Let's just set the bottom line here before we go any further. As of February's state budget planning for 2024-25, the formerly golden paradise on the West Coast of the United States known as California is in a financial chasm (aka deficit) of something approaching seventy-three billion - with a "B" - dollars.

That's a whale of a negative number.

The biggest challenge facing lawmakers and Gov. Gavin Newsom is the state budget deficit — and it just got bigger.

Today, the Legislative Analyst’s Office projected the shortfall as $15 billion higher, or $73 billion.

The analyst’s office had pegged the 2024-25 deficit at $58 billion in January, using Newsom’s revenue estimates when he presented his initial budget proposal of $292 billion. 

On Friday, Newsom’s Department of Finance reported that preliminary General Fund cash receipts in January were $5 billion below (or nearly 20%) the governor’s budget forecast. Unless state tax revenues pick up significantly, the bigger number will make it more difficult to balance the state budget just through dipping into reserves and targeted spending cuts.

This hasn't slowed down oleaginous Gov Randall Flagg-lite, Gavin Newsom, and his happy band of Sacramento progressives one whit from spending what they don't have and promising what isn't there.

Part of what's driving the budget deficit, in addition to profligate spending, is falling tax revenues. People are leaving and many of those who are pulling chocks are the ones CA can least afford to lose, because those are the millionaires and billionaires who fund Newsom's different schemes.

Take, for instance, the recently passed Proposition 1, which in the shortest terms possible, rejiggered how homeless money is spent, shifting a fair amount of the control - and funds - from local governments back to the state in addition to grandiose plans for housing, etc. How has all this paid been for?

A millionaires' tax.

...Currently, California’s mental health system is funded in large part by the 2004 Mental Health Services Act. It taxes millionaires 1 percent for every dollar in income they make over $1 million.

They are also planning a $6.4B bond issue. 

But since the state is now going to keep more of the funds it used to send to cities, those counties will now have to pick up the difference. Taxpayers in the counties will take the hit or their service will.

...With that money going to the state to spend it on its own programs and priorities, counties will be required to spend more of the funding they receive on housing services and wraparound services, such as education and employment assistance. Going forward, less money will be available for counties to spend on programs like mental health outreach or care, and they will be monitored more closely for how they spend it.

One reason the tax base is eroding faster than Newport Beach during a big storm.

This very same February - the one with the $73B deficit - the state legislature plunged ahead as if they were benevolent gods of yore handing out favors from an infinitely stocked treasure cave...or at least Oprah with a Medi-Cal card for darn near the whole audience.

On Monday, California became the first state in the nation to offer health insurance to all eligible undocumented immigrants. Beginning January 1, immigrants of all ages will be eligible for the state’s health insurance program for low-income people, known as Medi-Cal.

...Full-scope Medi-Cal will allow immigrants like Granados, living in the Golden State to seek free dental, vision (eye) care, specialist appointments, mental health care, substance use disorder services, prescription drugs and medical supplies, and in-home care if they meet all Medi-Cal eligibility rules, including income limits.

That is a laundry list of goodies.

It's just money.

Of course, there are more examples, but this one caught my eye today out of San Francisco. Granted, the place is always Ground Zero for interesting civic experiments in governance, but they're in the middle of a fierce mayor's race right now and trying to outdo each other in "Big Ideas."

A bill introduced Monday could see San Francisco welfare recipients being paid if they steer clear of illicit substances.

Supervisor Matt Dorsey proposed the “Cash Not Drugs” pilot program Monday as a compliment to Proposition F, a ballot measure from March that requires drug screening and treatment for welfare recipients if they are to continue receiving monetary assistance.

For those who test negative for drugs, Dorsey’s plan would provide an extra $400 a month. Recipients who will be affected by Proposition F — single adults without children — currently receive $712 per month through the County Adult Assistance Program. Under Dorsey’s bill, those people would now receive up to $1,112 when they test negative for drug use. If passed by the Board of Supervisors, the pilot would go into effect for three years, with its effectiveness overseen by an independent academic researcher.

Mayor London Breed has already endorsed it. 

Who doesn't love giving money away right before an election? Every Democrat running for every office right now loves to.

And besides, the City by the Bay is as awash in cash as it is in...what's that?

Oh.

It seems San Francisco has an "It's only money" problem, too.

...Departmental budget submissions for the Fiscal Years that begin July 1, 2024 and end June 30, 2026 must be submitted to the Mayor’s Office by February 21, 2024. The Mayor issued annual budget instructions to City departments for FY25 and FY26 on December 13, 2023. The City is projecting a budget shortfall of approximately $799 million with a $245 million deficit in the first year and $554 million in the second year. Therefore, City departments are required to propose cuts of 10% in FY25 and FY26 from their General Fund budgets. An additional proposed contingency cut of 5% is required each year. 

An almost $800 MILLION shortfall over the next two years, but they've got an extra $400 a month per junkie or alcoholic to hand cash to?

My checkbook does not work like this, nor does my ATM card. CA must be magic.

But this time, not so much magic, as trying to pass the bill for the bucks off  to the rest of California.

SCHWEET

...The plan Dorsey announced Monday is part of a drug treatment strategy known as “contingency management,” which rewards individuals for positive behavior as a reinforcement mechanism. The San Francisco Department of Public Health oversees several similar programs on a small scale. Dorsey said the costs of the program could be reimbursable through Medi-Cal.

Don't you love it when a plan comes together? The dopers will vote for Breed and Co and it won't cost the residents of San Fran a dime.

But it makes a sober observer from outside the state wonder how Medi-Cal gets all its money to work these multiple wonders.

Oh.

The state taxes managed care plans. The legislature just renewed the tax that was set to expire because, well...they have no money. Need more.

California Democrat lawmakers are pushing a bill to increase the tax on Medi-Cal managed care plans by another $1.5 billion, to fund the state share of cost in the Medi-Cal program. Or so we are told. While this appears to be in-the-weeds legislative lingo, it also appears to be a money grab to help Gov. Newsom shore up his $73 billion budget deficit… on the backs of the state’s poorest people, and physicians who can’t get full reimbursement for treating Medi-Cal patients.

This is what third world countries do when the results of Socialism or Communism come home to roost. All you need to know is this is money being taken out of your pockets to pay the governor’s bad debts.

...Last year’s MCO Tax (Assembly Bill 119) also taxed health plans, however, those revenues were intended to fund Medi-Cal providers with much-needed rate increases to Medi-Cal physicians.

This MCO Tax will not fund rate increases, but will instead be used to backfill the Governor’s massive budget shortfall.

...The governor will be able to “shift” $3.1 billion from the MediCal Provider Payment Reserve Fund to the general fund to help shore up his $73 billion budget deficit. How many other state agency budgets are facing such a scheme?

They are also one of only, like, four places in the country that still penalize people on their taxes for not having health insurance. 

...Many Californians who go without insurance may unknowingly pay more in tax penalties than they would for a health plan. California is one of four states, plus the District of Columbia, that penalizes residents for not having health insurance. This most recent tax season, Californians saw penalties of up to $850 per adult and $425 per child.

During the 2022 tax season, the latest year for which data is available, more than 271,000 households paid fines for lacking health insurance, according to the Franchise Tax Board. Most of those who paid the fines earned less than $50,000.

Yet another advantage of Florida - no income tax to tack penalties for breathing onto.

Is it any wonder that the going rate for a U-Haul out of that state is exorbitant but worth every last dime?

San Francisco handing out largesse for staying clean is like the cool kids playing with the poor kids' money because they're bored. If it doesn't work out, San Fran's on to the next thing. It's no skin off their noses.

But the family working their butts into the dirt trying to survive in the Central Valley or upstate?

They know it's money - their money. 

And they wonder if they're ever going to be able to scrape together enough to leave.