Heavy CA issues loom over Newsom, potential successors

from Dan WaltersCalMatters

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Political California swung into the New Year on Monday.

The Legislature reconvened after a 114-day recess, Gov. Gavin Newsom renewed his nascent presidential campaign, and the dozen or so men and women who yearn for his job continued to look for ways to reach a hitherto uninterested electorate.

of Newsom interview on Monday on MS NOWcable channel beloved by Democratic politicians and activist voters hinted again that his final year as governor will be dominated by his near-certain bid for the White House in 2028. He has spent much time criticizing President Donald Trump for denying aid to victims of the Los Angeles fires and cracking down on undocumented immigrants.

Newsom’s concerns will color everything he and the Legislature do about the deficit-ridden state budget and about a half-dozen other stubborn problems that have emerged or become more acute since Newsom took office seven years ago.

In recent years, Newsom has been lax about delivering the annual State of the State message to the Legislature, which is required by the state constitution. But he will get the job done later this week, then unveil his response to forecasts of semi-permanent, multibillion-dollar deficits.

Gabe Petek, budget analyst for the Legislature, sees an immediate $18 billion hole between revenues and expenses, which could grow to $35 billion if not closed. He warned that Newsom and lawmakers cannot rely on a sluggish economy to solve their problem.

They have used a variety of tricks, including raids on emergency reserves, off-the-books borrowing and fraudulent accounting tricks, to stave off the day of fiscal reckoning, but the deficit, born of overspending revenue, persists.

“If our projections hold, the Legislature will face a fourth consecutive year of budget problems — all during a period of overall revenue growth,” Petek said in a November analysis. “As it stands now — with larger projected deficits and far fewer tools available to deal with them — California’s budget is arguably less prepared for downturns.”

Legislative leaders, pressured by a powerful progressive contingent, do not want to cut the health care and income support services they so willingly put in place after Newsom falsely announced that the state had a $97.5 billion surplus three years ago.

Progressives and their allies in public employee unions and other left-of-center groups want to fill the budget hole with new taxes and are sponsoring two ballot measures, one for extending the additional tax to the highest income taxpayers this should expire and second impose a a new tax on the wealth of government billionaires.

Newsom has strongly rejected raising taxes to deal with the deficit, apparently unwilling to become a pro-tax presidential candidate. But so far he has offered nothing but gimmicks to solve the problem created by his unusually unsubstantiated 2022 surplus declaration.

The state’s stubborn budget deficit is just one of the issues that continue to elude resolution as Newsom’s final year begins. Other problems include high levels of unemployment and povertya housing shortage it is just as sharp as when he took office in 2019, insurance crisis born of chronic forest fires, a woebegone bullet train project, a spike in the cost of livingstubborn insecurity of water supply and looming shortage of gasoline as refineries close due to hostile government regulation.

On top of that, California’s economy is $4 trillion more or less remained neutral, with the nation’s highest unemployment rate, no net job growth since the COVID-19 pandemic, and severe job cuts in signature sectors such as film and television production technology.

The apparent existence of such problems during Newsom’s final year as governor is not only a potential obstacle to his presidential campaign, but also colors the thousands of campaigns to choose a successor.

Will future Democratic governors be willing to point to Newsom’s remaining problems — especially the budget deficit — and tell voters how they would approach the challenge? Or would they just compete to see who can be the loudest?

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.