The Golden State is awash in cash
RECENTLY CALIFORNIA has been running a lottery to encourage vaccinations against covid-19. Those who have received their jabs can enter to win prizes, including holidays, gift cards and ten grand-prize cheques of $1.5m each. California has also recently won a windfall of its own. Instead of an expected $54bn budget deficit because of the covid-19-induced recession, a roaring stockmarket combined with a federal stimulus has produced a surplus of more than $100bn.
Politicians, including Gavin Newsom, California’s governor, are splurging. On June 14th the legislature agreed to pass a $264bn draft budget—the largest in the state’s history, nearly 30% bigger than the previous record in 2019-20.
Dubbed the “California Comeback Plan”, Mr Newsom’s proposed spending promises to help California “to make a once-in-a-lifetime investment in the future of the state”. The budget will devote billions to public education, housing, transport, health care for undocumented immigrants, fighting homelessness and climate change, and more. Though the budget is not yet final, its size highlights politicians’ belief that more government spending is the solution to the state’s problems, as well as some of their own.
California is so flush with cash that it is launching the largest-ever state tax rebate. Those earning under $75,000 will be...