Increase in personal income tax: more than 5%
Expenditure per capita (2008): $4,196 (25th lowest)
2009 budget shortfall: 36.7% (2nd highest)
Home price decline from peak: 46.7% (3rd largest)
Since 2009, few states have had more serious budget challenges than California. Spending growth has far outpaced economic growth since 1991, and the gap continues to widen today. For years, the state has been one of the biggest-spenders in the country. TANF (Temporary Assistance for Needy Residents)-eligible residents receive $537 per month for 42.4 months — the second largest amount in the country and the seventh-longest period. The state also spends a great deal on pension beneficiaries.
The recession has made California’s structural deficits larger. Median home values fell by 46.7% from their peak in 2006, and median household income barely increased since then, much less than the average state. In 2010, the state had a $45.5 billion budget shortfall, or 52.8% of its general fund — the largest in nominal terms and the second-worst in the country as a percentage of general fund. Enormous budget gaps have forced the state to cut funding to nearly every major program. The state also has raised taxes substantially, including increases of 5% or more in sales tax, personal income tax, and corporate income tax, which together contribute to an overall increase in revenue from taxes of over 9%.
(iStock Photo) More From 24/7 Wall St.: America’s Disappearing Restaurant Chains American Cities Where Manufacturing Is Booming States Where Seniors Cannot Afford to Live The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.