California’s fiscal wildfire is here. The flames are licking the highest levels of the state capitol in Sacramento. The flames surround the Democrat super majority-run legislature.
Democrats’ profligate spending, greed, and lack of imagination on how to run America’s most populous state have been disastrous. An investment research group says California’s “tax policy is killing the Golden Goose in the Golden State.” And that’s not the only problem.
Governor Gavin Newsom sent billions of Joe Biden’s specially printed, inflation-causing Covid money to voters for “inflation relief” before his latest election. He teed up “free” kindergarten for four-year-olds, and gave out “free” healthcare to illegal aliens. His reckless spending was the fiscal equivalent of putting on a pork chop suit and heading out to the closest dog park. Now, of course, he’ll be blaming this fiscal cliff on someone — anyone — else.
Newsom helped destroy contracting jobs and continued to waste money on the Train to Nowhere. His one-time Democrat leader in the legislature told billionaires like Elon Musk to, well, read it yourself:
F*ck Elon Musk.
— Lorena Gonzalez Fletcher (@LorenaSGonzalez) May 10, 2020
Money is fungible, and many billionaires and millionaires have “moved” their wealth to other states by spending a few more days of the month in another state. Last month, Newsom, a rich kid, and Democrats balled their collective fists, howled at the moon, and declared they’d show them by going all Hotel California on people who got the heck out of the state. The plan was to “aggressively crack down” on this “extreme wealth” by vowing to continue to tax them based on their “worldwide net worth” of over $50 million in “total assets.” This is unalloyed greed. Plus, it’s just dumb economics.
The Strategas Research article predicting California’s fiscal disaster is behind a paywall but was quoted by the “Radio Free California” podcast hosted by Will Swaim of the California Policy Center and David Bahnsen, the founder of wealth management firm The Bahnsen Group.
The bad news for California starts out with “California tax revenues, a bellwether for the country, declined 42% year-over-year in January, led by a 50% decline in income tax revenues.”
And no, it’s not because of Covid. No, it’s not due to the market alone, according to the financial research company. Economists predicted a decrease in tax revenues, but nothing this dire.
It gets even worse: “We want to be clear,” Swaim read from the report. “The magnitude of California’s decline is larger than that of other states and cannot be explained by a lower stock market on its own.” To show that it was a uniquely California issue, the research article showed graphs of how Texas was not suffering from the same afflictions.
Swaim quoted from the article, “it’s quite rare to see a decline in tax revenues of this magnitude even during Covid or the financial crisis” [emphasis added]. The research article went on to say that “posit[ing] a more bearish view of state finances relative to the consensus, but what’s happening in California is beyond even our initial view. … Over the past 12 months, tax revenues are down more than 2%. This is before we get to April, the largest month for tax collections in which we’re expecting a significant drop in tax revenues compared to last year. We want to be clear: the magnitude of California’s decline is larger than that of other states and cannot be explained by a lower stock market on its own.”
The call was coming from inside the house, according to the researchers:
“The weakness is likely being compounded by tech layoffs and the migration of the highest income taxpayers out of the state. The state is too dependent on the small number of taxpayers leaving. Tax policy is killing the Golden Goose in the Golden State.”
Stephen Green noted this week that 700,000 Californians got the hell out of Dodge over the past two years.
The headcount actually shrank by more than 500,000 people between April 2020 and July 2022, according to a new report in the Los Angeles Times.
The actual number who fled is larger than that — over 700,000 — since hardy fools from other states and overseas still move in. The numbers moving out have reached such a Biblical exodus, it’s equivalent to someone taking my adopted hometown of Colorado Springs (metro population of about 750,000) and moving everybody somewhere else.
And do you know what that means? Fewer congressional representatives and fewer tax dollars.
If you were trying to ruin a state you couldn’t do better than Governor Gavin Newsom and the Democrats.
Covid waste
Billions lost
Billions misspent
Pricing out middle-income earners
Trains to nowhere
Universal mail-in ballots begging for fraud
Dumb fire policies
Hot and cold running druggies camping on the streets
Teachers who don’t show up
Free stuff for people who broke the law to get here
Letting criminals out of jail/prison
Ordering cops not to do their jobs
Those of you who have followed my West Coast, Messed Coast™ report know all too well what other items could round out that list. It’s embarrassing.
Related: Another Wave of Joe Biden J-O-B-S Losses
Bahnsen calls it “the perfect storm.” The interesting part of the report is that the gravity of the numbers year-over-year was worse than anyone could have thought. It’s not “oh, it’s finally happened–what we thought.” It’s worse.
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