8 votes

California expects record revenues in stunning Covid budget reversal

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  1. skybrian
    From the article: [...] [...] [...] [...]

    From the article:

    The state's coffers are so full that California will be constitutionally obligated to put billions of dollars into rainy-day reserve accounts, all while many other states are facing deficits. In New York, Gov. Andrew Cuomo says the state is $15 billion in the red.


    Remarkably, the state has more money than it did a year ago, before the pandemic — the overall proposed spending total for 2021-22 is $5 billion higher than in last January's budget, while the general fund amount is a staggering $11.5 billion larger.


    It turned out that the state's wealthiest taxpayers, many in the Silicon Valley, had a banner year thanks to a soaring stock market and technology that meant the professional class could continue working remotely without skipping a beat. California's progressive income tax structure relies on the rich more than most other states and California did so well it actually saw more tax withholding during the last nine months of 2020 than in 2019.


    California has $34 billion beyond what it needs to balance its budget, and the governor said $22 billion will be put into various reserve funds. He emphasized that fiscal forecasters believe the surplus could be fleeting and that the state will face years of deficits in the future without putting aside money.


    Businesses and moderates have raised concerns that any additional taxes would prompt tech firms and wealthy residents to flee to other states, especially after Oracle and Hewlett Packard Enterprise announced last month they would move their headquarters to Texas and some economists have suggested a remote work culture has untethered employees geographically.

    Newsom dismissed those concerns Friday, putting faith in California's reputation as an incubator of innovative businesses thanks in part to its world-class universities. But he also said that he has no interest in another tax on the wealthy.

    "Make no mistake, there are some that are talking about wealth taxes, some that are talking about big income taxes," he said. "They're not part of the conversation."

    4 votes