California's Forecasted Budget Deficit Decades in the Making

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For decades, the state that has been dominated by one-party that has been laying the foundation for a budget catastrophe. The concept of having the wealthy bear the responsibility to fund most of the state’s General Fund and the constant efforts to have its residents pay the highest costs for electricity and fuels is about to burst the proverbial ideological bubble.

The State’s much-touted $21 billion operating-budget surplus is likely to disappear entirely due to declining tax revenues and rising public welfare costs.

COVID-19 carnage on the job market has exposed that our elected officials have been oblivious to basic math for decades, and continue to be void of a few economic basics such as:

  • 69% of Americans have less than $1,000 in ready savings, and most likely have blown through that in the last few weeks of home isolation.
  • In California alone, there are more than 4 million small businesses which employ more than 7 million people across the Golden state.
  • Among the largest sector of small businesses in California are the 90,000 restaurants, of which 30,000 may close permanently as a result of the COVID-19 impacts.
  • If the 4 million small businesses in California see a 30 percent closure rate the ramifications on employment could be devastating.
  • As California begins paying out massive amounts in unemployment and welfare benefits and continues to support the hiring of undocumented workers and has virtually eliminated the independent contractors, you can see how this house of cards is starting to crumble.
  • California is expected to face a $54.3 billion deficit over the next year, and unemployment is expected to rise to 18% — that is nearly 1 in 5 Californians without jobs!
  • Once the world’s 5th largest economy, tax-paying Californians now must cope with uncertain future bureaucracy-distributed State and local monetary expenditures along with the state’s unfunded pension debt liabilities of one trillion dollars, or almost 5 times the State’s $220 billion-dollar 2020-21 budget!
  • The State has been very proud to have 5% of its taxpayers contributing 70% of the monies to the State’s General Fund. The other 95% of uninformed and poorly informed voters pay, every day, for the foolish actions and evil inactions, of the unrealistic California politicians who were empowered by election outcomes.

Income to the state from those elite 5% should be great in 2020 as it will reflect the growth in 2019 of the stock and real estate markets. However, the future does not look as rosy. A recession may seem eminent, especially if the stock and real estate markets do not recover in 2020. There appears to be a forthcoming huge gap in 2021 between the General Fund needs that continue to grow, and the reduction in funds available in 2021 from that elite 5%.

To compound our elected leaders lack of financial wisdom, we have their ideological green goals that continue to increase the cost of energy to its 40 million residents to run what was once the 5th largest economy in the world.

As America recovers from the COVID-19 shelter-in-place mandates, California  cannot rid itself from the continuing and state-prescribed high costs of energy that other states are not shackled by, and those elected California  officials are doing nothing to effectively and forever resolve the causes of the high energy costs that severely limit the state’s economic base and its potential for improvement.

California boasts that it is a leader in all sorts of things. Well, California is the only state in contiguous America that imports most of its crude oil energy from foreign countries.  Another is importing more electricity than any other state due to the state having insufficient renewable generation to replace the closures of uninterruptable generation from nuclear and natural gas. California’s electricity costs are already among the highest in the country and will continue to increase as imports from other states increase and become more expensive.

Today. the intermittent electricity from low-power density renewables is expensive, far more than oil and natural gas, and have been contributory to prices for electricity in California being 50% higher than the nation’s average for residents, and double for commercial consumers. Costs to homeowners and industry are projected to go even higher with the continuation of Governor Newsom’s carbon dioxide gas emissions-centric puppeteering radical Green Crusade.

Since California  is currently unable to generate sufficient electricity in-state to meet demand, the state is forced by its own policies to import more electricity than any other state, an outcome that is not in the financial interest of any California  resident. Without any known state-fostered plans to rebuild with more in-state power generation, California continues to shut down its safely functioning nuclear and natural gas electricity generation plants!

Misguided Sacramento leaders have caused California  to increase imports from foreign countries from 5 percent to 57 percent of total consumption. The imported crude oil costs California more than $60 million dollars a day being paid to oil-rich foreign countries, depriving Californians of jobs and business opportunities. Apparently, Governor Gavin Newsom wants to markedly reduce in-State oil production even more and is seeking to permanently ban oil-shale fracking technology’s use which would INCREASE costly foreign crude oil imports to California to fill the gap of ever-declining California and Alaska production, further crippling the State, forcing the continuation of California  as a remarkable national security risk for the USA.

Decades of relying on an elite few to fund the state General Fund, and imposing the highest cost of energy in the country on its own residents is now forecasted to present the largest budget deficit in decades that will stagnate the states recovery from COVID-19 for years.


Ronald Stein is Founder and Ambassador for Energy & Infrastructure of PTS Advance, headquartered in Irvine, California.