30 June 2023
California, once flush with a record surplus, now faces a $32 billion deficit as the tech industry wanes and pandemic funding ends. The state’s reliance on wealthy residents for tax revenue, particularly from capital gains, leaves its budget vulnerable to fluctuations. In contrast, states like Florida and Texas, which rely on sales taxes, are experiencing revenue growth. The diverging fortunes between Democrat and Republican-led states highlight the ongoing divisions in the United States. While some states have built up reserves and prepared for economic downturns, others are enacting tax cuts despite a weaker fiscal environment. As the stock market rallies, state tax revenues are beginning to normalize, signaling an end to the days of booming revenues.