American States Once Awash in Cash Now Face Reversal of Fortunes

California Governor Gavin Newsom for years had an enviable problem. His state was awash in cash.

Thanks to the booming tech industry and federal money during the pandemic, California was spending record amounts and still ran a surplus — almost $100 billion last year. That’s when Newsom, a rising star in the Democratic party, sent checks of up to $1,050 to millions of residents. The Los Angeles Times in an editorial declared him the luckiest governor in state history.

Now, following the tech bust and the end of Covid funding, the surplus has been replaced with a $32 billion deficit, ...