California Discovers $26 Billion Under the Sofa Cushions

Yes, we have earthquakes and wildfires and long lines for COVID-19 testing. But we also have lots of rich people.Ringo Chiu/ZUMA

Fight disinformation. Get a daily recap of the facts that matter. Sign up for the free Mother Jones newsletter.

Like every state, California has been bracing for fiscal disaster thanks to plummeting tax revenue caused by COVID-19 lockdowns. But then a funny thing happened:

California’s state budget faces a dramatic boom-and-bust period over the next four years, analysts said Wednesday, a roller-coaster period that could begin with a $26-billion tax windfall and later plunge to a projected deficit of $17.5 billion by the middle of 2025…The large supply of extra cash — equal to almost 20% of all current-year spending out of California’s general fund — is a surprise, Legislative Analyst Gabriel Petek said.

….The state’s tax revenues have remained strong — in part, Petek said, because high-income residents have not suffered any notable setbacks and California’s budget relies heavily on those taxpayers. “The progressive nature of the personal income tax structure has actually worked to the state’s benefit in the current environment,” Petek said.

Shazam! An extra $26 billion that we didn’t expect. How often does that happen?

The weird part of this is that analysts across the board, including most Democrats, have long agreed that California’s heavy dependence on rich taxpayers is a problem. But apparently that isn’t always true. During the pandemic, the rich have actually done fairly well even as ordinary folks have gotten slammed. That’s a bad thing in a cosmic sense, but a good thing in a green-eyeshade tax revenue sense. I can hardly wait for the bloody battles that are about to begin over how we should spend all this manna from heaven.

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you'll agree is worth supporting.

payment methods

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you’ll agree is worth supporting.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate