There was one big idea missing from Gavin Newsom’s revised budget: income tax cuts.
California politicians assume that the government should spend as much as the economy will bear. Newsom’s budget grew almost 10% from last year, twice the rate of economic growth.
In other states, especially Republican ones, governors promise to cut taxes while maintaining the quality of public services. In California, politicians promise new, “free” programs and hope to find the extra money somewhere — perhaps by seizing wealth, instead of just taxing income.
Perhaps that just reflects the difference between the “red state” and “blue state” models. But the problem in California is that we aren’t actually getting better government for the money.
Newsom’s proposed $349 billion budget is more than double the state’s $171 billion budget from ten years ago.
If you could hop into a time machine and tell Californians that you’d have twice the money to spend in just ten years, people would have been ecstatic about all the things we could do with the money. Safer roads! Incredible schools! New dams! Fire-ready cities!
Except none of that has happened. In fact, the quality of government services is declining.
Some of it was simply stolen. There is an unknown, but likely large, amount of fraud in California state spending, which Newsom did not address.
Some of the money is wasted on poorly designed programs. California has spent billions on homelessness, for example, while barely making a dent in the problem, largely because the state has bought or rented housing rather than treating mentally ill or drug-addicted people.
The two biggest items in the budget are education and health. California spends a massive amount of money on schools, but results are mediocre at best, thanks to overspending on administrators and the unions’ stranglehold on education policy.
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Health care costs keep rising without any real cost controls, and Newsom’s ill-conceived policy of adding illegal immigrants to Medi-Cal came to a sudden halt last year because the program ran out of money.
Even if Newsom and the Democrats don’t want to cut spending and taxes, they could certainly be doing a better job of spending what they have. Residents aren’t getting value for money.
Our leaders believe, despite all evidence to the contrary, that money is best spent by the state. The truth is that California does best when people can spend and invest for themselves.
Real “affordability” would mean lowering taxes and letting Californians keep more of what we earn.
But real tax cuts never enter the discussion.
Newsom used the phrase “tax cut” to describe a reduction in filing fees for small businesses. That’s not a “tax cut”; it’s just reducing an obstacle that doesn’t need to be there. And it’s just $400 per business, per year.
California needs a budget with a different — dare we say, more American — vision: one where the point of working hard isn’t just to feed a gluttonous government, but to build a better life.
