How To Go From A Budget Surplus To A Budget Deficit

In 2019, Gavin Newsom became Governor of California.

In November 2022, The Times of San Diego reported:

Six months ago, while proposing a revised state budget, Gov. Gavin Newsom bragged about the state’s having a $97.5 billion surplus that would finance some landmark expansions of social and educational services.

“No other state in American history has ever experienced a surplus as large as this,” Newsom told reporters as he unveiled a 2022-23 fiscal year budget that topped $300 billion and, with a few tweaks, was eagerly adopted by the Legislature.

Never mind.

Last week, the Legislature’s budget advisor, Gabe Petek, issued a sobering report on the state’s finances, saying revenues are likely to fall $41 billion short of what Newsom and legislators anticipated, leaving the state with a $25 billion projected deficit for the 2023-24 budget. Moreover, he said, if recession hits, as many economists expect, the gap between income and outgo could be much higher.

At the rate it’s going, things are only going to get worse.

On Sunday, Fox News reported:

The California Reparations Task Force formally recommended that the state offer payments of up to $1.2 million to every qualifying Black resident.

The task force held a public meeting in Oakland, California, on Saturday and voted on the final set of recommendations to be sent to the state’s legislators. The nine-member panel called on the state to offer its Black residents a formal apology in addition to the payments.

“Reparations are not only morally justifiable, but they have the potential to address long-standing racial disparities and inequalities,” Rep. Barbara Lee, D-Calif., said after attending the meeting.

The panel’s recommendation breaks payments down by types of historical discrimination. For instance, Black residents affected by redlining by banks would receive $3,366 for each year they lived in California from the early 1930s to the late 1970s, amounting to up to $148,099.

Similarly, Black residents could receive roughly $2,352 in compensation for over-policing and mass incarceration for each year they lived in California between 1970 and 2020. Those payments could amount to $115,260.

In total, from these and other payments included in the plan, a Black Californian who is 71 years old and has lived in California his entire life could receive up to $1.2 million, according to analysis from the New York Times.

Where is this money going to come from? Were Black residents the only people impacted by discrimination? It’s interesting to see reparations in California as California was admitted to the Union as a ‘free state.’ California’s constitutional ban on slavery went into effect in 1850 (that ban was not necessarily effective in preventing slavery, but there was a ban). Is Massachusetts going to pay reparations to the Irish immigrants who couldn’t find jobs after their indentured servitude was over because of discrimination?

Discrimination based on race, religion, or ethnic origin is wrong, but reparations are not the answer.