4 hours ago
1
Last week California Gov. Gavin Newsom announced that his state is facing a $12 billion budget deficit.
As has become the habit for every blue-state governor in trouble, he pinned the blame on President Donald Trump.
But the real reason California is in a hole is its unprecedented levels of social-service spending, especially on illegal immigrants.
Unless the state is willing to reform its budget-busting welfare programs, California, like its blue-state brethren New York and New Jersey, will face perpetual fiscal woes.
Newsom claimed that “California is under assault” from Washington, and that a “Trump slump” from tariffs and other federal policies will cause its fiscal shortfall.
Yet the budget document itself admits the state does “not forecast a traditional recession” — and that an anticipated decline in revenues accounts for less than half of the new deficit.
The main issue, the budget makes clear, is California’s explosion in spending — especially for Medi-Cal, its health-care program for low-income individuals.
In California, the medical plan supposedly reserved for the poor covers more than a third of the entire population, far more than in the rest of the country: Nationwide, similar Medicaid programs cover about 20% of all Americans.
Part of the reason for its large number of recipients is that since 2016, California has been continuously expanding coverage for what it calls the “undocumented.”
Beginning last year it made Medi-Cal available to all illegal immigrants.
Medi-Cal’s coverage is generous: It includes dental, vision and mental-health services, as well as transportation to medical appointments and drug and alcohol rehab.
Just two months ago, the Newsom administration had to borrow an extra $2.7 billion because more illegal immigrants were enrolling in the program than anticipated.
As the new budget announcement euphemistically put it, increased Medi-Cal expenditures on “individuals with certain statuses” caused much of the budget shortfall.
Similar growth in unrestricted service spending bedevils California’s homeless programs.
A recent state audit on homeless spending found that California had spent $24 billion on the problem over the last five years — during which time the homeless population grew by 30,000.
The explosion has many causes, but the migrant surge over the US-Mexico border exacerbated it, a recent analysis showed.
Homeless migrants have much of the state’s generous social services, from housing to food support, at their call.
Despite the failure of California’s unrestricted homeless-funding model, last year the state voted for more than $2 billion in bonds to build homeless housing, with no apparent restriction on immigration status.
Newsom recently announced with pride that the increase in the number of people on the streets had slowed last year. Not that homelessness had fallen, just that the rise was less rapid.
It’s still the largest state in the union, but since 2020 California has lost almost a million and a half people to other states.
The swell of asylum-seekers and illegal immigrants is the main reason its population hasn’t shrunk more.
Yet to remain fiscally afloat, the state can’t continue to allow its illegal immigrant and homeless populations to expand, offering ever more subsidies to both, while continuing to push law-abiding residents out.
To Newsom’s credit, his new budget proposal seeks to rein in Medi-Cal’s growth by ending new illegal immigrant enrollments (an easy promise to make, if Trump keeps the border closed) and charging users a small premium.
Last week he also announced a new push to get cities and towns to dismantle homeless encampments.
But as is often the case with Newsom, the changes were mainly cosmetic —and will do nothing to address California’s long-term population shift away from taxpayers and toward welfare recipients.
Even before his announcements, the state predicted tens of billions of dollars in deficits in each future budget year.
Meanwhile, other blue states are facing similar problems.
Over 40% of New York’s population is on the state’s Medicaid programs, which have seen growing illegal-immigrant enrollment over the past decade. Last year, the Empire State expanded Medicaid access for illegal immigrants even further.
The number of homeless in New York City increased by half just last year, and almost all of the increase came from an influx of international migrants.
New Jersey too has expanded Medicaid eligibility for illegal immigrants, and is dealing with a rapid rise in homelessness.
All three states rely on boom-or-bust budgets that use high-earning taxpayers to fund ever-expanding social services for growing numbers of illegal immigrants and homeless people. It’s a fiscal model that cannot survive for long.
Either California and the other blue states will find a way to change — or circumstances will force them to.
Judge Glock is the director of research and a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
English (US)