Are you a Californian who feels like your views on politics in California are not popular? Do you feel like no one will agree with you? Feels like when you meet someone who does agree you are part of a secret underground club of people who think like you? Then join us on the California Underground Podcast to hear others who share your views and solutions to save our beautiful state.
On this episode, we dive into the 2023 California budget to let you know what is in it, how it's passed, and where your tax dollars are going. We also discuss the grim outlook from the Legislative Analysts Office.
Links Mentioned in Show
https://ebudget.ca.gov/budget/2023-24MR/#/Agency/6013
https://calmatters.org/explainers/california-budget-2023/?utm_source=CalMatters%20Newsletters&utm_campaign=0d34dc41d0-WHATMATTERS&utm_medium=email&utm_term=0_faa7be558d-0d34dc41d0-151901727&mc_cid=0d34dc41d0&mc_eid=b684b78146
https://www.cato.org/blog/comparing-california-florida-fy-2023-24-budgets
https://calmatters.org/politics/2023/06/california-budget-deal-what-you-need-to-know/
https://calbudgetcenter.org/resources/californias-state-budget-reserves-explained/
https://lao.ca.gov/Publications/Report/4646
This episode was recorded on 7.6.23
*The California Underground Podcast is dedicated to discussing California politics from a place of sanity and rationality.*
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00:00:27
What's going on? Everybody?
00:00:28
Thanks for tuning in to another episode of the California
00:00:30
Underground Podcast. I'm your host, Phil, and as
00:00:32
always with me, my trusty cohost, the best and fastest
00:00:35
researcher in the West Camille. How are you doing tonight?
00:00:39
I'm good. How are you?
00:00:41
I'm doing pretty well. Tonight is going to be a pretty
00:00:45
wonky episode, so apologies if you're not one of those people
00:00:50
who don't like wonky episodes. Apologies right off the bat.
00:00:54
We're sorry about that I also. Apologize, yes.
00:00:58
Yeah, apologies on that. But yeah, it's going to be a
00:01:03
little walky. It's going to be a little
00:01:04
Schoolhouse Rockish in terms of what we're going to be going
00:01:08
over and what we're going to be talking about.
00:01:10
And it's it's the budget, it's the California State budget.
00:01:14
What happens? Told you that before we hopped
00:01:17
on. I said Winnie might be a little
00:01:19
bit of a problem tonight. She's a little.
00:01:21
She's a little on edge tonight. I don't know what's going on
00:01:23
because there's all these people out.
00:01:24
She's people watching I. Think Eddie would be offended if
00:01:26
you just had her on your lap or get her her own chair?
00:01:31
If she was just sitting next to me, I don't think.
00:01:33
And then every so often she, you know, you just pet her.
00:01:36
Yeah, she just saw a person. Actually get you more views.
00:01:40
If if Winnie was on the podcast all the time, so apologies to
00:01:44
people. She's she's a little antsy right
00:01:47
now. She keeps seeing people and
00:01:49
barking at everybody. Maybe she's just upset about the
00:01:52
budget because there's a lot of money that's being spent.
00:01:55
They finalized the budget. It went into effect on July 1st.
00:02:00
We're going to talk a little bit about the whole process.
00:02:02
That's the schoolhouse rock part of this.
00:02:04
Then we're going to talk about some of the highlights of this,
00:02:07
basically what is going on, where the money is going to and
00:02:11
all that. And you know, also compare it
00:02:16
maybe to other states. That don't have personal income
00:02:19
tax and talk about the differences.
00:02:21
And I think that will probably be enough.
00:02:23
If you're a wonky person, that's probably enough.
00:02:26
If you're not a wonky person, this might be a good episode for
00:02:28
you to kind of get an introduction to the California
00:02:30
State budget. So you can actually tell people,
00:02:33
hey, this is where we're spending all our money.
00:02:34
We're not cutting here. We're spending here.
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Who's getting a tax break? You'll have to find out.
00:02:40
It's not an industry that is particularly helpful to a lot of
00:02:43
Californians or very important to a lot of Californians.
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But when you hear about it, it'll make sense.
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So you have to tune in and find out which one is getting a huge
00:02:51
tax cut. It's not us.
00:02:53
We're not getting a huge tax cut.
00:02:55
So First things first. Do you know how a budget gets to
00:03:02
be passed in California? I do.
00:03:04
Well, you probably do. You did.
00:03:07
You did the reading, so you actually.
00:03:08
I think I read it, I read and I'm coming here and I'm just
00:03:11
going to be honest that I this is not a subject I understand
00:03:14
and I'm trying to understand it. As much as I researched it, so
00:03:21
I'm just counting on you. Just get me through this
00:03:23
episode. Okay.
00:03:24
Thanks. All right.
00:03:26
So basically what happens is it starts in January.
00:03:30
The governor makes a proposal, his budget proposal.
00:03:33
So Newsome made his budget proposal back in January.
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He predicted that it would be a deficit of 22.5 billion.
00:03:41
That's much larger than it is now, obviously because of how
00:03:44
things have progressed. So that's the baseline.
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He sends it to the legislature. Now, the legislature is
00:03:51
comprised of the Assembly and the Senate, not the House and
00:03:54
the Senate. We're not talking about
00:03:55
Congress. This is your state legislature.
00:03:58
It's the Assembly and the Senate now in March and April.
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This is when all the backroom deals are getting made.
00:04:05
This is when legislators and interest groups start to get
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involved and they start to make changes and they start to figure
00:04:10
out what they like and what they don't like.
00:04:14
They're making backroom deals. For example, Korea's article.
00:04:18
Senate Democrats proposed shocking hiking corporate taxes
00:04:22
by more than two percentage points.
00:04:25
That way they could avoid making any cuts to the budget.
00:04:28
And Newsom, to his credit, actually shut down the idea of
00:04:31
any tax increase so there would be no new tax increase vice.
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Presidential movement. Presidential we've been talking
00:04:39
about a lot. Last week we talked about
00:04:41
President Newsom waiting in the wings go listen to that episode,
00:04:43
episode 216. Then he gets to do it again.
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He makes revisions to his budget in May.
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He then updated and said we're $31.5 billion deficit and the
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Legislative Analyst office, which is an office that looks at
00:05:01
the budget and gives you a bipartisan.
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Or nonpartisan, I should say. Analysis of the budget estimated
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that the deficit would be a 34.5 billion.
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Then finally we get to June, which last month.
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Now the Senate and the Assembly start to make their adjustments.
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They figure out what they're voting on.
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They figure out what can we come together on.
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And all the way up until basically July and the end of
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June, they come up. With their conclusion, what the
00:05:35
budget's going to be, they all have to ram it through.
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Do we agree? Great heads to the governor's
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desk and the governor actually has incredible power in
00:05:45
California where he can just veto the entire budget.
00:05:47
So governor actually has a lot of power in terms of making the
00:05:52
budget. I would say it's a lot less than
00:05:56
in DC where the president can propose a budget, he can say I
00:06:01
want these things. But basically the House can just
00:06:04
kind of go as screw you, we don't care what you want, we're
00:06:07
just going to do our own thing. So the governor does have a lot
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of power in terms of what gets passed, what gets in the budget,
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what he wants. And also the veto pen is really
00:06:19
powerful because he can threaten to veto the whole thing and it
00:06:22
could just blow up the whole government because if no, if
00:06:25
there is no budget passed, there won't be any way to pay for any
00:06:28
obligations or anything so. I kind of agree with that since
00:06:32
like although California is so big, but I think you and I are
00:06:36
both on the same like technically the governor is
00:06:38
considered smaller government and compared some to the whole
00:06:41
United States. However, we have a very
00:06:45
self-interest, tyrannical type governor.
00:06:48
So it's stressful. But I kind of do believe in like
00:06:52
yeah the governor should have those rights.
00:06:54
You just want a good one who. It's actually passing things for
00:06:57
the people, not for his own selfish interest in tiny little
00:07:00
groups. Yeah, I think that's a good
00:07:04
point. I mean, like it says, the
00:07:06
interest groups do get involved after the governor sends in his
00:07:09
budget. So the fact that he can kind of
00:07:11
stamp down those interest groups does say a lot.
00:07:16
I mean, let's say hypothetically let's go back in time to like
00:07:18
20/21, It was 2021, right, The recall, let's say just.
00:07:26
A Republican candidate wins. They're the recall.
00:07:30
The following year they would only have one year, but the
00:07:33
following year they would have a lot of power with the veto power
00:07:37
to make a lot of cuts and concessions with the California
00:07:41
State budget. So just one year of a Republican
00:07:44
governor can make a huge difference because they are so
00:07:47
involved. With the process and that
00:07:50
Republican governor would get to put a budget forward to the
00:07:53
legislature, they get to talk about it.
00:07:55
He would say, I'm not budging on this, you're not raising taxes.
00:07:57
We're going to cut a whole bunch of things.
00:07:59
So governor does have a lot of power, which is I guess sort of
00:08:04
a counterbalance to the legislature here in California,
00:08:07
which is so dominated by interest groups.
00:08:10
It is a nice little counterbalance, but.
00:08:14
When they're both on the same side, it's kind of hard to
00:08:17
really, really get anything substantial done.
00:08:20
Although Newsom did get a lot of Flack for stuff in this budget.
00:08:24
And I think that's again where where of the whole mindset the
00:08:29
Newsom's going to run for president, he'll probably be the
00:08:31
candidate in 2024. If not, he is at least laying
00:08:36
the groundwork to be a presidential candidate down the
00:08:38
line. So a lot of the stuff he did, he
00:08:40
did. Piss off a lot of his, his core
00:08:44
base and stuff like that. We're going to talk about it.
00:08:47
But he did have to make some tough decisions and tough
00:08:50
concessions. So let's see what's the next
00:08:55
thing we should talk about. All right?
00:08:58
So everyone's clear on how a budget becomes, well, it becomes
00:09:03
our budget, how it actually gets passed, right?
00:09:06
Yes, I am now. Thank you.
00:09:10
All right, so this is from the Lao, the Legislative Analysts
00:09:15
Office. This is basically the
00:09:20
nonpartisan group that looks at the budget and gives you an idea
00:09:24
of what's happening. This is the 2023-2024 budget,
00:09:27
California's fiscal outlook. Let me see.
00:09:32
I'm just going to Scroll down. So the biggest issue right now
00:09:36
is that the economic conditions are weighing on revenues, which
00:09:39
is what a lot of people are saying.
00:09:41
So a lot of people are saying, well why, how?
00:09:44
How did we go from a surplus to a huge deficit?
00:09:50
Probably. It's most likely due to the fact
00:09:52
that one, a lot of California's revenues does revolve around how
00:09:56
well the economy is doing. It also revolves around how well
00:10:01
the stock market is doing. Pre COVID, there was probably a
00:10:05
good amount of people still paying in.
00:10:07
There's a good amount of personal income tax revenue.
00:10:10
So we probably ended up with a budget or a budget surplus.
00:10:14
I believe that COVID had a little bit to do with that
00:10:18
budget surplus. A lot of states all of a sudden
00:10:20
had these huge surpluses. We're not going to get into
00:10:23
that, but I suspect that's maybe why we had such big surpluses.
00:10:27
And then all of a sudden it turns around.
00:10:29
Now we have $34.5 billion deficit projected.
00:10:34
So economic conditions really do weigh on California's revenues.
00:10:40
And it says here. Facing rising inflation, the
00:10:42
Federal Reserve, tasked with maintaining stable price growth,
00:10:45
repeatedly has enacted large interest rate increase
00:10:48
throughout 2022 with the aim of cooling the economy and in turn,
00:10:52
slowing inflation. Higher interest rates stamp in
00:10:55
economic activity by increasing borrowing costs from our home
00:10:57
buyers, consumers and businesses, as well as
00:11:00
depressing the value of riskier assets.
00:11:02
Assets like stocks. Let's see.
00:11:07
Inflation pressures remain. While there's slowdowns in some
00:11:10
areas of the economy have not yet spread more broadly.
00:11:13
Similar historical episodes have ended in recessions.
00:11:16
The longer inflation persists and the higher the Federal
00:11:18
Reserve increases interest rates in response to greater the risk
00:11:21
to the economy. The chances that the Federal
00:11:25
Reserve contain inflation without inducing A recession are
00:11:29
narrow. It's a nice, bleak outlook.
00:11:33
So, all right. I'll take a step back.
00:11:36
I'm not trying to get too wonky in terms of what's going on
00:11:38
right now. The Federal Reserve inflation we
00:11:43
talked about before you go to the supermarket, eggs are $8 a
00:11:47
dozen, milk is $6. Everything's out of control.
00:11:50
You're going, I spent $100 and I went home with bread, eggs and
00:11:54
milk inflation's out of control. So what the Fed is trying to do
00:11:59
is in create increase interest rates.
00:12:02
Which forces people to hold on to their money, maybe save
00:12:05
money, not take out so many loans, slow the economy a little
00:12:09
bit, kind of cool it down. But it's very, very hard to do
00:12:14
right now. There's a lot of economists
00:12:15
thinking that we're kind of on the edge of a recession.
00:12:19
This legislative analysts office is saying that we're it is very
00:12:23
likely, it's very narrow, that we're not going to be able to
00:12:26
avoid a recession. And that's just a tip of the
00:12:30
iceberg. It goes on to say we're a
00:12:33
recession to occur soon. Revenue declines in the budget
00:12:37
window are very likely would be more severe than the outlook.
00:12:41
So basically what they're saying is right now California as it
00:12:46
stands in their financial picture, we're at a $34.5
00:12:51
billion deficit and that's assuming best case scenario.
00:12:57
We don't have a recession, that's the best case scenario.
00:13:03
So imagine if there is a recession, all of a sudden their
00:13:09
projections are going to be way worse.
00:13:13
What that does for the budget, it's pretty crazy.
00:13:19
So yeah, they're they're based on the best case scenario.
00:13:21
They have not made this to believe that what what their
00:13:26
their recommendations or what their outlook is.
00:13:29
Based on if there's a recession, it's based on if there is no
00:13:32
recession. And right now because of the the
00:13:35
Fed and the interest rates and their belief that it's very hard
00:13:39
to kind of tame inflation through interest rates, it's
00:13:42
very unlikely that we won't avoid a recession right.
00:13:48
So in case that there is a recession that deficit could
00:13:53
double could be more could be we could be talking about. $50
00:13:58
billion deficit, $60 billion deficit in a state that already
00:14:03
spends a crap ton of money. Sixty $70 billion deficit.
00:14:08
Why is that important? Because you can't as a state-run
00:14:15
a deficit and you can't have a lot of debt.
00:14:20
This isn't like the US federal government where you can.
00:14:24
Run an enormous federal deficit and you can take a whole bunch
00:14:26
of debt and trillions of dollars in debt.
00:14:28
States can't do that, and in fact, the state constitution
00:14:33
requires the legislature to pass a balanced budget.
00:14:37
As a result, if earlier in the process the state faces a budget
00:14:40
problem, the legislature must solve the problem using a
00:14:44
combination of tools. In a recession, the main tool
00:14:46
for solving a of solving a budget problem is the state's
00:14:49
reserve. If the reserves are insufficient
00:14:52
to cover the budget problem, however, the legislature must
00:14:56
take other actions to bring the budget to balance.
00:14:58
These actions includes reducing spending, increasing revenues
00:15:02
and or shifting costs, for example, between funds, time
00:15:04
periods or entities of the government.
00:15:06
So based on that outlook, I'll pose you the question, do you
00:15:14
think this is a good outlook financially for California or
00:15:18
does this look kind of bleak? I'm sorry, it looks bleak.
00:15:22
And why would you say that? Well, it already feels bleak
00:15:27
based on, you know, talking about going to the grocery store
00:15:30
and all of $100 and you've got only four items.
00:15:33
And now we do have this deficit that's just kind of projected
00:15:38
and they don't know what's going to happen if we go into
00:15:39
recession and we're probably going into recession.
00:15:41
My husband was actually telling me about a story he heard
00:15:45
Steve's telling me about Costco, the CEO of Costco.
00:15:49
Based on patterns believes we're going in a recession because
00:15:52
when we have previously gone into a recession like the buying
00:15:56
patterns of what people do and what they're what they're buying
00:16:00
and what they're not buying and it's we're in that pattern again
00:16:03
of what exactly what happens right before recession of when
00:16:06
they're not buying like the big ticket items and they're just
00:16:08
buying the basics. And so he believes we're going
00:16:11
into a recession based on that and I know that's it's not a
00:16:13
guarantee but I feel like we've been in talks of this for a
00:16:16
while and. I think I mentioned to you, it
00:16:20
feels like we're just like bleeding money over here and
00:16:23
we're like, well, what are we even buying?
00:16:25
And nothing's changed. It's just like, you know, this
00:16:31
is California and people can't afford to give raises.
00:16:38
Inflation has gone on. It's, and this is one of the
00:16:44
problems when you spend so much and you're kind of teetering.
00:16:48
On the edge and you're already flirting.
00:16:50
Well, you already have a $34.5 billion deficit, and again,
00:16:55
that's best case scenario, you're you're crossing your
00:17:00
fingers and your toes and watching CNBC every day going,
00:17:03
dear God, I hope we don't have a recession.
00:17:05
Because if so, it's going to be a catastrophe for California,
00:17:08
because we've gotten to a point in California where so many
00:17:12
people have their hands out and we're going to talk a little bit
00:17:14
about it at the different competing groups.
00:17:16
They all want money. They all don't want their
00:17:18
budgets cut. They don't want to see any
00:17:21
reduction in spending on their part.
00:17:24
For example, like one of our our favorites, the state Senator
00:17:27
Scott Weiner, his whole thing was that the Bay Area public
00:17:32
transit is basically teetering on the edge of collapse, so
00:17:35
obviously it's the state's job to bail them out.
00:17:39
So what happens if there's a recession and all of a sudden
00:17:42
the state can't afford to prop up the public transit anymore?
00:17:45
Does public transit go under? Does that stop working jobs Stop
00:17:49
happening? People can't get to work now.
00:17:51
Like it does become like this cascading effect in California,
00:17:54
where what happens? Who, who's, who's on the
00:17:59
chopping block when recession does happen here, which it does
00:18:03
seem like it's more likely than not.
00:18:05
Even this Lao report is saying that looks like it's more likely
00:18:07
than not. And that's the problem when
00:18:11
you're kind of teetering on the edge and you spend so much damn
00:18:13
money. It's like anything.
00:18:16
It's like your personal it's like your personal budget.
00:18:19
If you spend to the absolute Max of all the money you're bringing
00:18:23
in every month and then all of a sudden your car loses a tire or
00:18:28
something, all of a sudden you're like, ah crap, how do I
00:18:32
pay for this tire? It becomes that issue, you know,
00:18:35
like you can't live to the the the absolute Max of your budget.
00:18:41
Yeah, I feel like California's been leading up to this for a
00:18:43
while. Like there's been budget issues
00:18:45
for years. But then I think it's kind of
00:18:48
feels like with the COVID surplus money, they got a little
00:18:51
too excited and weren't thinking ahead of this money could go
00:18:54
away. We're not going to get this
00:18:55
every year. And so it was like they were all
00:18:58
excited to go. It's like this when someone
00:19:00
personal, someone gets a bonus and they're like, we get to do
00:19:04
all the things that we never got to do now, but the bonus only
00:19:06
goes so far. And then you do all these things
00:19:10
and you're spending increases and all of a sudden the
00:19:11
following year you don't have that bonus.
00:19:13
And then you're like, wait, how do we, We were spending X amount
00:19:16
on groceries and this and that and like vacations, but all
00:19:20
those things. Now you don't have the budget
00:19:22
for it. It feels like California kind of
00:19:23
did that. It's the Clark Clark Griswold
00:19:25
problem from Christmas vacation where he's counting on the
00:19:30
budget to build his pool and then the budget doesn't come.
00:19:33
And then he already has a down payment on the pool.
00:19:38
Let's see, there's so much to get to.
00:19:41
I want to try and get to as much as possible can.
00:19:44
We talk about, you mentioned the reserves, the budget reserves.
00:19:49
Right. Do you want to talk about that
00:19:52
and what we have in the reserves?
00:19:53
Do you know? I feel like I sent you a link,
00:19:56
but I don't know. If it is, you sent me the link
00:19:58
so I have it right in front. Sure.
00:20:03
So again, like the Lao said, which is if there is a problem
00:20:08
and all of a sudden there's a recession that they can pull
00:20:13
from these reserves. So it's kind of like a savings
00:20:15
account. The state has money put aside.
00:20:19
This is from the California Budget and Policy Center.
00:20:22
How much money is in the state's budget reserves at the end of
00:20:24
February 20, 2023, there's $37.2 billion in four state budget
00:20:30
reserves. The budget Stabilization Account
00:20:35
23.3 billion, Public School System Stabilization account 9.5
00:20:39
billion Special Fund for economic uncertainties 3.5
00:20:43
billion Safety net reserve 900 million.
00:20:46
So I imagine these budgets are set there and they're sort of
00:20:52
like if something happens like a recession does happen that they
00:20:56
can just move money from the reserves and.
00:20:59
Just put it in there and just move money into it.
00:21:01
And that's really kind of the point.
00:21:03
And they have it set up for the budget for public school.
00:21:07
This is something I learned as well about the California
00:21:11
budget. It's this thing called Prop 98,
00:21:13
which was passed back in the late 80s and it basically
00:21:19
requires a minimum amount, percentage wise of the budget
00:21:24
has to be spent on education, so.
00:21:28
With in reality there's the budget and then Prop 98 makes
00:21:32
you create another little budget that is required and you can't
00:21:36
really screw with that amount. So that's why a lot of public
00:21:39
education money is kind of pushed off to the side.
00:21:42
It's it's it's own little category which is why I imagine
00:21:45
they have a public school system stabilization account.
00:21:51
Let's see, do, do, do, do. Let's see.
00:21:57
So it gives this nifty little graph that you sent me.
00:22:02
And it does Say, for example, is the state required to make an
00:22:05
annual deposit in the budget stabilization?
00:22:07
Yes. Public school No.
00:22:10
Safety net reserve? No.
00:22:12
Special fund for economic certainties?
00:22:13
No. When can funds be withdrawn?
00:22:18
Funds may be withdrawn. This is the budget
00:22:20
stabilization. Funds may be withdrawn if the
00:22:22
governor declares a budget emergency.
00:22:25
And the legislature passes a bill by majority vote to
00:22:28
withdraw funds for public school.
00:22:31
Funds may be withdrawn if the governor declares a budget
00:22:33
emergency and the legislature passes a bill by majority vote
00:22:36
to withdraw funds. Safety net.
00:22:39
The legislature may vote to withdraw funds at any time.
00:22:42
And special fund for economic uncertainties, the legislature
00:22:45
may withdraw the funds at any time by majority vote.
00:22:50
Is there a limit on the amount of funds that can be withdrawn
00:22:53
for budget stabilization is the only one that has restrictions.
00:22:57
The amount could be withdrawn is limited to the lower of the
00:22:59
amount needed to address the budget emergency or half the
00:23:02
funds in BSA, unless the funds have been withdrawn in the
00:23:05
previous fiscal year, in which case all the funds remain in the
00:23:09
BSA may be withdrawn. So that's where we are at in
00:23:16
terms of. Budget reserves how much we're
00:23:19
spending. Let's go to the next thing.
00:23:26
And I think this is important. I kind of want to bring this up
00:23:29
for people to see on screen. I have to make sure I pick the
00:23:35
right one. This is not it.
00:23:40
I have 1000 tabs open right now, so bear with me if I can.
00:23:46
Talk amongst yourself, here we go.
00:23:50
This is for 2023. This is the May revision to the
00:23:54
Governor's budget. What we're kind of looking at is
00:23:58
this general fund revenues versus expenditures.
00:24:01
So we wanted to talk about where is all your tax money going to,
00:24:08
where is it coming from? The first one is obviously
00:24:13
personal income tax, which if you live in California, you
00:24:15
understand. Most of money comes from
00:24:18
personal income tax. The number is 118 billion.
00:24:24
I just learned that tonight. When it says it's in millions,
00:24:27
you have to add zeros and it becomes 118 billion.
00:24:31
Sales and use tax takes in 33 billion.
00:24:34
Corporation tax takes in 42 billion.
00:24:37
And then there's a couple others that add up a little bit.
00:24:41
This is. So much money.
00:24:44
This is a ton of money, so. In terms of the in in revenues,
00:24:49
they said about $209 billion was taken in.
00:24:54
Keep in mind there is a $300 billion budget.
00:24:58
So again there is that's where the deficit comes from is that
00:25:02
they don't really know they got a bridge, how do they get to
00:25:05
that money Expenditures, they spent about $79 billion on K
00:25:13
through 12 education. Health and Human services, 73
00:25:16
billion, Higher education 22 billion, Corrections of
00:25:19
rehabilitation 14 billion, and then others.
00:25:24
This is another little breakdown.
00:25:25
You can see. Total state funds total $306
00:25:28
billion. So for a state that's facing a
00:25:32
huge deficit that grows, it seems like it grows Every time
00:25:35
they talk about it doesn't seem like they've made a lot of cuts.
00:25:38
I thought it was like 41 billion, but then you're talking
00:25:41
34. But yeah, I I thought it was
00:25:44
like 41. Yeah, I think it was at 41.
00:25:45
It seems like every time they come out, it's, it's a higher
00:25:49
number. So now we're 41 billion, let's
00:25:50
just say 41 billion. As you can see, the largest
00:25:56
amount we spend is Health and Human Services.
00:26:00
Next right behind it is 26.2 K through 12 Education and then a
00:26:06
whole bunch of other ones that really don't hit the double
00:26:09
digits, but so that's. That's mainly where the bulk of
00:26:12
our money goes is Health and Human Services in K through 12
00:26:15
education. What?
00:26:16
What is that? I mean, do you know what Health
00:26:18
and Human Services is? Well, can you?
00:26:23
Click on that. Here's the state funds by
00:26:25
Department Health and Human Services Agency.
00:26:29
Again, I believe these numbers are in 1, right?
00:26:35
Oh, I'm sure it can't be. Not $69.
00:26:40
But you can see these are all government agencies.
00:26:43
Health and Human Service Agency Department Health, Department of
00:26:45
Manage Healthcare, California Department of Aging, Commission
00:26:49
on Aging, California Senior Legislature, Department of
00:26:54
Public Health. What's the difference between
00:26:55
the Department of Public Health and Health and Human Services,
00:26:57
Agency Department of Developmental Services?
00:27:01
Department of State Hospitals, California Health Benefit
00:27:05
Exchange, Department of Rehabilitation?
00:27:09
I mean, it just goes on and on and on.
00:27:10
It's just like all these and it's just that's what we're
00:27:15
spending on Health and Human Services, state funds by
00:27:19
department. Let's see.
00:27:20
I want to go back. How do I go back?
00:27:28
Here we go. Are you ready to see how much we
00:27:32
spend on public education? Go ahead, Okay.
00:27:39
Like my property tax dollars should be coming back to me as a
00:27:42
teacher for my own children, but whatever.
00:27:44
You should be gay in the rebate. Let's see, Department of
00:27:49
Education takes in a whopping 72.
00:27:52
I think that's billion dollars may revision.
00:27:55
It's down. This is K through 12, right?
00:27:57
This is just K through 12, yeah, because they have a separate
00:28:00
category just for higher. Education.
00:28:05
Summer school for the arts, teachers Retirement System
00:28:08
contributions, retirement costs for Community College that
00:28:13
actually went way down. School facilities aid program,
00:28:16
Commission on teacher credentialing, general
00:28:18
obligation bonds. So that's what they're spending
00:28:22
a lot of money on. State Library?
00:28:26
Yeah. What's another one that we can
00:28:29
take a little gander at? Environmental Protection.
00:28:33
It's interesting that in a state like California, Environmental
00:28:36
Protection is only 1.7% of the budget, you think?
00:28:40
And how much is that? That is, total expenditure looks
00:28:46
like about $5 billion. It is interesting, especially
00:28:53
given all the laws that are coming in that will be going
00:28:56
into effect in the next few years that have to do with like,
00:29:00
you know. You know, sales of electric
00:29:01
vehicles in the next 10 years and then even the, I think like
00:29:08
they're making all the trucks, all the, I can't think of the
00:29:11
name, you know, all the like all the trucks delivering
00:29:15
everything. I think they're making them go
00:29:16
electric and stuff. And so it is interesting that
00:29:19
only 5 billion is going towards this when there's all these laws
00:29:22
that are going to be in place that are going to bankrupt
00:29:25
everyone and there won't be infrastructure for it.
00:29:31
So 7% of the budget goes to higher education.
00:29:34
This is the UCS. University of California takes
00:29:37
$4 billion, almost $5 billion. California State University,
00:29:41
almost $5 billion Retirement cost for higher education.
00:29:48
Billions and billions of dollars in retirement.
00:29:51
Dumb. It costs money to go to college.
00:29:56
Correct. Like, if I decided to go back to
00:29:59
college, I'm going to be paying. Why are they getting so much
00:30:02
state money? I think I talked about this
00:30:08
once, way back in the old days. And I apparently didn't listen.
00:30:13
Well, this was back. I think this was on coffee in
00:30:15
California politics. For all the OG fans who remember
00:30:18
that, it was the idea that the UCS have broken their promise
00:30:25
because it used to be free. And the original reason the UCS
00:30:29
were started was one simple reason.
00:30:33
Free college for everybody in California.
00:30:35
That was the whole idea. And it slowly, over time went
00:30:40
well. Okay, maybe not super free.
00:30:43
We do need you to chip in like $200.00 to help cover costs and
00:30:46
people are like, yeah, whatever, that's fine.
00:30:48
And then it like crept up to $1000 or whatever.
00:30:51
Now it's what like $60 to go to a UC?
00:30:54
Like it's it's insane the amount of money that Uc's make.
00:30:57
You're right. If why are we giving $5 billion
00:31:00
to the UC system if they're already raking in hundreds of
00:31:04
millions of dollars from tuition alone?
00:31:06
Like, where's the rest of that money going?
00:31:08
I mean, yeah, yeah, they're they have big beautiful campuses and
00:31:13
hospitals and all that. I.
00:31:14
Could say the infrastructure. Like what?
00:31:15
I would love to see that. Yeah, We're, we're specifically.
00:31:20
I mean the the UCS are just raking in money so but they've
00:31:25
come a long way. Yeah, we've heard.
00:31:26
Breaking their promise. Let's see, Are you ready to get
00:31:30
into what's exactly in the budget?
00:31:33
We've talked a lot about? We've already talked 1/2 an hour
00:31:36
about the budget itself, percentages, all of that stuff.
00:31:41
Do you want to start talking about what's in the budget and
00:31:43
what people should be looking or expecting this year?
00:31:46
Yeah. Is there anything go ahead?
00:31:50
Is there anything you would like to specifically talk about that
00:31:54
jumped out at you? Well, let's talk about Sequa,
00:31:57
cuz that's always like kind of like a trigger point for us.
00:31:59
And didn't. Am I wrong?
00:32:02
Didn't knew some kind of like he's actually trying to get
00:32:04
things rushed through? Yes, for.
00:32:08
Yeah, okay so. Which is again presidential
00:32:14
move. Suddenly it matters.
00:32:17
Yeah, and I was reading an article before that he was
00:32:20
getting up. He was getting a lot of Flack
00:32:24
from environmental groups for let's see if I solved the
00:32:28
article up, cuz it had a really funny line.
00:32:30
Okay, here it is. Oh no that's not it.
00:32:33
Sorry. And I had this up now I lost it.
00:32:39
I'm just learning so much here. Darn.
00:32:43
I had the article up and now I lost it.
00:32:45
Yeah. I was reading an article, I
00:32:47
think it was LA Times right before, like before when we were
00:32:49
doing our prep for the show. Yeah, there he got a lot of
00:32:55
pushback because he has been trying to cut the permitting
00:32:59
process and make it more streamlined around Sequa.
00:33:03
Because Sequa, and we've talked about this, causes a lot of
00:33:06
problems with building new housing or any sort of new
00:33:09
development anywhere in California.
00:33:11
And it's gotten to the point where Democrats have sort of
00:33:13
created this monster and. Now, they don't know how to stop
00:33:17
the monster, and like everybody from all over the Democratic
00:33:21
political spectrum, from Newsome to Senator Scott Weiner, are all
00:33:26
saying, you know, we need to make cuts, we need to reform it,
00:33:31
we need to do all this. But environmentalists have been
00:33:34
pushing back on it because they're afraid that by doing so,
00:33:39
developments will start to hurt the environment.
00:33:43
God, I wish I had the article cuz there was such a dumb line
00:33:46
in it from environmentalists who were like something about wait,
00:33:53
hold on, I know where it is. I know where it is.
00:33:57
It's in the wrong tab. It was the.
00:34:01
Wrong tab, it just removed itself, but.
00:34:04
It was in the wrong browser. OK.
00:34:09
It said we won't rest. Until all the fish in the state
00:34:16
are safe, that that was their line.
00:34:20
That's what keeps me awake at night, too.
00:34:23
Yeah, I'm just like, you know, I lay my head on the pillow,
00:34:27
started to drift off to sleep, and then I think, Oh my God, are
00:34:29
the fish in California safe today?
00:34:31
OK. Are the delta smell OK?
00:34:35
The delta smell side note should be.
00:34:40
A lesson in Darwinism, which the left loves because it's a fish
00:34:45
that cannot swim. So I'm just going to leave that
00:34:51
there. If a if a fish can't swim, I
00:34:55
don't think we should be stopping everything because a
00:34:57
fish can't swim. Sounds like Darwin.
00:35:01
Natural selection. God, whatever you want to say
00:35:05
has already decided the fate of that fish if it can't swim so.
00:35:10
Anyway. What does it do?
00:35:12
I need to know more about this. Hold on, I think it just moves
00:35:15
with the current. I I honestly think it just kind
00:35:17
of moves with the current. But I remember reading that that
00:35:21
that's that's why like in the San Joaquin Basin there's such
00:35:24
an issue about the Delta smelt getting like caught up in any
00:35:28
sort of irrigation or anything like that.
00:35:32
They're like Oh well they can't swim.
00:35:34
So they get sucked up into the irrigation.
00:35:37
And you're like, wait, the fish can't swim.
00:35:39
That's why they get caught in the irrigation, sounds like.
00:35:42
Is there a joke in here somewhere about teach a fish to
00:35:46
swim? Teach a fish to swim.
00:35:50
They will. They'll avoid the irrigation all
00:35:52
the time. Something like that, Okay.
00:35:58
But yeah, so moral of the story, environmentalist.
00:36:00
And this is what we talked about at the beginning of the episode.
00:36:03
He did push back a little bit. Again, I think it's all part of
00:36:06
he's not doing it because he thinks this is what's best for
00:36:09
California. I think he's doing it because
00:36:10
he's trying to see more moderate that he could take on proponents
00:36:14
on his own side. And he can seem tough against,
00:36:17
you know, people who try and bully him.
00:36:19
It's all for presidential stuff, but on the topic of climate
00:36:27
change and environmentalism. It says a multiyear commitment
00:36:33
to battle climate change took a $2.9 billion hit in the final
00:36:36
budget announced between news from the legislature programs
00:36:40
aimed at climate resilience. Making the state capable of
00:36:42
withstanding some of the impacts of changing conditions took some
00:36:45
of the biggest cuts, losing 964.
00:36:48
Sustainable agriculture and drought and water resilience
00:36:51
also saw cuts. So you know when we're
00:36:56
complaining that we don't have water.
00:36:59
Sure. You know, makes sense.
00:37:01
Let's cut more, especially after the rainy year we've had.
00:37:06
We can all die of dehydration and we'll educate the kids, but
00:37:10
we're all gonna die of like, environmental hazards because
00:37:14
we're not putting the money towards it.
00:37:16
So what is even the point? It's nice knowing y'all.
00:37:22
Again, this is a question that probably comes up every year.
00:37:26
I think it came up a lot this year when there was a ton of
00:37:30
rain all over California and people are going, where's all
00:37:33
this rain going? Why aren't we saving this rain?
00:37:34
Well, because the legislature decided it's not worth trying to
00:37:37
save rain or any drought protection.
00:37:40
So they're just going to keep cut in there.
00:37:43
So no investments in drought protection or reduction in cuts
00:37:48
in drought protection. So next time there's a rainy
00:37:50
year, it'll just all wash away into the ocean, so.
00:37:54
We learn nothing. We've learned nothing.
00:37:57
You brought up the 0 emission vehicle mandate, $10 billion
00:38:01
programs will help reach the state's 0 emission vehicle
00:38:04
mandate remained in the new budget agreement. 10 million. 10
00:38:10
billion, sorry, 10. Billion, 10 billion, you
00:38:13
probably said. Billion.
00:38:14
I was just questioning. I could have said million.
00:38:16
These numbers get confusing. Again, I'm not a mathematician,
00:38:21
that's why I went to law school. Environmentalists have raised
00:38:25
concerns that the reductions would help keep California from
00:38:27
meetings targets for cutting greenhouse gas emissions and
00:38:29
other air pollutants. These client quote These climate
00:38:33
budget rollbacks undercut our state's ability to meet our
00:38:36
climate goals, pure and simple, Mary Creaseman, chief executive
00:38:40
of the advocacy group California Environmental Voters, said in a
00:38:43
statement ahead of the final announced budget.
00:38:45
The climate crisis isn't taking a break in 2023, that much is
00:38:49
clear, and neither are climate action.
00:38:53
Because remember, climate change, there's never an end to
00:38:55
how much money you need to spend on climate change.
00:38:58
They'll always need more money to make up for the cuts.
00:39:04
Newsom said he's seeking federal climate funding from the
00:39:06
Inflation Reduction Act, the act that did not reduce inflation.
00:39:10
He also asked the legislature to seek voters approval of a
00:39:12
climate bond ranging from 6 to 16 billion.
00:39:16
Okay PSA for all those listening.
00:39:20
Whenever you see the word, approve a bond on your proposal.
00:39:27
It's a room against nut. Correct, right.
00:39:29
Correct. It means I know some things.
00:39:32
You're voting for debt, so bond sounds sexy.
00:39:37
It sounds nice. We're issuing a bond, we'll pay
00:39:39
you guys back. It's debt.
00:39:42
So and there there has to be interest payments on bonds, so
00:39:47
it's not free money. Education.
00:39:53
Again, Prop 98 does protect a lot of it.
00:39:57
The budget includes A historic 8 percent, 8.22% cost of
00:40:03
living adjustment for California's public schools.
00:40:06
The total Proposition 98 funding for the 20/23/24 fiscal year
00:40:10
will be $108.3 billion. I would also like a cost of
00:40:16
living adjustment. For the fact that you
00:40:19
homeschool, Sure. Yeah, that makes sense.
00:40:25
They're spending $108 billion on public education and you know
00:40:30
you're saving them money. So they should.
00:40:33
It's true. You should get a refund.
00:40:34
I'm. Helping I'm contributing to
00:40:36
smaller class sizes. Exactly.
00:40:40
I guess Newsome's not a fan of the arts and music.
00:40:44
Because he cut $200 million out of the Arts Music Instructional
00:40:50
Materials Discretionary block grant.
00:40:54
That's a bummer. And that's actually the good
00:40:56
news, because he proposed lashing 1.8 billion.
00:41:02
So Newsome, not a fan of arts and music, yeah.
00:41:07
No, I think that's sad. Yeah, I mean, I I'm a music guy.
00:41:12
I think music's great tool and think kids should learn it.
00:41:15
It's always arts and music that get cut first.
00:41:19
Yeah, I don't get that. This was interesting but.
00:41:23
At least they'll learn about not bullying.
00:41:27
You know they're they can be non binary and like they're taking
00:41:31
the time to teach all that. Don't bully, which I agree with
00:41:35
not bullying, but you know at least school has become that.
00:41:37
But well you can no more to music.
00:41:38
They'll probably teach you about.
00:41:41
How to hate yourself because you're a descendant of slave
00:41:44
owners or something like that. Here in California, the budget
00:41:48
also includes a $300 million equity multiplier allocated for
00:41:52
schools with the highest concentration of
00:41:54
socioeconomically disadvantaged students, which includes
00:41:57
students from low income household students experience
00:42:00
homelessness and students whose parents did not graduate high
00:42:02
school so. I have a great idea.
00:42:06
Instead of spending all that money, we could save all that
00:42:09
money and just introduce school choice.
00:42:12
I mean, that sounds good to me. There's.
00:42:16
Fireworks. I think we should probably have
00:42:18
someone like our good buddy Todd Madison back on.
00:42:21
He was the proponent of the proposition for school choice
00:42:24
last time. Yeah, school choice would solve
00:42:27
a lot of these problems, especially talking about.
00:42:33
Socioeconomically disadvantaged students.
00:42:36
Studies have been done to show that kids from the inner cities
00:42:40
benefit from school choice. Some minorities benefit from
00:42:44
school choice because they can get out of the neighborhood.
00:42:48
Yeah, so. And that doesn't cost the state
00:42:51
really anything to to equity multiplier gives people the
00:42:54
choice to go to the best school where they want to go.
00:42:59
Right. So.
00:43:01
That may save billions of dollars, but then?
00:43:06
We'll never know. But you got to not know.
00:43:08
You got to think. You got to think of the teachers
00:43:12
you know and it more specifically the teachers.
00:43:15
Union. I care about the teachers.
00:43:18
I don't care about the teachers union.
00:43:20
How would the president of the California Teachers Association
00:43:24
afford their 4th home if they're not spending billions of dollars
00:43:28
on education in California? Think of the presidents of the
00:43:33
unions. You're right.
00:43:34
So. I apologize.
00:43:36
Yeah, just, you know, next time think about that.
00:43:38
Don't be so selfish. Thank you for bringing that up.
00:43:42
Let's see. Homelessness, big issue, right?
00:43:47
Do you think the state wants to spend more money to solve
00:43:50
homelessness because it's become such a big issue?
00:43:54
Yes. You would think so.
00:43:58
You would think so. Well, they do love spending
00:44:00
money. Yeah, I mean, they love.
00:44:02
So I would just any of these issues, they'd be like let's
00:44:06
spend money. You get $1, you get
00:44:08
$1, everybody homeless gets $1.
00:44:10
Right, but it has not gotten more money, but.
00:44:17
I'm wrong? With with homelessness on the
00:44:19
rise, and I don't know what percentage, we've seen
00:44:23
homelessness increase in California over the past couple
00:44:25
years. They haven't increased at all.
00:44:31
So for someone, and it wasn't Newsome, the one who's starting
00:44:34
to get tough on homelessness, that was his whole.
00:44:38
Thing Well, and everyone was welcome here of course, except
00:44:43
for anybody that Ron DeSantis sends here.
00:44:45
So I won't be surprised if we start sending Florida a bill to
00:44:49
cover homeless issues. Yeah, that would be a nice
00:44:53
political stunt for Newsome is if he brings a bill to Florida
00:44:56
for all the the homelessness. But yeah, there hasn't been any
00:44:59
increase. I don't know if this also
00:45:02
increases. This probably doesn't fall under
00:45:05
homelessness. But the care court, which we've
00:45:08
talked about before, I've heard from the courts and from judges.
00:45:13
That are going away. No, they're still trying to roll
00:45:16
it out. But in typical government
00:45:19
fashion, it's already behind its deadline.
00:45:22
Nobody knows anything. Nobody knows what the heck's
00:45:24
going on. Even the judges have no idea
00:45:27
what's going on. They haven't even been briefed
00:45:28
on what's going on or how this is going to be handled so.
00:45:33
Real quick, back to the homeless thing.
00:45:35
I'm totally okay with them not extending the budget.
00:45:37
If they can figure out how to actually use their enormous
00:45:41
budget that they have to come up with some solutions.
00:45:46
Because whatever they're doing is clearly not working, but they
00:45:49
have so much money already. So I think it's it's okay that
00:45:53
the budget hasn't been increased, but now they just
00:45:55
like need to get some new people in there who can figure this
00:45:58
out. Right.
00:46:00
And I think that's one of the biggest criticisms.
00:46:03
I think Newsom himself brought it up where he said again he
00:46:07
acted tough for about 20 minutes and then he backed off when he's
00:46:12
upset about the homelessness as well.
00:46:16
Yeah, he had talked tough about it and said I want to get
00:46:21
accountability when it comes to homelessness and figure out
00:46:24
where all the money is going. But he has increased money and
00:46:30
he hasn't decreased money. So there definitely does need to
00:46:33
be more accountability because it's still a lot of money.
00:46:36
It says it's collectively allocated nearly 21 billion
00:46:41
since the 2018-2019 fiscal year. That's a lot of money.
00:46:46
In just a couple years, $21 billion.
00:46:51
And with 171 unhoused residents, California's home to
00:46:56
1/3 of the country's entire homeless population.
00:47:00
So yeah, so no more money going, no more new money going or
00:47:05
increase going to homelessness status quo.
00:47:11
Let's see what else is interesting that we can talk
00:47:13
about. Did you hear about this down
00:47:17
payment program, the California Dream for All program?
00:47:21
I probably did but refresh my memory.
00:47:24
So the Dream for All program was the idea that the state would
00:47:28
loan you your down payment for a house.
00:47:33
Worst idea. And then at the end when you
00:47:35
sell the house, if you sell it at a gain, they would obviously
00:47:40
you'd take a chunk of that gain and you pay back the state.
00:47:44
If not, you still owe the state money.
00:47:46
So either way, and I think I brought up how legally, if you
00:47:51
loan someone money and you have an interest in a property,
00:47:54
therefore you can foreclose because you have a vested
00:47:59
interest in that property. Fun fact because if you have a
00:48:05
loan or lien on a property and it's not being paid, you can go
00:48:09
ahead and start foreclosure proceedings to get your money
00:48:11
back. So imagine the state having the
00:48:13
power to foreclose on your home. Yeah, that doesn't sound good.
00:48:21
So they put aside $300 million and then in about 11 days it was
00:48:27
already dried up. People rushed to use it.
00:48:32
Yeah. Did that?
00:48:33
Didn't sound like that would go far, No.
00:48:34
California. It's not that far.
00:48:36
Property prices. Newsome.
00:48:38
Even in this through called recession, it's still insane.
00:48:41
Tell me about it. Newsome's early objections.
00:48:45
Even Newsome objected. He didn't want to reup.
00:48:47
It is so he'll be reinflated with another $200 million.
00:48:51
So there you go, $200 million going to more down payments.
00:48:59
So that'll be gone in like 5 days.
00:49:03
Medical Let's see, there's some more.
00:49:09
A lifeline for public transit. This is something I want to talk
00:49:13
about. The governor of legislatures
00:49:14
hashed out a plan to help public transit agencies still reeling
00:49:17
from plummeting ridership during the pandemic.
00:49:21
While Newsome's May budget proposal failed to provide any
00:49:23
assistance for transit agency facing a fiscal Cliff and
00:49:26
delayed $2 billion in construction projects, the
00:49:29
legislature rejected that move. We proposed an additional 1.1
00:49:33
billion over the next three years from the state's cap and
00:49:36
trade funds. The deal includes a total of 5.1
00:49:39
billion / 4 years, restoring the full 4 billion for construction
00:49:43
and adding 1.1 from cap and trade, with complete flexibility
00:49:47
for agencies to use the money for operations as well as
00:49:49
construction, subject to accountability measures and
00:49:52
state oversight. So the state is going to start
00:49:55
overseeing this is mostly for like Bart.
00:49:58
Bart has really taken a huge hit, our favorite senator, Scott
00:50:02
Weiner said. Public transportation is easy to
00:50:04
take for granted, but allowing it to collapse would have been
00:50:07
devastating for our state's future.
00:50:10
This budget extends a critical lifeline that will help transit
00:50:12
agencies maintain services while making critical improvements to
00:50:15
cleanliness and safety, something that's been a big
00:50:19
issue with Bart. People don't want to ride it
00:50:22
anymore because it's gross and dangerous.
00:50:27
Also, he did pass a bill recently, Weiner, and it's
00:50:34
temporary. He's going to, they're going to
00:50:38
temporarily raise the tolls at the bridges.
00:50:41
So when you cross the Bay Bridge, they're going to
00:50:44
temporarily raise it. I think it's $11.00 now, which
00:50:46
is still cheaper than the George Washington Bridge.
00:50:49
Last time I crossed the George Washington Bridge was $18.00 to
00:50:51
cross the George Washington Bridge.
00:50:54
Which is just astronomical when you think about how many people
00:50:56
cross over the GW bridge. So between that this lifeline, I
00:51:02
think they're projecting that if they can't turn it around, they
00:51:06
have about, they have enough money for like the next four or
00:51:08
five years public transit. So how long do you think $11.00
00:51:14
temporary is going to last? I think it'll be $15 in like 4
00:51:18
years. Oh, forever.
00:51:22
It'll be forever. But but it's not, it's not ever
00:51:26
going to go lower, but certainly it'll go higher.
00:51:28
Oh, but yeah, it'll go higher. But the idea it's temporary that
00:51:32
they're going to raise $1.50, it's not going to come back down
00:51:36
from $1.50. It's not like one day they're
00:51:39
going to be like, hey guys, thanks for chipping in.
00:51:41
Good job everybody. We did it five years later.
00:51:45
Now the tolls got cheaper. Well, it's like a like a trick
00:51:49
word like this is temporary because in a year we're going to
00:51:52
raise it to 11:50. It's temporary until we renew it
00:51:57
in five years forever. That increase would yield
00:52:04
180 annually, which most of which would be required for
00:52:08
be used maintaining current service levels with 10% going
00:52:11
towards improvements. You think less people will ride
00:52:16
it at the higher rate? Well, do you think less people
00:52:22
would cross the bridges because it's the seven Bay Area bridges
00:52:26
are being increased? Oh, Bridges.
00:52:28
Not the not the ridership is being.
00:52:32
Yeah, got it. OK, So yeah, they're.
00:52:37
So the question should be, do you think it would force more
00:52:39
people out of their cars onto public transit?
00:52:44
Walk. Maybe that's the trick?
00:52:46
Maybe. Maybe they're trying to price
00:52:47
people out of their cars. Yeah.
00:52:51
And then it's like, look, we're saving the.
00:52:53
Environment. It's much nicer to take this,
00:52:54
this Bay Area Rapid Transit, isn't it?
00:52:57
Don't mind the homeless person crapping over there in the other
00:53:00
side of the train. Let's see.
00:53:07
I'm trying to see, oh, James Gallagher had a statement on it.
00:53:12
You say California's mobile homeless shelters, drug dens
00:53:15
formerly known as public transit are getting a bailout?
00:53:19
I'd agree. You know, one of my favorite
00:53:24
things is to troll Senator Weiner on Twitter, I've.
00:53:30
Noticed. It's always fun.
00:53:32
I think there's a lot of people who love to troll them now, but
00:53:38
it's amazing. They just don't understand.
00:53:41
The market in the free market, which is what did he say he had
00:53:46
this suite where he goes ridership is back to 2/3 of what
00:53:52
it was pre pandemic. Which put another way means
00:53:59
ridership is still down a third from pre pandemic levels, which
00:54:03
is a lot of people and the wasn't.
00:54:06
It reverse maybe. Maybe I'm wrong, was it?
00:54:11
It's still down 2/3, but OK, sorry, maybe I'm told.
00:54:14
Either way, he was trying to say it's up I.
00:54:17
Saw you comment and I thought you were like, so in other
00:54:20
words, 2/3. I'll be quiet.
00:54:23
You go ahead. Either way, he was still
00:54:24
bragging about the fact that public transit is down a third
00:54:30
from what it was pre pandemic and it's been long enough that
00:54:34
people are not coming back to transit.
00:54:38
Right. Which shows that the product
00:54:39
itself is not necessary for a lot of people if they can avoid
00:54:45
going on public transit. It's not desirable for a lot of
00:54:48
people. People are not choosing transit
00:54:50
over taking a car or some other form of transportation.
00:54:56
So the fact that they're just like, well, I don't know why
00:55:00
this is happening. We need a bailout.
00:55:02
It's like. Maybe take a step back and
00:55:05
examine why your product is crap and no one wants to use it, but
00:55:10
that's not the. He loves.
00:55:12
That's why he doesn't understand like that.
00:55:14
It's his favorite thing in the world to go on there half
00:55:16
clothed and post. Photos.
00:55:18
That and contributions from big real estate.
00:55:21
Those are his two favorite things, yeah, but yeah.
00:55:26
And kids that are not. Exactly.
00:55:27
And talking about somebody else's kids, not your own.
00:55:30
I mean, he doesn't even have kids, so.
00:55:34
But yeah, it's always interesting that they just don't
00:55:36
understand the market in the sense of like, hey, your
00:55:38
government program is crap. It's not getting any better.
00:55:42
People are not choosing to use it.
00:55:44
Your solution should not be let's run to Sacramento and ask
00:55:48
for more money to tide us over. It should be Let's take a hard
00:55:52
look at what the Hell's going on here and figure out how to make
00:55:55
it better. But the government doesn't do
00:55:57
that, so. No, they need to learn to cut
00:56:01
their losses too. Like, certain things get
00:56:03
proposed and they work out and they serve their time.
00:56:06
But time moves on and things change and it's no longer a
00:56:09
benefit, and it needs to be. We need to not keep throwing
00:56:12
money into it. It's just.
00:56:15
Yeah. And it it's obvious in addition
00:56:19
to obviously the the danger and public safety issue of Bart,
00:56:26
there's obviously the issue that.
00:56:28
San Francisco itself is slowly dying.
00:56:31
It's in a doom loop, actually. I heard it described better.
00:56:36
A loop comes back around to the same place.
00:56:38
San Francisco's in a doom spiral, meaning it's going down,
00:56:42
but no one's going to work in San Francisco anymore.
00:56:46
You know, you you took out thousands and thousands of of
00:56:49
people who work there. Companies are gone.
00:56:51
So there's just no demand to even go on bar anymore.
00:56:55
So that's a big systemic problem.
00:56:57
So how are you going to fix the fact that there's nobody working
00:57:00
in San Francisco with more money from the government?
00:57:04
It's like you're just throwing money at bad, at bad
00:57:07
investments. It doesn't make sense anymore.
00:57:11
Right, Bart is the Band-Aid, but there's like an actual health
00:57:13
issue that needs to be dealt. With Exactly.
00:57:15
Yeah. There's there's bigger issues
00:57:18
and they should be focused on why San Francisco is dying.
00:57:23
And how to get more people back into San Francisco, which I saw
00:57:27
today that London Breed is now proposing tax cuts for
00:57:30
businesses to come back to San Francisco.
00:57:33
Which I. That's cute.
00:57:35
I'm surprised she didn't start melting like the Wicked Witch.
00:57:40
She was like tax cuts. Oh no, I'm melting.
00:57:45
That must have hurt for her to even say that, to come out of
00:57:48
her mouth to talk about tax cuts for businesses.
00:57:51
But yeah, so they're they're throwing some money at public
00:57:54
transit. They're going to raise the
00:57:55
tolls. They're going to try and save
00:57:57
it. Weiner wanted a lot more.
00:58:00
Weiner didn't get it. So, but again, this could be an
00:58:03
issue. If the recession happens and
00:58:05
it's a really bad recession, what's going to get cut?
00:58:10
We may end up seeing. Now I wanted to save this.
00:58:13
Maybe this is a good way to end it.
00:58:16
I had alluded to the fact that there is an industry.
00:58:20
In California that is getting a tax cut slash credit.
00:58:27
Do you think you can guess what industry is going to get
00:58:31
preferential tax treatment in California?
00:58:39
I don't. I don't.
00:58:41
I'm sorry. It's one of California's oldest
00:58:43
industries, one it's well known for.
00:58:50
I said what are the comments guessing?
00:58:51
No one in the comments is guessing.
00:58:53
It's good old Hollywood. Hollywood.
00:58:57
Okay. Yes, it says.
00:58:59
In this year's budget agreement, there's a tax credit for movie
00:59:06
studios starting in 2025. Any film industry employer that
00:59:11
receives the credit? Would also have to hire or
00:59:14
assign a safety advisor to perform a risk assessment and be
00:59:17
present during production. So this is obviously after the
00:59:20
whole Alec Baldwin thing where he shot the girl and she died.
00:59:24
Among other provisions. Productions would have to
00:59:26
conduct a daily safety meetings and those with firearms would
00:59:29
need to have a prop master or armorer with a permit from the
00:59:32
California Department of Justice.
00:59:36
So you'd actually have to get as much permitting as someone who
00:59:39
just wants to carry a firearm. The tax credit would also be.
00:59:43
They always get all the like, remember during COVID,
00:59:48
restaurants weren't allowed to be open and serving in their
00:59:50
parking lot, but they would come in and take over the lot for
00:59:53
like a movie studio and that was OK like there.
00:59:56
I don't know if you remember it was like the viral video about
00:59:59
the woman just crying because they came and told her we need
01:00:02
the space. You aren't allowed to serve
01:00:04
people inside your restaurant and now you can't be outside
01:00:06
your restaurant because we need to form a movie or set up like.
01:00:10
In a tent for their food or whatever it was.
01:00:13
But she and she's like, crying. She's like, why do they, why do
01:00:15
they get this? Why does Hollywood get these
01:00:17
benefits? They're like, one of the richest
01:00:19
industries. How about their union gives them
01:00:23
a cut, a break. Cuz it's Hollywood, cuz it's one
01:00:27
of the glamorous industries and it's.
01:00:30
Not glamorous anymore. And The funny thing is, most
01:00:32
filming is really not even done in California anymore.
01:00:35
It's all done in Georgia, so. Yeah.
01:00:38
It's not like it's not like the olden days where you go up to,
01:00:42
you know, Burbank and you check out this Warner Brothers studio
01:00:45
and that's where they'd all be hanging out.
01:00:48
It's like movies are all over the place.
01:00:50
Now too many homeless people to deal with, they don't have space
01:00:53
anymore and they would have to go in and clear thousands of
01:00:55
homeless people and that would take too much money and effort.
01:00:58
So the tax credit would also be. I don't understand.
01:01:01
Sorry, go ahead. Sorry, go ahead.
01:01:03
Okay, the tax. No, I just don't understand the
01:01:05
reasoning. Because they love their
01:01:08
celebrity buddies. Not a tax credit for you or me.
01:01:12
Not the hardworking average citizen.
01:01:14
Not a tax cut for us. A tax credit for the tax credit
01:01:20
for the movie industry. I would also be refundable
01:01:23
starting in 2025. Meaning film studios that
01:01:26
receive a large credit but have a small tax bill will able to be
01:01:30
able to get cash back. Wow.
01:01:34
That's a change the film industry has been lobbying for,
01:01:37
and they got it. The credit had been would have
01:01:39
incentives and requirements aimed at increasing diversity in
01:01:42
the film industry workforce. A little less than half of all
01:01:47
film industry jobs in the country are located in or around
01:01:50
Los Angeles, a slight decline from a decade ago.
01:01:54
So it's not even that big of an industry anymore.
01:02:00
So all right. And I think we have a couple
01:02:05
minutes. I do want to discuss this real
01:02:09
quick cuz you had sent this to me as well.
01:02:14
I think this is important to show people and then we will end
01:02:20
our wonky episode for the evening.
01:02:24
I hope everyone got enjoyment out of this.
01:02:26
I hope it was enjoyable that people understood what was going
01:02:28
on and have a little bit better idea.
01:02:30
Oh yes, this. So this is comparing California,
01:02:33
Florida budgets for 23 and 24 both overall and per capita.
01:02:41
Florida spends far less in California.
01:02:42
Further, it's not clear the California State government
01:02:44
provides much incremental value to its residents for all its
01:02:47
extra spending. This is a figure California and
01:02:51
Florida State spending. This is obviously the amount
01:02:56
that they're spending general Fund 2 and 25 other state funds.
01:02:59
So around again 300. Billion federal funds. 135
01:03:05
billion Florida. Only 46 billion Other state
01:03:10
funds, 31 billion. So these two alone don't even
01:03:14
add up to a small fraction of how much the general fund of
01:03:19
California is. And then they only get $39
01:03:22
billion in federal funds, which is interesting, because don't
01:03:26
they say that red states take more in federal funds than blue
01:03:29
states? Isn't that their argument?
01:03:35
They always say all those red states are always taking more in
01:03:38
federal funds than blue states. This is in a graph of California
01:03:44
and Florida State per capita spending.
01:03:49
We see that on a per capita basis, California State
01:03:51
government spends about double the amount Florida does.
01:03:54
Since states must balance their budget, their main reason
01:03:57
California can spend far more than Florida is that the Golden
01:03:59
State has a personal income tax. Florida, by contrast, is mostly
01:04:03
reliant on sales and excise taxes for its non federal
01:04:08
revenue. But it's not clear that
01:04:12
California is getting much more additional bang for the extra
01:04:14
bucks it is spending. Standardized test scores
01:04:18
reported by the National Assessment of Educational
01:04:20
Progress show Florida equaling or exceeding California.
01:04:23
In one extreme example, Florida ranked fourth among States and
01:04:25
mathematics at the 4th grade level, while California ranked
01:04:29
38th. So going back to our pie chart
01:04:34
in the beginning, the second most we spend on is K through 12
01:04:37
education, and it's 38th in mathematics.
01:04:43
So good job, California. At the end of the day,
01:04:49
California knows one solution. Spend more money in face of
01:04:56
deficits, way more money. So that's basically it.
01:05:03
I think we did a good job covering everything.
01:05:07
You you took a job, I just made comments.
01:05:11
I tried my best. Maybe we'll get.
01:05:14
An assemblyman or a state senator, assembly, person,
01:05:18
assembly, whatever member on state, senator on to talk about
01:05:22
this more and give us a better idea, but that gives you an
01:05:26
idea, $300 billion. It's what they're budgeted for.
01:05:31
The Lao outlook is bleak, I would say.
01:05:35
I think they're expecting a recession is going to happen.
01:05:38
When the recession does happen, if it's really bad, it's really
01:05:41
going to put a hurting on the budget.
01:05:43
And they're gonna have to make some serious cuts.
01:05:45
And I think California's already kind of teetering on a bad
01:05:48
position right now. And we'll see what happens in
01:05:52
the rest of the year and in September.
01:05:55
I forgot to add, This is why we get all those bills in September
01:05:58
and October. These are the trailer bills that
01:06:00
they add on at the end, so. I was gonna ask you about that
01:06:04
actually, cuz those have not been officially signed yet.
01:06:07
Right. So let's go.
01:06:08
I'm gonna go right back to this my little handy chart.
01:06:12
It's not like 10. Yeah, September 14th is the
01:06:16
deadline for the legislature to pass any bills that mean any
01:06:18
leftover budget. Trailer bills follow up Bills
01:06:20
that flesh out specific programs in the main budget must be
01:06:23
approved by that date. Amendments of the budget are in
01:06:25
bills referred to as budget bill juniors, which can also include
01:06:29
trailer bills. Critics say that too many major
01:06:32
policies are determining these trailer bills without sufficient
01:06:35
review, and then Newsom has a month to sign or veto.
01:06:42
So that's why there's still bills coming through between
01:06:46
October and September, but there's still bills coming
01:06:49
through anyway because they pass bills and they go into effect
01:06:52
the next year. So, all right, Any final
01:06:56
thoughts on the budget? Do you think California spending
01:06:59
its money wisely? No, I don't think that
01:07:05
California is spending its money wisely.
01:07:07
I would agree with that. If, if programs were working,
01:07:10
like if we were actually seeing our education was off the charts
01:07:14
doing well, if we were coming up with solutions for homelessness,
01:07:18
if we had lower taxes, then I would say great things are
01:07:21
working. You know, if food was
01:07:24
affordable, if gas was affordable, if, if house food
01:07:29
was more affordable, then yeah, I would say, OK, these programs
01:07:33
are working. For roads, we always talk about
01:07:36
our roads. Our roads are still not.
01:07:38
Fixed Where is that gas tax money going to and.
01:07:41
Then we're we're having to pay the cost on our cars from the
01:07:44
wear and tear. Well, it's like I like to say,
01:07:48
if progressive policies worked, California would be a utopia.
01:07:51
And I think we're far from that. So they've proven you can spend
01:07:55
all the money you want on this stuff.
01:07:58
Hasn't changed anything. Literally.
01:08:00
So I. Guess.
01:08:01
Know how much? 300 billion IS.
01:08:03
A lot of money. Can't even imagine billion
01:08:06
dollars. It's 308 * 1 as I
01:08:11
learned. Thank.
01:08:13
You thank you. That brings it down 3. 108,
01:08:17
*, 1 All right, so that's our budget episode.
01:08:21
I don't know what else to say. It's a lot of money and it's
01:08:26
scary. Good job.
01:08:27
I understand it a lot better. So you did very well because.
01:08:30
I I mean, I literally told you before we went on.
01:08:33
I was like, I still don't understand this.
01:08:34
Yeah, I don't know what's going on.
01:08:35
I tweeted out the other day and I got some love and some people
01:08:40
were like, I I don't think this is a good idea.
01:08:43
I was like, you know what? If California Republicans want
01:08:45
to be bold, you take a look at that chart and go, they're
01:08:50
bringing in $118 billion in personal income tax.
01:08:56
Why don't you just campaign on getting rid of income tax in
01:08:59
California? You know, why not just say that
01:09:05
like you never know. You got to be what are you going
01:09:08
to propose otherwise? Incremental tax cuts here and
01:09:11
there that don't really make a difference?
01:09:13
Like you, you got to starve the beast effectively here at
01:09:18
California. And if you take out personal
01:09:20
income tax, I mean, the argument kind of fades itself.
01:09:23
You'll you'll get someone who says, well, you can't not tax
01:09:25
people, How are you going to pay for the roads?
01:09:27
Gas tax. Isn't that what we're paying the
01:09:29
gas tax for? They can pay a tax on everything
01:09:33
else that has a I just want to as a purpose, so.
01:09:37
Everybody. It.
01:09:40
Goes up. What?
01:09:41
Every July 1st it increases. Yeah, so just wanna.
01:09:44
Roads. I don't see our gain any better.
01:09:47
But yeah, call me crazy, I think California Republicans should
01:09:51
make that a big platform. Just go for it.
01:09:53
Swing for the fences. Attract attention.
01:09:56
Say, you know what? Let's get rid of the income tax.
01:09:58
Let's bring people back. People will come pouring back
01:10:01
into California. Invest in the, you know, invest
01:10:05
in here. Buy houses, Do all that.
01:10:07
So just a thought. Anyway, we can talk about that
01:10:11
another time. All right.
01:10:15
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01:10:22
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