuss the ramifications of the revenue shortfall on the state’s budget.


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revenue implies the money is earned.


15

You just know some Sacramento nimrod is ginning up a bill to tax U-Hauls leaving the state!


16

Most government agencies spend money like it grows on trees. The Cambria CSD is spending money on a new swimming pool in a floodway, a worthless water system and much more. And these elected people say they are fiscal conservatives.


18

Oh, and while they allow water to rush into the ocean rather than reserve it, no one can get a water permit. But they have water to build a new public restroom which will use lots of water.


16

The state has faced worse deficits. When the last Republican governor left office California was $91 billion in the red. Mortgage and lending people tell me that interest rates should be dropping in the new year which will revive the housing market. In other words, this too shall pass. But, eat it up conservatives. I expect 2024 to be a really bad year for your ilk.


-49

Well, I hope you are correct with respect to interest rates and real estate.


3

So did the Republican inherit that debt from the Dem’s as that is what the Dem’s always say?Both parties spend money with no real over site but there is almost nothing in Ca that is not taxed or has a fee ( tax ) on it and still we are in debt. Train to no where a good example of not spending taxpayers money on things to help improve their lives


6

There is no doubt that we know where this is headed…..the state will go after the few remaining money earners who haven’t yet left the state behind.

Best picture to explain this is a shriveled raisin that is getting deflated so that momentarily it will implode. In submarine terminology we are reaching our “crush depth”.


25

How much money does the state give to people who are here illegally ?


36

Well, I recall, according to a state government output years ago ( 2008), between 4-6 billion dollars.


6

That’s 10%. That doesn’t sounds nearly as sensational as $58 BILLION!!!


5

Oh come on! Interest rates are hardly the only thing to stagnate the California economy! How about the “green investments,” the onorous regulations that stifle business opportunities (read: lost tax revenue), lack of support for petroleum which has made gas prices skyrocket, just to name a few. Furthermore, the structure of the tax system in the state is based on volitile personal income taxes instead of sales and user taxes. When incomes are high (due to investments doing well) then there is often a surplus, but when the market slides, so does the income. It’s impossible to plan properly. It’s the dark side of soak the rich mentality.


45

Creating a budget on projected revenues is always going to leave them in a never ending cycle of shortfalls and surpluses.


Why not run the state based upon % of revenues already collected? Schools get 25%, roads get 25%, etc…


Then, let managers and directors have ‘bank accounts’ that let them store surplus $$ for a rainy day to smooth out the rough spots or respond to urgent necessities?


If they based the above on 100% of revenue, there could never be deficit spending and subsequently no debt to service….or better yet, base it on 90% and put 10% into savings every year. Eventually, the interest rate on that 10% saved would completely fund the state’s operations…


42
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