Fourth ranked economy in California is also at the top of poverty

California’s economic production exceeded $ 4 trillion a year, thus sneaking past Japan if it was a nation, The fourth largest economy on the globeExceeded only by the United States, China and Germany.

The news was an opportunity for governor Gavin Newo yes exercises its tendency to BraggadocioS

“California is not just up to date with the world – we define the pace,” Newsom said. “Our economy is thriving because we invest in people, prioritize resilience and believe in the power of innovation.”

It was also an opportunity for Newsom to make another shot of President Donald Trump, saying: “While we are celebrating this success, we acknowledge that our progress is threatened by the reckless tariff policies of the current federal administration.

If California’s economy thrives as boasts of Newsom, it can wonder why the state The unemployment rate is the third highest in the nation, with more than a million unemployed workers and why it is The poverty factor is the highest in the nationS

One can also wonder why, if the California economy is so healthy, the state budget is experiencing chronic deficits of multacliers dollars.

NEWSOM should tell the legislature this month how will it change 2025-26 budget he offered in JanuaryAdmit the annual vortex from negotiations to create the last version or less or less to accept until June 15.

The proposed budget in January at least $ 11 billion in short -term amendmentsIncluding loans outside the books, it enters the budget reserves of the state and the accounting tricks to close the difference between the estimated income and the expenses dictated by the current legislation.

Tax revenue is a little more than expectations So far this year, but not almost enough to close the deficit that has expanded due to the cost of Medi-Cal, California’s health system for the poor who are far beyond the budget level 2024-25 that has come into force last June.

Overall costs for Medi-Cal are over $ 6 billion higher than expectations, with a major part caused by a higher than expected recording of undocumented immigrants.

Therefore, it can be revised as it is called, it will probably contain even more beneficial amendments that can postpone the day of fiscal considered, until the Newsom manager ends two years, but will continue to hit his heir and the legislature.

The situation with the Medi-Cal example of the main reason why California’s budget is unhealthy while the country’s economy continues to grow, though without producing many new jobs.

The relevant data should be found in a recent publication by the budget analyzer of the legislature, Gabe Petek, called “Calefacts 2024S “

He reveals that as the Newsom became governor in 2019, government spending increases on average by 9% annually, while annual revenue increased by only 6%. The difference between these two numbers is what budget Mavens call a “structural deficit”, which means that the costs baked in law are far beyond what can generate the current revenue system.

The main discrepancy between income and output is important to remember, because when Newsom reveals its processed budget, it will probably cite wild fires in Los Angeles and Trump’s tariffs as factors in the budget precipice.

Both events are likely to increase the deficit, but they have not caused it. The deficit exists because Newsom and the legislature chronically spent more than revenue production, although Californians have One of the highest state and local tax burden in the countryrelative to the economy of the state.

In addition, by joining reserves designed to reduce the impact of recessions or other emergencies, Newsom and legislators have weakened the state’s ability to deal with real economic failures or disasters, such as wild fires.