A report from the bipartisan Legislative Analyst’s Office says California’s savings account could grow to more than $18 billion by the end of 2021.

California had a record $21.5 billion surplus in the state budget in 2018. Newsom and the Democratic-controlled state Legislature spent more than half of that money on paying down debts and boosting reserves.

About $4 billion of it went to support ongoing programs while the rest was used for one-time projects. Where did it go exactly and where is it going? Small business owners deserve to know.

As Congress debates more funding, a contentious point was federal dollars bailing out states… we see now that Pelosi is lying as California does not need a bailout.

With a looming recession and possible federal cuts, where will the money go?

By Evan Symon

The California Legislative Analyst’s Office found that the state will have an extra $7 billion that wasn’t spent in the budget. And by 2021 there can be as much as $18 billion in the state’s general fund.

This is a long way away from a decade ago when the state was about that much in the red.

While the number may go down $2 billion if the Trump administration removes the state Medicaid tax, which it has strongly indicated it will do, it still leaves billions of dollars of extra money sitting in California’s coffers. It’s just a matter of deciding what to do with it.

A Rainy Day Fund

The most likely option for state lawmakers would be to save the extra money, put it into a savings account, and let it accumulate money from both interest and additional surpluses until the next major financial crisis.

A recession is likely coming, and a major natural disaster such as an earthquake is always possible. The LAO even made it clear in the report that “This does not necessarily mean a broader economic slowdown is imminent in the near term. Nonetheless, there likely is greater risk in the economic outlook for 2020-21 than in previous budget cycles.”

Nevertheless, an additional $18 billion would get California through a recession with minimal budget cuts. And after what happened to California during the last recession, where the state was cutting back working days of state employees and giving literal IOUs to banks, a rainy day fund would give California a lot of much needed breathing room, not to mention having an advantage over most states.

And with tax revenue expected to level out in the coming years due to a slow down of wage growth, it may be the most percipient option.

Paying Debts

Despite a surplus in the budget, California still has debt. A LOT of debt.

In 2017 it was estimated that California is still in the red somewhere between $26 billion and $1.3 trillion. Much of that comes from state pensions – pensions of which will be draining more soon due to more baby boomers retiring.

This is another popular option, as Governor Newsom spent half of last years surplus of $21.5 billion paying off this debt. While this won’t nearly pay it all off overnight, eating into some of that now could help future debt issues in the future.

Protection against Federal cuts
Currently California is standing to lose $2 billion each year in surplus due to losing the aforementioned state Medicaid tax. If it is lost, the surplus takes care of that lost revenue, right off the bat.

Due to the Trump administration’s dislike of California, and other Federal program cuts that are possible in the upcoming years, a surplus could help fill in the gap of anything taken away. Lawmakers across California have mentioned this being a scenario before, with a federal cut hurting Californians across the board.

“The state is not in this alone,” said Assemblyman Anthony Rendon (D-Lakewood). “Federal actions may hurt our budget in three ways: by damaging the economy as a whole, by hurling fiscal threats at our revenues, and by withholding funds for programs that benefit Californians.”

Like a rainy day fund, this would only be for the worst case scenario. And it’s one where it can’t even be estimated on because of likely shifts in the Presidency, House of Representatives, and Senate next year.

Infrastructure

California currently has about $187 billion in infrastructure needs. Many roads, highways, bridges, rail lines and other transport repairs, upgrades, demolitions, and new constructions are needed across the state. Former Governor Jerry Brown himself had been very adamant about extra money going towards neglected transportation needs.

Like the overall state debt, a few billion a year going to new infrastructure would only put a small dent into what is needed. But with many bridges and other vital facilities possibly failing and causing injury and death if their problems are ignored for too long, infrastructure also makes sense for surplus spending.

A good lesson for the state
A budget surplus is a good problem to have. California has, for now, learned its’ lesson on overspending on immediate budget needs, and has gone from being the butt of national jokes to becoming the budgetary model for the United States.

“President Trump talks a lot about America’s economic growth under his presidency, but when you look behind the numbers, you see it’s California’s growth that has provided the economic rocket fuel for the nation,” Governor Newsom said about the budget surplus. “The federal government would be wise to look to California as a model for how to get its fiscal house in order.”

When it comes to immediate budgeting, California is back on track. How it decides to spend the current surplus would only validate that.

NYP: Jeffrey Epstein’s accused madam Ghislaine Maxwell has proposed a $28.5 million bail package — that represents all of her and her husband’s assets — in a desperate bid to spring her from federal lockup, according to a new motion unsealed Monday.

The suggested package is “exceptional in its scope and puts at risk everything that Ms. Maxwell has — all of her and her spouse’s assets, her family’s livelihood, and the financial security of her closest friends and family — if she were to flee, which she has no intention of doing,” wrote her lawyer Mark Cohen.

Although her spouse’s name is redacted from the documents, his identity has been widely reported as tech CEO Scott Borgerson.

The package is composed of a $22.5 million bond co-signed by her and her husband, according to the motion that was filed under seal on Dec. 4.

Scott Borgerson, 44, is the CEO of CargoMetrics, a data-analytics company for maritime trade and shipping. He co-founded the Boston-based company in 2010, and it was most recently valued at $100 million in 2016.

Five additional bonds totaling $5 million will be co-signed by seven of Maxwell’s closest friends and family members whose names were redacted.

She would be released to home confinement with a GPS ankle monitor — although the name of the person with whom she’d reside was withheld.

Maxwell’s security firm would post the remaining $1 million bond.

The British socialite would also sign waivers of her right to contest extradition from two countries where she holds passports: France and the United Kingdom.

A team of private security guards would tail her 24 hours a day, seven days a week to ensure her safety after she received threats against her and her family, the filing says.

At a bail hearing shortly after her arrest in July, US District Judge Alison Nathan refused to release her to home confinement on a $5 million bond over concerns she had been evasive about her finances and was a serious flight risk.

The British heiress wouldn’t disclose her husband’s name to pretrial services, prosecutors had said.

In the motion, Maxwell describes living a “quiet family life” in an oceanfront mansion in Manchester-by-the-sea, Mass. with her spouse for four years prior to her indictment in Manhattan federal court.

She fled to a New Hampshire compound, not to evade authorities as prosecutors contended at her first bail hearing, but due to an “intense media frenzy and threats” that endangered the “safety and wellbeing of herself and her family,” wrote Cohen.

Her husband did not initially come forward to co-sign her bail package for these reasons, the filing says.

But the restrictive jail conditions, which have amounted to solitary confinement, have been unbearable, and the 58-year-old daughter of disgraced media titan Robert Maxwell has been relentlessly skewered in the press, according to her lawyers.

In the first three months she was locked up, she was pilloried in more than 6,500 national media articles.

“That exceeds the number of articles that mentioned such high-profile defendants as Harvey Weinstein, Bill Cosby, Joaquin “El Chapo” Guzman Loera, and Keith Raniere in the 90-day period following their arrests, combined,” her attorney wrote.

She has denied the allegations and is eager to defend herself against a case that lacks corroboration and “boils down to witness testimony about events that took place over 25 years ago,” the papers say.