State budgets for Texas and California are in the news, and once again the two largest states in the union are headed in opposite directions:
The Texas Legislature is in for a fight over how to spend its expected pot of money from inflation-driven record consumption tax collections.
Trying to direct the Legislature and the Texas House specifically often resembles herding cats — 150 members with 150 different ideas on how the $27 billion projected surplus should be appropriated.
Comptroller Hegar indicated this week that the total might grow even more by the New Year. He will provide an updated certified revenue estimate in January.
Whether it grows or not, the sum will be a large pot with which the Legislature can do a lot.
The foremost suggestion is to buy down property taxes through ramped-up compression of local ad valorem tax rates.
Gov. Greg Abbott has called for spending “at least half” on “the largest property tax cut ever in the history of Texas.” Lt. Governor Dan Patrick first called for using $4 billion to cut taxes and then upped that to possibly more than half of the total.
The Legislature already has $3 billion earmarked for a buydown next session from holdover American Rescue Plan Act funds.
$25 billion.
That’s the estimated deficit Gov. Gavin Newsom and state lawmakers will confront when crafting a budget for the upcoming fiscal year, the Legislature’s nonpartisan fiscal advisor announced Wednesday.
The projection marks a stunning reversal from back-to-back years of unprecedented prosperity: The budget for California’s current fiscal year clocked in at a whopping $308 billion, fueled by a record $97 billion surplus that was by itself enough to treat every state resident to a $7,500 vacation. The year before, Newsom and lawmakers approved what was at the time a record-busting $263 billion budget that included a $76 billion surplus.
Snip.
The Legislative Analyst’s fiscal outlook doesn’t take into account soaring inflation rates or the increasingly likely possibility of a recession. Due to inflation, “the actual costs to maintain the state’s service level are higher than what our outlook reflects,” the analyst’s office wrote. The estimated $25 billion deficit thus “understates the actual budget problem in inflation-adjusted terms.” And, if a recession were to hit, it would result “in much more significant revenue declines,” meaning California could bring in $30 to $50 billion less than expected in the budget window.
I don’t think there’s any “if” about a recession anymore.
For a while California’s tech and entertainment industry strengths were outrunning its massive blue state economic mismanagement and green energy delusions. That’s no longer the case.
The problem with the blue state model is that they either run out of other people’s money, or people take it with them when they move before the state can take it away. Still others leave to avoid the outrageous cost of living. No wonder U-Haul ran out of trucks to leave the state.
Budgets are hard to balance even in good times, given competing priorities and political factions. It becomes much harder in a recession. And it becomes nearly impossible when you try to fund not only the regular Democratic Party graft and fraud, but social justice madness and green energy delusions.
Which is why so many Californians are getting out while the getting is good…
Tags: Budget, California, Dan Patrick, Democrats, Gavin Newsom, Glenn Hegar, Greg Abbott, Republicans, Texas, U-Haul, Welfare State
Here’s a thought! Cut TAXES!!!!
Newsom spent the federal Covid emergency money which WE paid for on non Covid budget items.
No provisions/payments were made to bring back the 40% of small businesses closed due to lockdowns, or provide the mom & pop businesses any compensation for losing their livelihoods. Almost half of those small businesses were owned by people of color. Even $20k per small busiiness would have provided some kind of cushion, because the businesses could not be sold.
No provision of masks to restaurants and other businesses required to mask every minute of every day. Bought and hoarded by Gov.
Made people die alone in the hospitals and nursing homes
Threw frontline workers under the bus after living through long hours and no PPE by forcing them to be vaccinated or lose their jobs.
Newsom wants to spread the deficit to the rest of the country in 2024.
One thing I could not tell from the post was, what are the sources of the surplus? Is this a one-time windfall, or will there probably be more surpluses in years to come? The answers to such questions really should drive the decisions about this!
A little of that probably is from high oil prices, but the majority is from Texas’ solid business climate.
$27 billion? One could build a lot of wall with that much money…
2/3rds of State of Texas tax revenue comes from general sales and use taxes, and motor vehicle sales and use taxes (source: TX State Comptrollers office – Jan 2022). These taxes will likely continue generating revenue in line with economic conditions. NOTE that property taxes do not contribute ANY significant funding to the State – in TX, property taxes are generally imposed by local political jurisdictions (cities, counties, school districts, and such).
Personally, I would oppose property tax relief coming from the State. Local jurisdictions set property taxes. If one thinks that their property taxes are too high (and I do), then one should let your local politicians know (and I do – loudly). If the State wants to grant tax relief, let them cut the State sales tax rate, which would benefit everyone (and not just property owners – a politically favored GOP constituency here in TX).
I’ll take a back seat to no one when it comes to my conservatism. Texas is a low tax – low services State – that’s the way the majority of us want it. But there are certainly serious needs that the State could address with this surplus – much better (in my opinion) than property tax relief. An example? If you’re a strong 2A supporter (and I am), you should be strongly in favor of funding mental health services fully and appropriately in this State. That would address (with positive action) one of the biggest threats to our 2A rights – and would give TX something to point to as doing something effective in addressing gun tragedies. There are certainly other REAL needs that could be funded. I’m generally not a fan of the State doing too much, but I AM a fan of adequately funding in a businesslike manner whatever the State does decide to do.
How about sending each Texan a check to get our money back?
Don-
Great idea in theory – very difficult to put into practice equitably.
Reduce the State sales tax to try and minimize such surpluses in the future? I’d support that, altho I suspect it might be difficult to get the politicians to do this – politicians love to be seen as cutting taxes, they hate even more having to raise them (particularly in tough economic times, into which many think we are heading).
No, the funds are already in the Treasury. Put some in the rainy-day fund, and, as I discussed in my previous comment, allocate the rest wisely (yes, I understand that I’m writing about the TX Lege – one can always hope).
One the subject of U-Haul rents leaving the PRK:
my dad lives in the Bay Area and has a classic VW Beetle (1965) that I’m looking to bring to Texas. Just the rental fee on a U-haul flatbed car hauler trailer is more than it would cost to pay a car carrier company to haul the car from CA to TX – and that doesn’t include gas for my truck to tow the trailer (round trip) or hotel rooms along the way.
The city of Houston was on a boil-water notice for 2 days this week. Water treatment plant had two transformers go on the fritz, and backup generators couldn’t help b/c they sent power via the same two transformers.
The whole state was completely embarrassed by the freeze in Feb 2021.
Why not spend some of this shoring up our energy infrastructure? We’ve got the money, and we’ve got our own grid with its issues. Might as well make hay while the sun shines.
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A drive down Torrey Pines Road, in LaJolla CA will show that the biotech capital of the world is now a ghost town of empty buildings. These small pharma have not moved, though some have, but instead failed and the cheap money that birthed them is over.
So much of CA’s economy was built by venture capital chasing tech idiocy that it is difficult to imagine CA coming back from this spiral down the chute as the tech zombies fail one after another.
It’s all about gov’t and a few social media giants – the rest is just distribution.