California ranks No. 43 for government finance
Dear John,
After California’s much delayed publication of its audited financial reports for the state's 2022 fiscal year, the news for California is not good. Despite the nation’s highest marginal income tax rate and punishing business taxes and fees, the Golden State ranks 43 in financial health when compared to other states.
Cato Institute’s Marc Joffe tapped the rankings by John Moorlach, director of CPC’s Center for Public Accountability, measuring the “Unrestricted Net Position (UNP)” of each state — a state’s total assets (like cash, receivables, and buildings) minus liabilities (like payables and debt) divided by population. This provides a per capita that can be used for comparative purposes.
A positive number (Alaska comes in at No. 1 with $24,199) is good; a negative number (California comes in at negative $5,668) is bad.
“In most cases, states that are in the red financially turn out to be blue politically,” Joffe concludes. “The six states with the most negative unrestricted net positions have Democratic legislatures. Deep blue New York and California are also in the red financially.”
“But Republican governance is no guarantee of fiscal probity,” Joffe says. He points out that No. 37-ranked Texas has a UNP per capita of -$2,590 despite Republican political control of that state. The reason, Joffe writes, is “Texas’s large liabilities for underfunded public employee retirement benefits, including pensions and retiree healthcare.”
“Other states that are both red financially and politically include Missouri and South Carolina,” adds Joffe.
Moorlach says the study’s findings are a red flag for California residents.
“The UNP is a warning light to residents,” Moorlach explains. “The higher the unrestricted net deficit per capita, the more susceptible the government is to increasing taxes. And if that imprudent strategy fails, the municipality will be out of fuel and become a bankruptcy candidate.”
Californians can take some comfort in the fact that seven other states, all controlled by Democrat majorities, perform even worse:
44 Kentucky
45 Delaware
46 Hawaii
47 Massachusetts
48 Illinois
49 Connecticut
50 New Jersey
You can check out Joffe's interactive national map here.
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There's still time to RSVP for next week's Foundations of Freedom: The Importance of America's Constitutional Pillars, hosted by the National Review Institute.
Don't miss CPC president Will Swaim at both the Newport Beach and San Jose events!
The afternoon programs will run from 3:00-5:30 p.m., with cocktails and conversation afterward.
April 30
The Pacific Club
Newport Beach, CA
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May 1
The Westin San Jose
San Jose, CA
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