Staff Reports
California is staring at a big budget hole and the left wants to blame anyone but Sacramento. The new Hoover Institution analysis makes the point plain: this is not a federal problem fixed by a shiny “billionaire tax.” It’s a state spending problem driven by exploding Medi‑Cal costs and policies from Governor Newsom’s team. Slapping a wealth tax on billionaires won’t stop the bleeding.
Spending, not revenue, sank the state
Look at the numbers. State tax revenue rose about 55 percent since 2019, while state spending jumped roughly 68 percent. If you raise revenue but spend even more, you don’t have a revenue crisis — you have a spending addiction. Governor Newsom’s January 2026 budget forecast even projects about a $93 billion shortfall over the next four years. Sacramento dug that hole with big new programs and a bigger Medi‑Cal bill, then turned to politics and slogans instead of honest budgeting.
Medi‑Cal is the monster under the bed
Medi‑Cal is the main driver of the crisis. More benefits, broader eligibility, and rising health costs mean the state pays more and more. Yes, federal policy can nudge state costs, and President Trump’s “One Big, Beautiful Bill” changes the federal landscape — but those are small ripples compared with the tidal wave of state decisions. The Hoover paper shows the math: changing federal rules doesn’t erase the structural growth of state spending on Medicaid. Sacramento chose the programs, Sacramento needs to own the bill.
Why the billionaire tax won’t plug the gap
The billionaire tax is political theater dressed up as a solution. Even if it raised some money, estimates from many nonpartisan analysts show it would not cover the long-term, recurring costs of Medi‑Cal and other commitments. Wealth taxes are hard to collect, invite lawsuits, and push capital and people to friendlier states. Worse, relying on one-time or unpredictable revenues to paper over a recurring spending problem is budget malpractice. California voters deserve a plan that addresses spending growth, not a campaign poster that says “tax them more.”
Here’s the blunt truth: if California wants fiscal sanity, it must stop treating taxes as the only tool and start fixing spending. That means reforming Medi‑Cal, checking program growth, and setting real priorities. The billionaire tax makes for a catchy rally line, but it won’t keep hospitals open or balance the budget. Sacramento created the problem — Sacramento should fix it, not pass a feel‑good illusion and hope billionaires will save the day.
