California general fund falls short + Is politics driving people to leave the state?
Good morning and welcome to the A.M. Alert!
GENERAL FUND FALLS BELOW FORECAST
Alarm bells aren’t ringing yet, but lawmakers and state officials have to be concerned with general fund cash receipts, which are falling significantly short of what was forecast.
According to the latest finance bulletin from the California Department of Finance, general fund agency cash receipts for September were $2.785 billion — 14.7% lower than the 2022-23 Budget Act forecast of $18.906.
In fact, cash receipts for the first three months of the fiscal year were $4.781 billion, or 11.1% below the forecast of $42.946 billion. Combine that with the $2.186 billion shortfall forecast for the 2021-22 fiscal year and the cumulative deficit through September was nearly $7 billion.
What’s contributing to this shortfall?
“Shortfalls in September continued to be driven by lower proceeds from personal income tax,” according to the finance bulletin.
The budget forecast called for $13.317 billion in personal income tax receipts for September. The final number fell a little over $3 billion short, a shortfall of nearly 23%.
“September is a significant month for personal income tax cash receipts, as many taxpayers pay their third quarter estimated payments,” according to the bulletin.
Yet estimated payments fell significantly below projections, according to the Department of Finance. The state saw $2.246 billion less than what was forecast, a 42.3% shortfall.
DOES POLITICS PLAY A ROLE IN PEOPLE LEAVING CALIFORNIA?
Critics of California’s Democratic establishment love to paint a picture of residents fleeing in record numbers, disgusted with the state’s liberal policies and high taxes.
While it’s true that last year saw the largest net migration out of California in 40 years, according to the Public Policy Institute of California that is the result of a large (but not record) loss of Californians to other states and a sizable reduction in international immigration.
But what of those people who do leave the state? Does politics really play a role in their decision to depart?
According to PPIC, signs point to yes.
In a recent blog post, the PPIC wrote that, “Conservatives feeling unrepresented in state government might be drawn to states that they see as a better ideological fit. For people already inclined to leave California for other reasons, politics might push them to finally pack their bags.”
PPIC survey data shows that while 26% of very liberal poll respondents said that the state’s high housing costs made them seriously consider moving out-of-state, 39% of independents and 45% of very conservative respondents said it did.
It appears as Gov. Gavin Newsom might also factor into one’s considering to leave. More than half, 56%, of those who said they disapprove of Newsom said that they were thinking of leaving the state, according to PPIC. That’s compared to a little less than a third (28%) of everyone else.
Likewise, taxation seems to play a role. Half (51%) of those who said that they pay much more than they should in taxes said that they were thinking of moving, compared to just 23% of those who didn’t think they were over-taxed.
“These patterns emerge despite the fact that the survey question asked about moving in the context of housing costs and makes no reference to Governor Newsom, tax rates, or any other hot-button political issues,” according to the post.
The PPIC notes that not everyone who leaves the state is conservative, nor is thinking about leaving the same as actually leaving.
“For most respondents, thoughts about moving may not be an action plan so much as a cry of frustration. A large share of Californians feel like they want to live somewhere else, and dissatisfaction with the state’s politics is at least part of the reason why,” according to the post. “This dynamic probably pushes a few who might otherwise stay to leave the state. The result may be a politically skewed departure that nudges the state’s politics ever so slightly to the left.”
QUOTE OF THE DAY
“We finally got Newsom to end the State of Emergency. Oddly, he’s scheduled its termination for February.”
- Assemblyman Kevin Kiley, R-Rocklin, via Twitter.
Best of The Bee:
After more than two-and-a-half years, California is retiring its COVID-19 emergency proclamation, via Maggie Angst and Lindsey Holden.
Insurance Commissioner Ricardo Lara, trying to ease an insurance crisis that’s plagued rural California for the past few years, announced Monday that all carriers doing business in fire-prone communities will have to incorporate his “Safer from Wildfires” program — guidelines aimed at protecting homes and businesses — into their premiums, via Dale Kasler.
Emotion-evoking info-commercials, coupled with mass texts and emails have muddled dueling sports betting ballot measures Proposition 26 and 27 to teeter the ledge of misleading. With the California 2022 general election just weeks away and ballots hitting mail boxes, The Bee has broken down what propositions 26 and 27 propose and what a vote for or against each could mean for California, via Brianna Taylor.