California Governor Gavin Newsom presented his proposed 2024-2025 budget Wednesday and started off by claiming that the state's not actually facing a $68 billion shortfall, that according to his office the state faces a $37.9 billion shortfall, and tsk-tsk'ing journalists who cited the December number from the Legislative Analyst's Office.
Yeah, that's so much better.
During his presentation Newsom announced that he plans to use $10.4 billion from the state's rainy-day fund and $2.7 billion from other reserves to partially close that gap, but in order to use the rainy-day fund Newsom has to declare a budget emergency. Now, the term "emergency" implies something unforeseen; California had large surpluses in 2021-22 and 2022-23, but Newsom and the Democrat supermajority didn't choose to pay off debt with that surplus and now are in a big hole. And Newsom doesn't want to nix his "signature" programs (a/k/a constituency payoffs), so he just wants to call it an emergency and do some other creative accounting.
If you guessed that Gavin would understand that his irresponsibility does not make the results everyone else's emergency, well, you don't know Gavin well. Of course it's a totally unforeseen emergency, because capital gains revenues fell and there were floods and snowstorms, or something.
California ophthalmologist Dr. Houman Hemmati had some thoughts for Newsom after hearing about the governor's plan to declare a budget emergency. Hemmati is the son of Iranian immigrants who owned a family farm in Ventura County, California, so he's keenly aware of the burdensome regulatory structure that affects all types of families and businesses in the state.
In a very long post on X, Hemmati gave Newsom very specific and effective advice on how to actually balance the budget instead of using some "voodoo economics." He wrote:
It’s utterly irresponsible of @CAgovernor @GavinNewsom - bordering on criminal - to declare a “budget emergency” so that he could artificially balance the budget (and take credit for it) using our rainy day fund. Gavin: YOU and your excess spending are the emergency.
Rather than depleting reserves, you must:
1. Immediately CUT $75 billion in spending. You can start with the following emergency measures cuts:
2. Immediately adjust the tax code to keep money from leaving the state AND attract tons of $ BACK to California:
3. Encourage large & small businesses to return to California and existing businesses to thrive by:
As many of us have said before, you already have the highest taxes in the nation. You don’t have a revenue problem. You have a SPENDING problem. Dipping into emergency reserves will only worsen the crisis YOU personally created by placing a band aid on a very deep wound.
Let’s put this in medical terms: When a trauma patient arrives to the hospital in shock, hemorrhaging from a deep wound, we don’t keep transfusing that patient with blood. We give enough blood & fluids to temporarily resuscitate our patient, but our priority is to identify the source of bleeding and STOP the bleeding. You’re doing NOTHING to stop the bleeding of our money - instead, you’re dumping more of it into a dying patient, only to watch it all hemorrhage onto the floor. This isn’t sustainable.
If you’re having trouble cutting spending, talk to me. Talk to others who have common sense. Talk to regular citizens. Let’s work together to cut spending, shore up the tax code, and make life easier for businesses & taxpayers, so we can get out of your mess. Otherwise, you’re only making it much harder for your successor to undo your damage. Thanks.
Wonderful advice, Doctor.