There is no other place on Earth quite like the state of California. It is home to some of the most innovative high-tech industries in the country in addition to having some of the most impressive natural resources of any state. But, similar to other compelling economic tales, the policies of the government jeopardize its future.
In point of fact, the state’s government has rendered California unlivable.
It wasn’t always like this, that much is for sure. The decade of the 1960s in California came to an end with a population of approximately twenty million people living there. Throughout the previous decade, the country’s robust economy allowed for the development of an enormous state water project as well as a higher education system that was the object of envy around the globe.
The future of California appeared to be secure because to the state’s magnificent and business-friendly coastline as well as its forward-thinking business executives.
No longer, and the following are the four primary reasons why California is at such an extreme risk.
This enormous state water project was conceived for a population that was not significantly higher than 25 million people. The current population of California is estimated to be close to 40 million people on any given day, and it is expected to reach 50 million or even higher in the not too distant future.
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Yet, throughout the past half century, California’s infrastructure requirements have been largely disregarded.
The water distribution system in the state has not changed significantly since the 1960s. About the state of its roadways, a recent article’s heading asserted, “California’s roads are some of the weakest in the nation, and they are swiftly growing worse.”
“The average cost to a California driver of driving on roads that are in need of repair is $844 per year, and 5.5% of the state’s bridges are classed as having structural deficiencies. According to estimates, the state of California has a drinking water deficit of $44.5 billion and a wastewater deficit of $26.2 billion.
There are 678 dams that are regarded to have a high risk of failure. An projected shortfall in funding for capital expenditures exists among the state’s educational institutions.
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Governor Jerry Brown of California provided an estimate in 2017 that stated the state was “facing $187 billion in unmet infrastructure requirements.” On the other hand, according to the Bay Area Council Economic Institute,
“the cost of California’s unfulfilled infrastructure needs is up to $737 billion and possibly as high as $765 billion.” Who has the upper hand? It’s difficult to say for sure, but all of those numbers are certainly intimidating.
One would expect that the above would cause government authorities to have significant cause for concern. To the point where they began making reductions wherever they could find them. If you believed that, you would be completely and utterly incorrect.
The state of California spends close to two hundred and fifty billion dollars each year on budgeted programs, and considerably more off budget in the form of programs paid for with bonds, which is another term for debt financing.
About the pension debt, out of those roughly 200 billion dollars, in the most recent budget, fewer than two billion dollars were allocated to the purpose of paying down the pension debt. A high-speed rail project that is now predicted to cost $70 billion and that nobody appears to desire has received more than that in funding this year.
In addition to that, as I mentioned before, California is shifting to the left even farther and expects the rest of the country to pay for it. Gavin Newsom, Kevin de Leon, Xavier Becerra, and Kamala Harris are members of the future generation of leaders in California.
These individuals are substantially more to the left than the older (and more “conservative” in comparison) Jerry Brown and Diane Feinstein. This new generation of leaders is supported by an influx of favorable voters who are replacing those that are departing. These voters are replacing those that are leaving.
Every one of these political figures is on board with the numerous legal challenges that Democratic Attorney General Xavier Becerra is bringing against the Trump administration.
Many people refer to such cases as being part of a resistance effort that is being led by California Democrats. This opposition is intended to result in political wins rather than policy benefits.
Gavin Newsom, Kevin de Leon, Xavier Becerra, and Kamala Harris all support greatly increased healthcare coverage, if not universal healthcare. It is predicted that universal healthcare might cost as much as $400 billion annually (that is not a typo).
All of them are in favor of the California magnet policies that have drawn in a large number of people who are not authorized to be in the state. In point of fact, there is no sign that the next generation is concerned in any way about the debt that will be incurred in the future. Conversely, they are in favor of raising tax rates.
What kind of taxes are those going to be? Throughout the next ten years, there will likely be increases in both income taxes and sales taxes. Prop 13 is a landmark law in the state of California that protects homeowners from excessive property taxation.
There is a persistent campaign to repeal this law. You should also prepare for a service tax, which will apply to professionals such as attorneys, accountants, cosmetologists, and gardeners. This new service tax would be added to the income tax that is already in place.
On top of everything else, sooner or later a proposal for an asset tax will be made. Businesses in California are subject to an asset tax, which is already collected by the state’s counties. Expect that to be recommended on a statewide level if California is forced to tackle its future debt, as the state is moving more and further to the left.
