Last month, California’s Legislative Analyst’s Office, or LAO, which is the nonpartisan state department that advises California’s policymakers on the state’s fiscal issues, increased their estimate for the state’s 2024–25 budget deficit to $73 billion. This estimate substantially exceeds Gavin Newsom’s estimate of a $38 billion deficit. Both estimates stand in sharp contrast to the state’s $100 billion surplus from two years earlier.
The deficit is the consequence of the state’s unwise and unsustainable choice of enormously expanding spending while its tax base declined. In the four years since February 2020, which was just before COVID restrictions were adopted across the country, California has lost more than 410,000 jobs. In that same four-year period, the rest of the country has added more than 7.3 million jobs. California’s job loss largely reflects the state’s population loss of 472,000 since 2020. But there are also fewer opportunities for those who are still here, as the state’s 5.3 percent unemployment rate is the nation’s highest.
Jerry Brown, who preceded Gavin Newsom as California’s governor, signed his last budget, which totaled $201 billion, for the 2018–19 fiscal year. The state’s 2023–24 budget is $310.8 billion, which equals a per capita spending increase of nearly 57 percent compared to 2018–19 and represents a 31 percent increase after adjusting for inflation.
To put this increase in perspective, Florida’s per capita spending increased 22 percent over this same period. After adjusting for inflation, Florida increased state spending by only 2.5 percent. Florida is an interesting comparison, because it is one of........