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).
LAO predicted in a Wednesday report that 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. Recent statistics show 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 $25 billion 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 $41 billion. Revenue losses are offset by lower spending in certain areas,” according to the report.
California had a budget surplus of $52 billion in fiscal year 2022-2023, according to last year’s LAO report.
Over 2022, only nine companies held initial public offerings (IPOs) in California compared to 2021, when 81 companies conducted IPOs. Furthermore, the nine IPOs were only 2% of all U.S. companies that went public in 2022, compared to 2021 when California IPOs represented 39% of all businesses that went public, the largest of any state.
In recent years, companies have begun to leave California for Republican states due to tax increases. Of the departures, one of the most notable is Elon Musk, CEO of Tesla, Inc., moving the company operations to Texas.
Many of the businesses that left California cited left-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.”
Alongside corporate tax declines, revenue from personal income tax declined, going from $135.9 billion in fiscal year 2021-2022 to a projected $122.6 in 2023-2024, according to LOA.
The office of Democratic California Gov. Gavin Newsom did not immediately respond to the Daily Caller News Foundation’s request for comment.
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