California Forced To Cut Spending After Wealthy Taxpayers Flee State
California directed state agencies Tuesday to reduce their spending levels in the wake of a projected massive budget shortfall and wealthy taxpayers leaving the state.
"It is vitally important that state government is efficient, effective, and only expends funds that are necessary to the critical operation and security of the state," wrote California Department of Finance director Joe Stephenshaw in a budget letter. "As such, all state entities must take immediate action to reduce expenditures and identify all operational savings achieved."
Stephenshaw directed state entities to cut expenses by taking such actions as not entering into any new non-critical goods and services contracts, halting non-essential information technology purchases, and only purchasing fleet vehicles that are mission-critical or emergency-related.
"All areas of department operations shall be evaluated and scrutinized to decrease costs including, but not limited to, subscription renewals, training costs, or furniture purchases," Stephenshaw wrote.
He also directed departments to order "minimal office supplies" and refrain from non-essential travel. Additionally, the state canceled a buyback of vacation and leave time employees had accrued, except for corrections employees.
Officials can make exceptions to the orders only to address an emergency, provide 24-hour medical care, avoid a significant loss in revenue, or achieve significant cost savings.
"Lastly, agency secretaries and cabinet-level directors will be required to report monthly to Finance and the Governor’s Office on all approved exemptions as well as achieved savings," Stephenshaw wrote.
The letter comes just over a week after the state's nonpartisan Legislative Analyst's Office predicted that it would see a deficit of $68 billion in 2024. It also comes months after the anti-tax group Reform California released a report that indicated wealthier residents were leaving the state, and those who were coming in could not make up the loss in taxable income.
The cost-cutting also comes as California has taken steps to address its homelessness crisis. The state announced late last month that it would spend almost $300 million to clear homeless encampments.
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