How California’s economy looks heading into 2019

California's State Building at Sacramento from the State website

Photo found at http://capitolmuseum.ca.gov/

California's State Building at Sacramento from the State website

Jason Kanetakis, Staff Writer

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When Governor Jerry Brown was elected governor of California for the third time in 2010, California was haunted by a collapsing economy with the state being $27 billion in debt. During Brown’s two terms as governor, the damage was reversed–both in the state and the nation–with the state now having a budget exceeding $200 billion. In addition to California’s already sizeable budget, the “[The state has] nearly $30 billion in combined reserves and unexpected tax revenue,” as reported by the Legislative Analyst Office. This is one of the many pieces of good news that incoming governor Gavin Newsom is receiving prior to beginning his term as governor. 

California has gone through an eventful year, with a number of nation-leading accomplishments. These include passing the nation’s strongest net neutrality law, eliminating the money bail system, passing nation-leading workplace harassment and sexual misconduct roles and becoming the first major economy to commit to 100 percent clean energy by 2045.

“[He] is living under a fortunate star,” the Hoover Institution said. 

The state budget is also going to improve even further as a result of increased taxes that were approved back in 2016. When Newsom completes his first year in office, revenue from personal taxes will have doubled since 2013.

The Legislative Analyst Office is forecasting at least another $14.8 billion in budget excess next year.”

“The Legislature and Newsom could follow Brown’s lead and use that [budget surplus] to continue preparing for a recession,” the Sacramento Bee said.

California’s strategy since budget started exceeding needs was to stockpile the excess until another recession hit the nation or the state. Howeverwith a new incoming governor, this strategy might change. If the new government chooses to spend more money instead of saving it up, then there is a range of issues that could receive more funds.

“Expanding health care coverage to undocumented immigrants or putting more funds into programs aimed at helping low-income Californians [are some of these issues],” the Sacramento Bee reported. However, there will be stark opposition facing the government if they choose any of these topics, which makes the doomsday prep like decision logical.

It is essential to remember that forecasts could always go the opposite way than we think. The Legislative Analyst Office again predicted in 2000 that the following years of 2001-2002 would produce a $10.3 billion surplus, but the “dot com” recession hit, and California instead faced a $12 billion deficit. With experts warning another recession is coming soon, Californians should be ready for anything.

“This is a time to save for our future, not to make pricey promises we can’t keep,” Governor Brown said at a budget conference back in May. “I said it before and I’ll say it again: Let’s not blow it now.”

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