In 2003, when the Dotcom boom busted, years of spending increases had left the state woefully unprepared for a downturn in the market. I know. As the state’s Chief Financial Officer I had to meet with the major rating agencies in New York to make the case for them not to downgrade California’s bonds to “junk” status.
We passed the Balanced Budget Act in 2005 and made tough spending cuts, but this is not something anyone should want to go through again. Especially not in the world’s 5th largest economy.
We are better prepared today with a ‘Rainy Day Fund’ and a just announced record $97.5 budget surplus. Nearly half of the surplus must go to education spending which leaves $49.2B for discretionary spending.
Gov. Newsom plans to put $23B into the ‘Rainy Day Fund’ to bring the state’s total reserves to over $37B total. That’s a good start, but it’s less than half the $100B shortfall the Public Policy Institute of California predicts should the state experience a moderate recession.
California is the world’s fifth largest economy. This surplus is great but our problem is rarely a lack of revenue. It's almost always a lack of responsibility.
We know a recession is coming. We know the state will experience huge shortfalls when that recession comes. We're not prepared today. But together we can change that.
Most Californians believe the state is not on the right track. The solutions to our biggest challenges are right in front of us but powerful Special Interests get in the way of true progress. We are working to change that and need your help!
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