When a family or business faces financial problems, that’s usually a good time to assess priorities. Waste is cut. Maybe a change of direction is contemplated. Government should also make such assessments during a recession.
The nonpartisan Legislative Analyst projects the state’s nearly $100 billion surplus will flip to an estimated $24 billion deficit for fiscal year 2023-24, which begins next July 1, just six months away.
Reported CalMatters. “Despite the expected shortfall, policymakers say they’ll maintain spending on social programs though advocates are calling for more.” That’s a recipe for tax increases in a state that already pays the highest taxes in the country. Voters in November rejected Proposition 30, which would have increased taxes on rich people up to $5 billion annually. They previously rejected a change to Proposition 13 in 2020. But Democrats in the Legislature hold two-thirds supermajorities in both the Assembly and state Senate. So they could conceivably pass tax increases if they get desperate.
Gov. Gavin Newsom is crafting his proposal for the 2023-24 budget, which will be released in early January. Finance Department spokesman H.D. Palmer told CalMatters, “[T]he governor’s priority was to not scale back programs that people have come to depend on, or to begin new ones. Some program expansions in later fiscal years could be delayed if there isn’t enough revenue to support them, he said. The goal is to avoid the kind of drastic program reductions enacted during the Great Recession that took years for the state to restore.”
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The Great Recession, which hit from 2007-09, also brought with it a record $13 billion yearly tax increase signed into law by Gov. Arnold Schwarzenegger.
Which is why this is a good time to conduct a review of existing programs to determine what’s working, what’s not and what can be continued more efficiently. A place to start would be for Controller-elect Malia Cohen, who takes office in January, not only to audit the major state departments, but to grade them on efficacy. Are they doing what they’re supposed to? If not, can they be eliminated, or replaced with something better? Even a 5 percent trimming of the existing $308 billion budget would save $15 billion.
Even government needs a spring cleaning.