California Projected To Have Massive Budget Shortfall As Businesses Flee The State

California is expected to have a $25 billion budget deficit in 2023-2024 as people and businesses leave the state in droves,according to a projection by the state’s Legislative Analyst’s Office (LAO).

LAOpredictedin a Wednesday reportthat the California budget will operate in a deficit due to tax revenue falling $41 billion below budget projections from fiscal year 2021-2022 through fiscal year 2023-2024. Recentstatisticsshow that there is less corporate and start-up activity in the state, with corporate tax revenue expected to decline by $6 billion from fiscal year 2021-2022 to fiscal year 2023-2024, according to LOA.

“Under our outlook, the Legislature would face a budget problem of $25billion in 2023‑24. The budget problem is mainly attributable to lower revenue estimates, which are lower than budget act projections from 2021‑22 through 2023‑24 by $41billion. Revenue losses are offset by lower spending in certain areas,” according to the report.

California had a budget surplus of $52 billionin fiscal year 2022-2023,accordingto last year’s LAO report.

Over 2022, only ninecompaniesheld initial public offerings (IPOs) in California compared to 2021, when 81 companies conducted IPOs.Furthermore, the nine IPOs wereonly 2% of all U.S. companies that went public in 2022,comparedto2021 when California IPOs represented 39% of all businesses that went public, the largest of any state.

In recent years, companies have begun toleaveCalifornia for Republican states due to tax increases. Of the departures, one of the most notable is Elon Musk, CEO ofTesla, Inc., moving the company operations to Texas.

Many of the businesses that left Californiacitedleft-wing policies, high taxes, bail reform, drug-use laws, chronic homelessness and stringent COVID-19 regulations. Musk referred to the state as the“land of overregulation, over-litigation and overtaxation.”