Gavin Newsoms budget ignores Californias ticking fiscal time bomb

Gavin Newsom claims to have balanced the budget for the first time in five years, but the revised proposal he presented this week gives little hope to an improved outlook for the finances of the Golden State.Rather than addressing the state’s deep structural deficit, Newsom’s new budget proposal relies on small, immaterial changes that merely kick the proverbial can down the road and do nothing to change the dire California fiscal outlook.Already, California is facing budgetary headwinds, thanks to the growing exodus of wealthy taxpayers fleeing a potential “billionaire tax.” Though it has not passed yet, the proposed 5% wealth tax on the state’s highest earners will be on the ballot in November.Newsom opposes the billionaire tax.He is attempting to appear to be a moderate, with an eye to the 2028 presidential election.

It’s an about-face for one of the progressive politicians in the nation.In addition to opposing the wealth tax, perhaps in the hopes of courting high-dollar donors, Newsom also plans to restrict the number of migrants on Medi-Cal, the state’s Medicaid program.

Newsom wants to set a ceiling at roughly 200,000 migrants, while other Democrats — including all of the Demcorats running to succeed him as governor — are promising to let every migrant, legal or illegal, enroll in Medi-Cal.The 200,000 limit is the tiniest possible reform in a state that is controlled largely by public sector unions who contribute to Democrat politicians and expect overly generous benefits in return.This is the larger challenge driving California’s fiscal problems, and Newsom’s minor fixes are too little, too late.

The sheer scale of unfunded pension liabilities alone represents a ticking time bomb that no amount of temporary spending freezes can solve.The state’s financial outlook remains ominous in part due to exorbitant spending like this for decades.Since California’s 2019-2020 fiscal year, state spending has grown by more than $100 billion.

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