The state of California is facing a budget deficit of $25 billion going into 2023, the state’s Legislative Analyst’s Office (LAO) reports.
According to the Daily Caller, the LAO’s Wednesday report claimed that the primary reason for the deficit will be the shortcomings in the state’s tax revenue, which will ultimately be about $41 billion less than originally projected. Corporate tax revenue in the state is expected to drop by about $6 billion from fiscal year 2021-2022 to 2023-2024, and personal income tax revenue has also declined, from $135.9 billion in the prior fiscal year to an estimated $122.6 billion in the coming fiscal year.
“Under our outlook, the Legislature would face a budget problem of $25 billion in 2023‑24,” the report states. “The budget problem is mainly attributable to lower revenue estimates, which are lower than budget act projections from 2021‑22 through 2023‑24 by $41 billion. Revenue losses are offset by lower spending in certain areas.”
The numbers reflect the broader trend of businesses, from large corporations to small businesses, all fleeing California over the last few years due to increased rates of taxation, costs of living, and over-regulation, among other fiscal woes. Many companies have left California for more business-friendly states such as Texas and Florida, including Elon Musk’s Tesla, which moved its headquarters to Texas.
In the year 2022, there were only nine companies based in California that held initial public offerings (IPOs); in 2021, there were at least 81 such companies located in the state. The nine companies together represent just two percent of all companies in the United States that went public in 2022; by contrast, the 81 companies located in California in 2021 represented 39 percent of all public companies, the largest such percentage in any state.