via Mike Shedlock Governor Gavin Newsom bragged of a surplus, but California is seriously underwater. The next recession will hit the state extremely hard
The City Journal founder Ed Ring comments on the Golden State Budget Fantasy
While finalizing the upcoming fiscal years state budget back in May 2022, California governor Gavin Newsom boasted of an extraordinary projected surplus: $97 billion. The governor immediately collaborated with an enthusiastic state legislature to spend it all. Of course, new spending on new programs and benefits tends to become permanent.
This has happened repeatedly in California. Between fiscal year 201213 and fiscal year 202223 (the year with the projected $97 billion surplus), per capita general-fund spending doubled, from just over $3,000 per resident to just under $6,000. (All figures are in 2022 inflation-adjusted dollars.)
The State Office of Legislative Analysts latest report projects a $73 billion dollar deficit for the next fiscal year. It wont be easy to paper over this debt, but the state may use its opaque accounting system to hide the ball.
Californias general-fund budgets are reported on a cash basis. The states balance sheet, however, uses accrual-based accounting. Without getting too far into the weeds, this is an apples v. oranges situation. Instead of the algebraic perfection of private-sector income statements, balance sheets, and cash flows, government accounting provides no easy way to reconcile what you see on the budget.
Some watchdogs, however, have succeeded in cracking the code. John Moorlach, one of the only certified public accountants to serve in the California State Senate, just published a review of the states fiscal health, focusing on the balance sheet. According to Moorlach, Californias balance sheet is in trouble.
Moorlach declared in a March California Insider interview that the state now has the largest unrestricted net deficit in the US: $222 Billion. In plain English, Moorlach is saying that Californias state government accounts have liabilities that exceed assets by $222 billion. No matter how creative Newsom and his financial wizards may be, someday that money will have to be paid.
A remedy that California has turned to over the years and will undoubtedly turn to now is to accumulate additional long-term debt. Emulating the federal government, but lacking its dollar-printing ability, Californias state and local governments and agencies have racked up over a trillion dollars in debt, primarily in bonds and unfunded pension liabilities. These liabilities, too, must be paid. Since thats all but impossible, the liabilities must be serviced with payments that, just as at the federal level, will eat up more and more of the operating budgets.
How Much Is California in Debt?
See also Canada is now a draconian medical state, sickening.
The above link says over a trillion. Thats being very generous to California. Click on it to discover
California State and Local Liabilities exceed $1.6 Trillion.
Californias total state and local government debt now stands at almost $1.6 trillion, or about half the states GDP.
That isnt an alarming ratio when compared to the national debt, which has now soared to 128 percent of U.S. GDP with no end in sight. But Californians carry this $1.6 trillion state and local debt ($40,000 per capita) in addition to their share of the national debt (about $90,000 per capita).
Poster Comment:
Might make a better president than Joe Biden!!