While much of American political discourse has devolved into overwrought culture war and personality fights, fiscal policy still matters. Last month, the Cato Institute released its annual Fiscal Policy Report Card on America's Governors 2024. Unsurprisingly, California Gov. Gavin Newsom didn't do too well.
The report, which considers state budget actions since 2022, gave "A" grades to the governors of Iowa, Nebraska, West Virginia, Arkansas, South Dakota and Montana.
Top-ranked Iowa Gov. Kim Reynolds has overseen cuts to income taxes and the elimination of Iowa's inheritance tax. At the same time, she has maintained a tight ship, with state general fund spending growing at a low rate of just 2.3% per year since her 2017 election. In addition, she signed off on major education reform empowering families with education savings accounts to help families pay for the education of their children at the school of their choice.
"The reforms should save taxpayer money since Iowa's per pupil ESA funding is just half the per pupil costs for students in public school," Cato notes.
By contrast, California got an abysmal "D" grade. "During his first five years, the general fund budget expanded by 65 percent, from $140 billion in 2019 to $231 billion in 2024," the report notes. Yes, you read that right. Though you might not see improvements to the state's homelessness crisis or shoddy roads or broken education system or public safety, yes, the politicians in Sacramento have had massive amounts of money to work with. And they've still blown it.
The report points out the absurdity earlier this year of California's massive budget deficit. "In early 2024, the deficit was projected at $58 billion, but it was later closed as the governor and legislature slowed spending, pulled money from the rainy day fund, and raised corporate taxes," the report notes.
Indeed, Sacramento bought time by playing budget shell games and engaging in gimmicks to make it appear the state budget was in a better position.
High taxes, of course, come with consequences. "California has many natural advantages but they are being outweighed by anti-growth policies and people and businesses are leaving," the report notes. That has really been the story of California over the last several years. The California "exodus" has become part of how people talk about the Golden State. The reason for that, in large part, comes down to the mismanagement of fiscal policy in Sacramento.
Gov. Gavin Newsom and the spendthrift Legislature need to stop playing games with taxpayer money, spend within their means and look to streamline government. What they are doing now is simply unsustainable and damaging to the future of this state.