Connect with us

Hi, what are you looking for?

Economy

Broke as a joke: CA audit finds state owes $55 billion more than available

California’s problems just keep piling up. Albeit 350 days past the filing deadline, the state just filed its 2021-2022 audited financial statement and got some big news: it still owes $55 billion more than it has. The Center Square reports that in its filing, the state admits that COVID-era unemployment fraud cost the state $29 billion that must be paid back to the federal government, and that in 2022, the state had $256 billion more in liabilities than it had in unrestricted resources.

Nonetheless, after accounting for “restricted resources, such as purpose-specific state trust funds and bonds, the state still owed $55 billion more than it had” the outlet reports.

“If that’s the best in California we can do economically and the government is still not able to repay debt, what are we going to do now when we have a much worse financial situation and we’re looking into eating into our rainy day fund,” Policy Analyst Marc Joffe, of the libertarian Cato Institute, told The Center Square.

The outlet notes California currently faces a $73 billion deficit for the 2024-2025 fiscal year, to which the Democratic legislature has responded with a proposal to cut this year’s budget by $2.1 billion and a proposal to spend $12 billion, or half the state’s rainy day fund. With the state reducing 2023 jobs growth from 325,000 to just 50,000, revenues are likely to be much lower than expected. With a significant expansion of benefits, including expanding taxpayer-funded MediCal to all illegal immigrants, and a major shift in illegal immigration from heavily-enforced Texas to California instead, state expenditures could end up being higher than expected.

“The audited financial statement gives you the whole picture. It’s not only looking at revenues and expenditures but also looking at the assets and liabilities of the state,” Joffe explained.

“Lower revenues and higher expenditures could combine to leave California with a much greater than $73 billion deficit for the year” according to the Center Square. “Due to constitutional requirements that the state pass a balanced budget each year, and a ban on taking on debt to finance deficits, the governor and legislature will likely have to cut tens of billions of dollars from the governor’s proposed $209 billion budget.”

Advertisement

Advertisement