Marketplace is community-funded public service journalism. Give in any amount that works for you – what matters is that you give today.
According to California Governor Jerry Brown, the state will earn more in revenue than it spends this fiscal year. That may come as a surprise to anyone who follows the state’s budget. It had a $9 billion deficit last year, and $25 billion the year before. How’d he do it? Massive spending cuts for one, says Brown:
“25 percent out of the colleges and universities, we cut healthcare, aid to the blind and disabled, we got rid of redevelopment, you name it.”
Combined with increased taxes, on income and sales.
Alan Schankel, director of municipal strategy at Janney Capital Markets, says California’s expected surplus, about $850 million, isn’t that big compared to the overall budget. And at the end of the fiscal year, the state could still come up short — California’s revenue is less predictable than other states’ because it relies heavily on income tax.
“A blip in the economy can have a disproportionate impact on revenues because it’s so dependent on high earners,” says Schankel.
California has lots of wealthy residents, but if they have an off year, the state budget suffers.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.