Companies leaving California, impacting state budget
(NewsNation) — Economic warning signs are mounting for the state of California after companies fled in droves to Republican-led states in order to avoid high taxes and crime rates.
The findings from a recent Bloomberg analysis don’t paint an optimistic picture for California — a state that historically has the largest economy in the nation.
The findings reveal that fewer companies are being established in California, and the ones that do exist aren’t producing the same financial output as they used to.
Notably, initial public offerings have raised only $177 million, compared to an average of $16 billion over the past five years. That $177 million represents only 2% of the funds generated by U.S. companies, but it typically accounts for nearly 40%.
If the situation doesn’t improve, California will lose its place as the state with the most IPOs generated each year — a title it’s held for nearly 20 years.
Less productivity means less revenue for the state.
According to the California Department of Finance, the state brought in nearly $3 billion less in taxes in September than it projected.
That means a budgetary shortfall in promised funding for state services like roads and bridges as well as support for education and housing.
The San Francisco mayor has gone on record saying the state needs to rely less on Silicon Valley and the tech companies that have made it thrive.
There’s also been a mass exodus of companies like Tesla, seeking more business-friendly tax environments.