California Faces Record $68B Budget Deficit | Hacker News Reader

California Faces Record $68B Budget Deficit

wsj.com

33 pointsdcgudeman13 comments

Get rid of Prop. 98 and cut the education budget ($108B)[0] budget back to 2011 levels ($47B)[1].

Boom, I just saved $61B and nearly balanced the budget. It's not like that money actually improved outcomes, anyway.

[0]: https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Educati...

[1]: https://ebudget.ca.gov/2021-22/pdf/BudgetSummary/K-12Educati... (see chart on p. 5)

Even with the so-called "substantial reserves", California is fucked. And this story effectively sinks Newsom's POTUS chances for a cycle or 2. Californians can expect even higher taxes, shittier services, more people kicked out onto the streets, more crime, more chaos, and no end to high interest rates, layoffs, and crushing inflation.

Talking to some friends who are from California, and everything you pointed out, Californians don’t think applies to them or their state. There is a serious disconnect

According to Dietrich Bonhoeffer's theory of stupidity, change in California will only happen after it completely collapses: https://www.youtube.com/watch?v=ww47bR86wSc

Suggestion: A constitutional amendment that says if the budget did not balance at the end of the year, then next year's tax rates all increase from this last year's rates by double the percentage that would have been required to balance last year's budget.

This would override all measures by the legislature to set tax rates.

Increase for whom?

A uniform split of the change-in-rate across all tax brackets would result in a more regressive tax system.

That maybe your thing, that may not be.

To be clear, I'm not trying to get into another tech-person-pretends-they-really-get-economics-on-hn discussion (frankly, I don't get economics well enough). Instead, I'm attempting to highlight that even this simple idea, if compounded a few years in a row, may have wide-reaching knock-on effects.

I disagree. One of California's big problems is exactly all the fucking around with taxes and spending in propositions amending the constitution with formulaic mandates.

Particularly notable offenders include Proposition 98 distorting education spending and Proposition 13 distorting property tax revenue.

Original source of the numbers, which seems quite readable:

https://www.lao.ca.gov/Publications/Report/4819

Of particular relevance to HN:

> In particular, investment in California startups and technology companies is especially sensitive to financial conditions and, as a result, has dropped significantly. For example, the number of California companies that went public (sold stock to public investors for the first time) in 2022 and 2023 is down over 80 percent from 2021. As a result, California businesses have had much less funding available to expand operations or hire new workers.

How is this possible just last year newsom was touting their budget surplus! He can’t be that incompetent, and he would never lie. Hmmm

https://calmatters.org/commentary/2022/11/remember-that-budg...

They got what they voted.

Rarely is there a simple, one line cause (and solution) to a complex problem. However, I think stopping base erosion and profit shifting is it.

Do they have reserves left over from last year's huge surplus?

Yes, the state has two "rainy day" funds: The Budget Stabilization Account (BSA) for the general fund and a separate reserve fund for Proposition 98 (i.e. school funding). The BSA currently has roughly $21B[0] and the Prop. 98 Reserve is over $8.5B[1].

However, due to "the significant downward revenue adjustment to 2022‑23", the state will actually continue contributions to, not make withdrawals from, the BSA[0].

[0]: https://www.lao.ca.gov/Publications/Report/4819

[1]: https://ebudget.ca.gov/2023-24/pdf/BudgetSummary/K-12Educati...

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