I had the pleasure of a virtual meeting with State Senator Mike McGuire on Wednesday. Some of you may not understand this, but I am a Mike fan. I like him personally, and I think he is an effective and influential leader for his constituents. With that said, Mike commented on what Sacto is doing with its aggressive spending plans. Let me tell you, there is a lot of money being spent by Sacramento!
Senator McGuire offered that the State has repaid its “rainy day” fund and now it has $28 billion in the account. I applaud that.
Many of the items Sacto is spending money on, are hard to argue against. They all seem to be very worthy causes/concerns. Amongst other things, the State is spending big dollars on:
- Career training – vocational training is now recognized as part of the solution to our worker shortage in CA
- $6.25 billion in 4 years to trench and install broadband to rural areas of California. CEQA exemption to this work should push these projects forward very quickly.
Senator McGuire also discussed wildfire vegetation management funding, wildfire resources expansion with night flying helicopters and more firefighters being hired. Additionally, preschool funding and childcare funding is receiving big money.
There are too many things to list that are getting money.
Here is my question: Where is all this money coming from? What is the Dirty Little Secret behind all this “windfall” spending?
Senator McGuire told us, corporate taxes are at a record “windfall” high in CA, as are revenues from personal CA State Income Taxes. Main reason was subsidies, changing the way people did business, and Federal bailouts pouring into California created a lot more wealth for the already wealthy, and the source of those dollars came from the COVID 19 pandemic.
In other words, the “rich got richer” from the COVID 19 pandemic. In a big way!
I have included some excerpts from an “Op-ed” piece from the Sacramento Bee that is pertinent to all of us. I hope you enjoy the opinion of someone other than “Me”!
“How do you spell “windfall”? In California today they spell it with a seven, a five, and nine zeroes.
$75,000,000,000 is a lot of “extra” money for a state that had originally projected a $54 billion deficit.
That’s a rounding error of $132 billion — more than half the state’s annual budget. How did Governor Gavin Newsom and the state assembly get it so wrong, and in such a nice way?
To be blunt about it, California was a great beneficiary of the Wuhan Flu pandemic. A spokesman for the state’s Department of Finance further warned that “better-than-expected revenues haven’t translated into an economy that’s fully rebounding.”
Approximately 1.6 million Californians lost their jobs in 2020, and of those, “Nearly a half-million people stopped even trying to look for work,” according to the AP. “Business properties saw their value plummet more than 30%.”
But the Tech Gods of Silicon Valley made out like bandits, according to that same report:
The Newsom administration projects Californians will earn $185 billion from capital gains — the most ever — resulting in $18.5 billion in tax revenue for the state.
The pandemic resulted in the largest one-time transfer of wealth from the lower and middle classes to the One Percent of the One Percent. California, having a surplus of billionaires, also enjoyed a one-time surge in state and local income tax revenues.
Corporate taxes, too. The most obvious example is Cupertino-based Apple. CEO Tim Cook just reported a record-smashing second quarter, with high-double-digit sales increases for both their Mac and iPad computers. Again, those are one-time gains caused by people needing new computers while forced to work from home.
But even all that revenue isn’t enough to account for the state’s $75 billion surplus.
Where did the rest come from? It came from you and me, pardner.
POLITICO reports that despite the state’s enviable revenue surge, “California is due to receive $26 billion in direct federal aid.”
One-third of California’s one-time surplus comes from the taxpayers (and taxpayers yet to be born) across the entire country.
I’d be remiss if I didn’t mention that the $26 billion is on top of another $16 billion in federal largess being paid directly to California city and county governments.
POLITICO reports that despite the state’s enviable revenue surge, “California is due to receive $26 billion in direct federal aid.”
One-third of California’s one-time surplus comes from the taxpayers (and taxpayers yet to be born) across the entire country.
I’d be remiss if I didn’t mention that the $26 billion is on top of another $16 billion in federal largess being paid directly to California city and county governments.
This article was originally published by Pjmedia.com. Read the original article here.”
That’s all folks!
John