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In the course of two years, California has turned a $100 billion surplus into a $73 billion deficit, forcing governor Gavin Newson (D) to propose painful (token) spending cuts on Friday while announcing his revised state budget.

California Governor Gavin Newsom unveils revised 2024-25 state budget on Friday, May 10 (photo: AP, Rich Pedroncelli)

When asked how the state was able to achieve such a monumental fail, Newsom – who claims the deficit is actually $27.6 billion (to which even AP called him out) – blamed a reduction in taxes from capital gains income, which surged in 2021 amid a raging stock market and plummeted in 2022. Then, in 2023, the state 'continued to collect less tax revenue than projected' due to capital loss carryovers. He also blamed "unexpected rain bombs" – which caused the IRS to extend the tax filing deadline for most California taxpayers in 2023 following severe winter storms. When those taxes were eventually collected, they were 22% below expectations, according to the Governor's office.

Watch:

According to AP, Newsom will cut $6.7 billion set aside for doctors who treat Medicaid patients, cut off healthcare to 14,000 disabled migrants in their home, saving $94.7 million, and slashed $550 million that was headed towards state schools in order to build new facilities.

Republican State Senator Brian Dahle called the cuts a "hollow gesture, at best," adding "The governor's national ambitions have triggered a massive exodus of people and businesses creating an enormous revenue shortfall of personal and corporate income taxes."

"You can't have a good government without a strong private sector. Plain and simple, people are being priced out of California from bad policies and mismanagement," Dahle continued.

In total, Newsom is proposing $32.8 billion in cuts over two years – including an 8% cut to state operations, which he says will shore things up.

Of course, we know that's bullshit.

Refreshing your memory from early April, Mike Shedlock gave a sobering view into reality;

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The City Journal founder Ed Ring comments on the Golden State Budget Fantasy

How Much Is California in Debt?

The above link says over a trillion. That’s being very generous to California. Click on it to discover … California State and Local Liabilities exceed $1.6 Trillion.

That article was from February of 2022. I suspect the liabilities are now close to $2 trillion.

Cost of Running a McDonalds Jumps $250,000 in CA

On February 4, I noted the Cost of Running a McDonalds Jumps $250,000 in CA Due to Minimum Wage Hikes.

A blowback is underway.

California Restaurants Cut Jobs

On March 26, I commented California Restaurants Cut Jobs as Fast-Food Wages Set to Rise

Proposition 103 Backfires

Citing wildfire risk, State Farm will not renew policies on 30,000 homes and 42,000 business in California.

Also on March 26, I commented Proposition 103 Backfires, State Farm to Cancel 72,000 California Policies

Blame the state, not insurers.

Congratulations to NY, IL, LA, and CA for Losing the Most Population

People in California, increasingly getting sick of the state’s progressive madness, are voting with their feet.

For discussion, please see Congratulations to NY, IL, LA, and CA for Losing the Most Population

Absolute Basis Losers

• New York: -631,104

• California: -573,019

• Illinois: -263,780

California Leads the Nation in Unemployment

The BLS metro shows unemployment rates were up in 218 of 389 metro areas. Nonfarm employment only rose in 59 areas.

On March 15, I noted Unemployment Rates Rose in 218 of the 389 Metropolitan Areas

Unsurprisingly, California has the highest unemployment rate in the nation at 5.7 percent vs. 4.1 percent nationally.

A Booming Economy?

California has massive problems although the stock market is at a record high and the economy is allegedly booming. The next recession will hit California exceptionally hard, and it’s not too far off.