Web Version [link removed] | Update Preferences [link removed] [link removed] California Employment Report
January 2022
The Center for Jobs and the Economy has released our full analysis of the January Employment Report from the California Employment Development Department. For additional information and data about the California economy visit [[link removed]].
CaliForming: Venture Capital Activity Boosts
State Revenues
As contained in the annual updates from Pitchbook [[link removed]], venture capital activity in 2021 soared to new levels in spite of the pandemic conditions and likely in part because of them as shifts to telework and other changes quickly expanded the operational flexibility for these companies. Pitchbook reports that US venture capital deals increased 40% to just over 17,000, while the value of these deals nearly doubled to $330 billion.
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This spike in overall venture capital activity and in particular exits has had a direct and significant effect on state revenues. Rather than the large deficits assumed in the 2020-21 Budget Bill, the state instead has seen large budget surpluses and record revenue levels as the result of this upswing in its increasingly volatile revenue base. The rapid shift of tech and other businesses to telework and other operational changes largely sheltered higher income workers from the effects of the state ordered shutdowns. Capital gains from both IPOs and the previous stock market highs contributed heavily to the surging surpluses.
This rise in state tax revenues is easily outpacing the rest of the nation, and in fact, tax revenues in California have grown more strongly than in the other states nearly every year since the beginning of the previous recovery after 2012. California tax revenues have grown both as the revenue base has produced more and as the state has increased the number and rates of taxes in this period.
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