re: Orange County, CA has gone ALL Blue, change from usual red

Extraordinary $30 BILLION Budget surplus will greet incoming Cali Governor

That’s because he’ll also inherit a $200-billion plus budget that, as it turns out, is in “remarkably good shape” heading into the coming year, with nearly $30 billion in combined reserves and unexpected tax revenue, the Legislative Analyst’s Office reported Wednesday.

One reason for the analyst’s projected surplus is that spending increases will be “very low” for a variety of reasons, not the least of which is that under Gov. Jerry Brown, lawmakers have sought to limit increases in ongoing spending.

Brown then turned to voters who answered by approving a ballot measure raising taxes in 2012. Voters extended that higher income tax rate by initiative again in 2016. By the time Newsom completes his first year in office, revenue from personal income taxes in California will have increased by 46 percent since 2012-13.

Income tax revenue, much of it paid by people earning $1 million or more, will account for $101 billion in the coming year, or 71 percent of the revenue that flows into the general fund. The general fund pays for the state’s share of most programs, including schools, universities, health care and prisons.

While revenue rises, California’s spending is leveling off for a variety of reasons:

Public schools, which are the biggest draw on the state budget, are experiencing declining enrollment as California’s fertility rate continues to fall.

Property taxes—the local government’s share of school funding—will generate $25.3 billion. Eight years ago, property tax revenue accounted for $13.2 billion.

Health care spending will rise less quickly, about 4 percent in the coming year. That’s significantly less than the 9 percent increase from the prior year.

“I’ll give you the asterisk now,” said Ann Hollingshead, senior fiscal and policy analyst for the LAO who along with Deputy Legislative Analyst Carolyn Chu provided CALmatters with the budget briefing. The surplus includes $14.5 billion that by law must stay in the reserve, plus $14.8 billion in a one-time revenue surge.

Perhaps Newsom’s most ambitious goal is to create a single-payer healthcare system for California. His proposal would insure both legal residents and undocumented immigrants. The version of single-payer insurance that Newsom supports would cost the state about $400 billion a year. It would likely be paid for by a hefty hike in the state’s payroll or sales tax.

Can't wait to see how this works out for California and how shareholders and private equity firms react to much higher tax burden than in say Tenn or Alabama.