Big Bad Budget Bills

Last week the news was all about the US House of Representatives passing another budget-busting bill that extends a streak of extraordinary federal spending since the pandemic. But California’s spending grew even more — much more. Federal spending in the 2024 fiscal year was 24% higher than in the year before the pandemic and the Congressional Budget Office forecasts 2025 spending to grow another three percent. But California's 2024 spending was 50% higher than the year before the pandemic and 2025 spending is forecast to grow another nine percent.

Deficits are the result in both cases. Under Presidents Biden and Trump the federal government has been covering its deficits by issuing Treasury notes and bonds. Under Governor Newsom California has been covering its deficits by borrowing from surplus Special Funds and tapping General Fund reserves with the result that the next governor is forecast to inherit negative reserves. The state is also hiding the creation of pension debts.

For years Govern For California has tried to influence state budgets but without much success. For that to change I think we will need a combination of a change-agent governor and sister organizations who support state lawmakers who focus on the budget. Let me know of any questions or comments.

PS: In case you read a recent WSJ editorial entitled California’s Five-Alarm Pension Fire, the bill referred to there is AB 1383, which was stopped in the Legislature last week. The opinion writer tells me they are aware the bill was stopped but are concerned that it could get resurrected by Governor Newsom who in their view is competing with Illinois Governor Pritzker for government union support in his quest for the Democratic nomination for president. Who knows but you can be sure that GFC is keeping an eye on the bill.