Who is responsible for California’s budget problems? Try Mother Nature

(Rich Pedroncelli/Associated Press)

Who is responsible for California’s budget problems? Try Mother Nature

California politics, homepage news, global warming, water and drought

Anita Chabria

January 10, 2024

California has officially entered the era of climate-driven economic uncertainty.



Governor Gavin Newsom drafted his new budget facing a deficit of nearly $38 billion.

That missing money is largely due to lower-than-expected tax revenues on capital gains. The stock and investment returns of the Golden State’s richest people weren’t quite what was expected.

But unlike most years when state officials have insight into how much money California can responsibly spend in April, when taxes are typically filed, last year was different.

Mother Nature ravaged the state during the winter and spring with record snowfall and storms that swamped entire towns like Planada and Pajaro. Capitola was hit by a bomb cyclone that virtually destroyed the pier. Tulare Lake reappeared in the Central Valley, flooding homes and crops and revealing the fragility of an expensive levee. Damage from that extreme weather cost $4.6 billion and claimed 22 lives, according to the National Centers for Environmental Information.

Our weather was so changeable and devastating that even the IRS had mercy and pushed back the deadline for the majority of state residents to first file taxes to October and then to November.

Which meant no one really knew (although there were certainly indicators) how much we were spending, even though we didn’t until a few months ago when those taxes were finally tallied and came up short.

“This has been a tough year,” Newsom told reporters gathered to hear his plan, and no one disputes that.

But it may not be an unusual year either, as we face the economic reality of climate change. Sure, the stock market is expected to rise, inflation is down and employment rates are up. By all measurable measures, the economies of California and the United States are poised for a good year, regardless of public sentiment that, faced with higher bills and a gnawing sense of uncertainty, isn’t quite ready to embrace a positive outlook.

But the severity of our weather is unlikely to diminish, and dealing with the brutal price tag of storms, floods, fires, rising sea levels, extreme heat, mudslides and more will change what we can and cannot afford in California. . Consumers are already seeing this as home and auto insurance rates rise based on predictions of even more climate disasters.

At the same time, the costs of rebuilding or maintaining houses in risk areas are also increasing, be it in places where the sea encroaches on houses or where flames threaten to double in fire-prone forests. Even keeping those homes warm or cool is becoming increasingly difficult to afford.

That means it’s harder to stay housed at any income level. More than 3 million Americans, mostly in severe storm states like Texas and Florida, have already moved because of the weather, a trend of climate migration that is expected to increase as the cost of living in dangerous and devastated places becomes unsustainable.

The federal government recently released its National Climate Assessment, which details the many ways in which climate and the economy are linked, and the many ways

it’s the situation

will probably get worse.

In the 1980s, the report said, “the country experienced an average of one

(adjusted for inflation)

billion dollar disaster every four months. Now that is on average every three weeks.”

Every three weeks a billion-dollar disaster occurs. In recent years, this amounted to $89 billion in events. And that billion dollar figure doesn’t include the emotional and economic toll of dead and injured, traumatized families, generational wealth literally evaporated, and poor communities, often people of color, without drinking water or roads.

However, the costs of climate change are not just obvious. Newsom’s cuts in the coming months will just be about the governor and Legislature figuring out exactly what they will be. Newsom is proposing to cut spending by $8.5 billion, most of which would come from climate programs. But the loss of money would also come from housing programs, the Middle Class Scholarship Fund and other cuts that are unlikely to be popular.

Newsom is also proposing to take $13 billion from our rainy day fund, but that also makes sense


probably an unpopular move.

But it has been a rainy year.

If there’s anything to learn from Newsom’s proposal, it’s that we need to plan for more rainy years, with more intensity.

This year, that means “tightening our belts,” as Newsom put it. A $39 billion deficit is painful, but not insurmountable.

But we need to save more in our reserve funds to plan for disasters we know will come, which seems logical but is virtually impossible under existing rules. I won’t bore you with the details of the Gann limit, but suffice it to say that saving more in the high-income years is difficult because of a budget rule established in the 1970s, long before billionaires with stock portfolios that rivaled the wealth from small states became California’s main source of income.

While our reserve fund is robust, states like Wyoming, which also has a volatile revenue model, have funds that are much stronger than ours. Wyoming could run for almost a year on the money it saved. Obviously California is bigger, but we only have enough saved for less than three months.

Predicting future revenues, for people and for states, is always a kind of crystal ball. But climate change is going to cost us dearly one way or another.

California should start saving now for its inevitable future debt burden.


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