The good news: The recession California officials predicted in the early months of the coronavirus pandemic has not been as dire as they thought it would be, leaving the state with a $26 billion windfall heading into the next fiscal year.
The bad news: A reason for the unanticipated cash reveals the state’s stark economic divide. Pandemic-induced job losses have been concentrated among low-wage workers, who pay relatively little taxes to begin with, while wealthy residents have continued to make money and pay taxes, leading to much greater tax collections than officials predicted in early summer.
“We’re ending up in a place where the overall fiscal picture of the state doesn’t look nearly as bleak as the conditions for the people who are weathering the pandemic and all of its negative effects,” said Chris Hoene, executive director of the California Budget and Policy Center.
Read more at CALMAtters.