Did California Give Mississippi Money For Healthcare

X years ago, then-Gov. Arnold Schwarzenegger was complaining that California received only 78 cents dorsum for every tax dollar it sent to Washington, arguing that the state'due south budget woes would disappear if the federal government would only play fair with funding.

It's also belatedly for Schwarzenegger, just a new report found that California has moved off the listing of donor states and now takes in almost exactly as much in federal payments as its businesses and residents pay in taxes.

While that'due south bully news for California, it'south not nearly then upbeat a statistic for the country as a whole, said Alan Auerbach, director of the Burch Center for Tax Policy and Public Finance at UC Berkeley.

"The federal arrears has been going upwardly every year, with the authorities spending more than than it is taking in," he said. "Every bit they say at the carnival, 'Everyone is a winner.'"

The new written report by the Rockefeller Found of Authorities in New York found that in the 2017-18 fiscal year, at that place were only viii and then-called donor states, which paid the government more than they received. That was downward from a dozen states in 2015, including California, and 17 states in a 2007 study by the contained Revenue enhancement Foundation.

John Blanchard

"The federal rest of payments is growing, sparking more than money for the states," said Laura Schultz, senior economist for the Rockefeller Institute and co-author of the new report. "As that coin gets spent, at that place are fewer states with negative balances."

The money that comes to Californians from the federal government includes retirement checks, like Social Security and veterans benefits, as well as Medicare and food assistance. California likewise receives billions in federal grants for Medi-Cal and other health programs, and money for transportation, education and housing.

Federal contracts with California companies are also included in the final figure, equally are wages and benefits for federal workers and the military, according to a 2017 report by the state Legislative Analyst'southward Function.

Some of those numbers have been ascent steadily, said Auerbach of UC Berkeley.

Former President Barack Obama's "Medicaid expansion and the Affordable Care Act allowed California to expand wellness care, and nigh all that money has come from the federal government," he said. As well, "there are a lot of new defense contracts and other increases in spending."

The latest figures as well evidence that while President Trump has threatened to slash federal funds from California for its sanctuary policies on undocumented immigrants and its tougher-than-Washington's ecology rules, the country's federal contract numbers continue getting bigger.

"California's greatest increase (in 2018) was in the number of contracts, which account for much of the growth in federal payments," said Schultz of the Rockefeller Constitute. "They rose from $54 billion in 2015 to $72 billion in 2018."

Those ascension figures have little to practise with any action California has taken.

When he took office in 2003, Schwarzenegger proclaimed himself "the Collectinator," pledging to get more money from the federal regime. He rapidly discovered that plenty of those federal dollars are baked into formulas the state tin't adjust.

Two of united states of america that get the most federal money, for case, are Virginia and Maryland, thanks largely to the huge number of federal workers and government facilities in the suburbs surrounding Washington, D.C.

And California'south population is 1 of the youngest in the nation, with about 14% of its residents 65 or older. Past contrast, more than a fifth of Florida's residents are of retirement historic period, guaranteeing a river rather than a stream of Social Security money.

While California officials withal might complain that other states become a college percentage of federal money, no ane is willing to modify places with states like Kentucky, Alabama, Due west Virginia and Mississippi. Each of those low-income states gets better than $2 in federal payments for every dollar of taxes.

"Poor states pay less taxes and take a lot of sick people," Auerbach said. "Information technology's pretty clear why Mississippi is a recipient state."

Merely California might non take much time to revel in its comfortable spot on the federal pay line. Both Schultz and Auerbach warned that next yr's survey could be bad news for the state.

Rockefeller's new nautical chart "only captures about ane month of the 2017 tax changes," Schultz said. "Nosotros won't see the total effects ... until side by side yr."

Although the tax package pushed through by a Republican Congress and signed past Trump trimmed people's IRS bills across the nation, California and other high-wealth states like New York and New Jersey face special problems.

When the federal government capped the deductibility of country and local taxes and mortgage interest, "California suffered a lot," Auerbach said. Relative to low-tax states like Texas, "California will be paying college taxes."

When the revenue enhancement changes are factored in, Auerbach said, the donor state numbers "are absolutely not going to stay the aforementioned."

John Wildermuth is a San Francisco Relate staff writer. Email: jwildermuth@sfchronicle.com Twitter: @jfwildermuth

Source: https://www.sfchronicle.com/politics/article/California-no-longer-pays-more-to-Washington-than-15243861.php

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