Gavin Newsom Neglects California as Governor

Gavin Newsom Neglects California as Governor

Calif. Gov. Gavin Newsom speaks during a press conference in Sacramento, Calif., on Feb. 1, 2023. (Justin Sullivan/Getty Images)

John Seiler

John Seiler

4/28/2024

Updated: 5/1/2024

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Commentary
Even as California is falling apart on his watch, Gov. Gavin Newsom is meddling in other states’ abortion policies. On April 24, his office declared, “Governor Newsom & Women’s Caucus Announce Bill to Allow Arizona Doctors the Ability to Provide Abortion Care to Arizona Patients in California.”
Senate Bill 233 was previously an electric vehicle bill that was changed under the deceptive “gut and amend” process. It allows legislators effectively to introduce new bills after the supposed Feb. 16 deadline by entirely “gutting” the old language and plopping in new language.
The abortion action was a reaction to Arizona’s 1864 ban on abortion going back into effect after being reinstated by the state’s Supreme Court.
Yet, even as Mr. Newsom was grandstanding, the Arizona House of Representatives voted to repeal the 1864 ban. If it passes the Senate, Gov. Katie Hobbs said she would sign it. Presumptive Republican presidential nominee Donald Trump has backed the repeal. If it is repealed, the state will still have some restrictions on abortion. Unlike in California, where Proposition 1 from 2022 placed a complete legalization in the state constitution.

What About the State of California?

Meanwhile, Mr. Newsom still has to give his annual State of the State address. In mid-March, the excuse was he was waiting to find out if this year’s Proposition 1 passed because the vote was so narrow. It will issue $6.4 billion for homeless programs. Secretary of State Shirley Weber certified the vote on April 12. Still no State of the State.
In 2023, instead of a State of the State address, on March 22 he delivered a five-page letter to Assembly Speaker Anthony Rendon (D-Lakewood) and Senate President pro Tempore Toni Atkins (D-San Diego). Mr. Newsom said it fulfilled the requirement in the California Constitution for the governor to “report to the Legislature each calendar year on the condition of the State.”
Perhaps technically.
But whereas his March 8, 2022 State of the State address was watched by many thousands live, and the YouTube stream garnered 31,000 views, almost no one read the letter. The people of California have not had a televised report on their state in more than two years.
Meanwhile, as I have reported in The Epoch Times, last October he traveled to communist China. I titled my article, “Gov. Newsom Embarrasses California in Meeting Dictator Xi in China.” The next month he flew to Atlanta for his quasi-presidential contender debate with Republican Florida Gov. Ron DeSantis.
If Nero fiddled while Rome burned, Mr. Newsom jetted while California decayed.

Unemployment Insurance Debt

The latest problem is described in the Los Angeles Times, where Don Lee is one of the few reporters who understands numbers. “California’s massive budget deficit, coupled with the state’s relatively high level of joblessness, has become a major barrier to reducing the billions of dollars of debt it has incurred to pay unemployment benefits,” he wrote.
“The surge in unemployment brought on by the COVID-19 pandemic pushed the state’s unemployment insurance trust into insolvency. And over the last year California’s joblessness has been on the upswing again, reaching 5.3% in February, the highest among all states. The March job numbers come out Friday.”
“To keep the safety-net program operating at a time when the taxes paid by employers and earmarked for jobless benefits are insufficient, Sacramento has been borrowing billions of dollars from the federal government. The debt now stands at about $21 billion and growing, an increasing burden for state deficit fighters and for the businesses that pay into the jobless insurance program.”

May Revision Coming

The crunch comes before Mr. Newsom submits his May Revision to his Jan. 10 budget proposal. The revision is one thing he can’t avoid. Although perhaps he will forego the typical budget briefing given by a California governor. He actually has been quite good with those in the past, showing a strong grasp of the numbers.
The Jan. 10 proposal calculated a $38 billion budget deficit. But the Legislative Analyst’s Office (LAO), in its latest calculation from Feb. 20, pegged it at $73 billion. Mr. Newsom’s May “Revise,” to use Sacramento parlance, will provide the starting point for budget negotiations. Shortly after, the LAO will come in with its own final estimates.
On April 11, Democratic leaders in the Legislature said they already had identified $17 billion in cuts. That leaves $21 million to go according to Mr. Newsom’s estimate, or $56 more according to the LAO’s.
His previous budgets fell into the trap long known about California budgets: depending on soaking rich people with higher taxes. This is even known in China, whose tech companies of course have deep connections with Silicon Valley as well as competing with them.
Look at this Feb. 13 report from China’s state-run Xinhua news agency: “A study has found that taxes play a role in determining where people choose to live, and in California taxes on high earners are driving wealthy people out of the U.S. western state.
“The study, titled ‘Behavioral Responses to State Income Taxation of High Earners: Evidence from California,’ analyzed taxpayers’ response to Proposition 30, a California taxation measure. ...
“The top 1 percent of California taxpayers shoulder 50 percent of the burden of the state’s income tax and evidence shows that they are highly responsive to tax policy, said Joshua Rauh, co-author of the study and a fellow at the Hoover Institution of Stanford University.”
It’s only getting worse. On Jan. 1, the top income tax rate of 13.3 percent was raised to 14.4 percent. And even the middle-class tax rate jumped from 9.3 percent to 10.4 percent. That’s higher than the top rate on billionaires was 20 years ago.
By the time the LAO analyzes the state’s finances next month, we should have some indication of how those 14.4 percent and 10.4 percent gougings have affected revenues.
The boys in the Chinese Communist Party must have been laughing over that Xinhua article, because their main competitors in Silicon Valley are suffering as their investment capital is drained away by a profligate governor and Legislature.
Although I’ve written about California’s tax grabs for 37 years, I’m far from an expert on Chinese tax policy. But according to HROne, a human resources firm dealing with employment in China, the top income tax rate there is 45 percent.
In California, the top 14.4 percent rate is added to the top federal rate of 37 percent. Total: 51.4 percent. That 6.4 percentage points higher than in China.

Conclusion: Return of the Rollercoaster

California’s income tax revenues long have been compared to a rollercoaster. They rise giddily high in good times, then zoom scarily way down in bad times. Mr. Newsom obviously knows that. He was a member of the San Francisco Board of Supervisors and the city’s mayor before becoming lieutenant governor in 2011.
In the latter position he saw how Jerry Brown was the only governor since Gov. George Deukmejian in the 1980s who dealt sensibly with the rollercoaster. As I have detailed several times in The Epoch Times, spending has to be kept below 6.2 percent of California’s personal income, a simple concept that for 20 years I have called “Seiler’s Law.”
Mr. Brown kept his budgets under 5 percent. Mr. Newsom’s recent budgets have soared above 7 percent. See my Dec. 14, 2023 article, “Of Course Overspending Slammed California Into Massive Deficit.”
The rollercoaster went way up and produced a $97 billion surplus two years ago. Now it’s going down, down, down as the wealthy—and even many of my middle-class friends—continue to flee to less confiscatory tax climates.
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John Seiler

John Seiler

Author

John Seiler is a veteran California opinion writer. Mr. Seiler has written editorials for The Orange County Register for almost 30 years. He is a U.S. Army veteran and former press secretary for California state Sen. John Moorlach. He blogs at JohnSeiler.Substack.com and his email is writejohnseiler@gmail.com

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