Despite a healthy national economy, California has a budget deficit that Governor Newsom proposes to close in the main by drawing on budget reserves, borrowing money, shifting funds, and deferring spending — ie, steps normally taken only during recessions. His choices are motivated by politics, not the welfare of Californians, and you can prove that to yourself by asking, “if Mr. Newsom gets his way, what would happen if California enters a recession right after he leaves office?” The answer is that cuts to programs would be draconian and big tax increases would be on the table because at the same time that revenues would be dropping $30 billion to $40 billion per year for several years, all those deferrals, borrowings and shifts would be coming due and reserves would be only half the level they were before Mr. Newsom drew them down.
Why is Mr. Newsom proposing that path when, by his own math, the deficit arises from excessive spending? That answer is also political. Newsom proposes a few cuts to programs but no concessions by public employees of whom the Executive Branch has more than 250,000 — Newsom has added 40,000 since taking office — and on whom he and the Legislature are endowing more than $44 billion of compensation and benefits this fiscal year. That’s because public employee unions are persistent donors to Newsom — eg, their money has helped him to run national advertisements about abortion rights — and disappointing them would put his national ambitions at risk.
Political patronage of public sector employees in California takes several forms. One is excessive salary spending through contracts with 21 bargaining units represented by politically-active unions. Another is excessive spending on employee benefits, including $3.6 billion in subsidies for retired employees far exceeding those provided by other states (more than 16 times the average of subsidies provided by Colorado, Oregon and Washington to retirees eligible for Medicare and nearly nine times those provided to pre-Medicare retirees). Billions more of the same above-market subsidies are provided by UC, CSU, Community Colleges, K-12 and local and county governments, all of whom get funding from the state. Another takes the form of union-enhancing legislation such as Assembly Bill 1, a democracy-suppressing bill signed into law last year that places a special interest in every legislator’s office. Another is damaging deference on policy, such as when California kept K-12 schools closed longer than necessary during the pandemic.* Needless to say, it shouldn’t be this way.
Believe it or not, it is possible to champion abortion rights and civil liberties without betraying rights to education, the democratic process, and good value for taxes paid. That’s what Californians need from their elected officials.
*Another possible example of patronage spending that I just discovered takes the form of budgeting more employees than are actually hired. Eg, in 2022-23, Mr. Newsom budgeted for 64,827.5 prison employees positions at a salary expense of $6.9 billion but actually employed only 52,048.5 employees at a salary expense of $6.4 billion. Where did that $500 million go?
