California’s population declined by about 75,400 in 2023, with a significant number of wealthy individuals leaving the state.
This has led to a budget deficit and a substantial drop in tax revenues.
Factors such as the cost of living, housing market, and remote work have contributed to people moving out of California. (Trending: Prominent LGBTQ Activist Arrested Over Disturbing Charges)
Tax Foundation Vice President of State Projects Jared Walczak said, “California has led the nation for years in out migration and, recently, in outright population decline.”
“California is one of only a handful of states that is facing a budget deficit, and one of only a very small number that has seen tax revenues reversed in the past year,” he continued.
Adding, “Most states continue to see rising tax revenues.”
“Not only is the state highly exposed to fluctuations in the stock market, but it’s also heavily reliant on the wealthiest taxpayers and if they leave the state, the impact is substantial,” explained Walczak.
“California also has expansive government programs that rely for funding not only on these high net worth individuals but on the idea of continuing population growth and employment growth,” said Walczak.
Concluding, “The way you pay for the benefits in a state like California is by the next generation earning more than the last and paying more into the system.”
The state’s heavy reliance on wealthy taxpayers and population growth for funding government programs has put its long-term prospects at risk.
The state’s $68 billion budget deficit may require drawing from reserves and reducing spending to address the issue.
Additionally, seven other states also experienced population declines in 2023.