California’s Newsom Sees Budget Deficit Deepening to $32B(bloomberg.com)
bloomberg.com
California’s Newsom Sees Budget Deficit Deepening to $32B
https://www.bloomberg.com/news/articles/2023-05-12/california-s-newsom-releases-revised-224-1-budget-proposal-for-next-fiscal-year
9 comments
Didn’t the state have a massive surplus last year?
Yes, and it was disbursed as stimulus under the guise of a "Gasoline Tax Refund." Obvious to everyone that it was a terrible fiscal decision, but clearly the administration thought it was prudent politically.
They didn’t have a choice - it was mandatory to return the surplus funds over a specific amount back to residents (SAL or Gann Limit)
https://www.transformca.org/post/california-s-ginormous-budg...
https://www.transformca.org/post/california-s-ginormous-budg...
Because of how California taxation works, there are good reasons to have a 5 year rolling tax window and set budgets based on that. That would give us a much clearer picture of real budget surpluses and deficits.
This is not obvious. Why is this a terrible decision?
Since there is currently no output gap in the economy, any stimulus turns 1:1 into inflation. Government spending can still be beneficial if directed toward high-ROI investments, but a straight-up cash drop is just a waste.
ISLM ; )