Your current web browser is outdated. For best viewing experience, please consider upgrading to the latest version.

Contact

Send a question or comment using the form below. This message may be routed through support staff.

Email Article

ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed

Manhattan Institute

search
Close Nav

California’s Spending Boom Masks a Spate of Problems

commentary

California’s Spending Boom Masks a Spate of Problems

The Wall Street Journal November 23, 2019
Urban PolicyTax & Budget

Politicians are rolling in tax revenue, but they can’t seem to solve basic issues like housing and energy.

This should be the best of times in California. A vigorous national economy is providing record numbers of jobs and robust growth in tax revenue. But far from flourishing, California is increasingly beset by social and economic problems, from homeless encampments to rubbish-strewn streets to blackouts.

“California is what America is going to look like,” Gov. Gavin Newsom boasted in a TV interview recently. The state, he said, “is America’s coming attraction.” The rest of the country can be forgiven for finding Mr. Newsom’s vision of the future less than attractive. High costs have strapped local governments in the Golden State, housing is often unaffordable, and gasoline and electricity are more expensive than elsewhere. Mr. Newsom’s first budget devotes billions of dollars to these problems, but much of the spending merely offsets problems the state itself has created. What should be a golden age of prosperity for California is turning into an age of anxiety with infectious-disease outbreaks and long nights without electricity.

California’s problems aren’t due to a lack of resources. Mr. Newsom’s budget, enacted in June, is a record $215 billion. Fueled by growing tax collections on California’s wealthy, state spending has increased $59 billion since 2014. The state’s personal income tax alone is projected to yield $102.8 billion this year, a nearly $28 billion increase in five years. That sounds like plenty of money, but it disappears fast in the Golden State. Sacramento spends more than $60 billion from its general fund on K-12 education alone, and $36 billion in state funds on Medi-Cal, as the state calls its version of Medicaid, which subsidizes health care for low- and moderate-income residents, including some illegal immigrants.

Continue reading the entire piece here at The Wall Street Journal (paywall)

______________________

Steven Malanga is the George M. Yeager Fellow at the Manhattan Institute and a senior editor at City Journal. 

Photo by Justin Sullivan/Getty Images

Saved!
Close