News

Last week I wrote you about the $195 billion California governments spend every year on compensation and benefits for public sector employees. Part of that cost is annual service on $270 billion of debt issued to public employees by lawmakers, none of which was approved by voters.

If ever you had any doubt that governments in California are run primarily for the benefit of public employees, look no further than $195 billion of annual spending by those governments on compensation and benefits awarded by elected officials who receive support or avoid opposition by public sector unions.

As we’ve been noting for some time now, a political renaissance is taking place in California as more political philanthropists engage in effective political activism. An example is TogetherSF Action, which scored a big victory earlier this week when, over the Mayor’s objection, it earned the San Francisco Democratic Party endorsement for Prop D, which would streamline the city’s commission system to make elected officials more accountable.

Yesterday San Francisco Mayor London Breed made a gutsy appointment to the presidency of the SF Board of Education when she selected Phil Kim, who served as the national director of STEM education for the Knowledge is Power Program (KIPP) and is a charter school champion.

Everyone knows the truth. In California it is serious drug addiction that drives homelessness, overdose deaths and retail theft. The solution is mass treatment. Voters took a step in that direction in March by approving Proposition 1, which authorizes Bonds for Mental Health Treatment Facilities. The next step must be taken in November with voter approval of Proposition 36, The Homelessness, Drug Addiction, and Theft Reduction Act that will give judges the tools to require treatment.

Earlier this week, Elon Musk announced he was relocating the headquarters of two California companies to another state after Governor Gavin Newsom signed a law that Musk characterized as infringing on parental rights. Newsom responded by accusing Musk of being a vassal to Donald Trump in a tweet that said: “You bent the knee” to which Musk replied: “You never get off your knees.”

As we’ve reported to you before, GFC is already focused on the 2026 governor’s race because California’s next governor is likely to inherit a precarious situation from Governor Newsom, the candidates who have announced so far are from the usual depressing cast of characters who specialize in loudly signaling virtue to the common person while quietly doing the bidding of special interests, and we are hoping the prospect of early backing by GFC could help elicit a bolder alternative.

The good news is that a tax increase measure has been pulled from the November ballot. The bad news is that Governor Newsom and legislative leaders announced a budget deal that draws from taxpayer reserves and thereby boosts pressure for a tax increase down the road.

Often I’m asked whether California could levy a wealth tax on individuals. My answer is that, absent persistent political pressure by taxpayer advocates, the political door in California is always open to all forms of tax increases, including a wealth tax.

Second quarter income tax estimates are due Monday, though the amount required in California is more than a quarter’s worth of estimated tax. That’s because during a past budget crisis the state imposed a requirement that taxpayers pay more than a quarter’s worth of estimated taxes for each of the first two quarters of the year. That budget crisis went away, but not the imposition on taxpayers.