California Democrats emerge from Tuesday’s election confronting severe financial and structural challenges, latimes.com reported. Nearly six out of ten Californians believe the state is heading in the wrong direction amid rising living costs, a budget deficit, and ongoing housing shortages.
Voters express deep concern over affordability. More than half of respondents rank the cost of living, inflation, and housing availability as the state’s most pressing issues.
Housing Unaffordability Persists Across the State
California has long struggled with a housing shortage driven by local zoning restrictions, high construction costs, and lengthy permitting bureaucracy. Gov. Gavin Newsom pledged in 2018 to build 3.5 million homes by 2025, but the state has fallen short of that target. Since Newsom took office in 2019, about 692,000 homes have been built across the state.
Prices keep climbing despite legislative efforts. Throughout the state, typical home values grew from roughly $570,000 in 2018 up to $900,000 by 2026.
I don’t know if anyone sees a new direction to go,
said Thad Kousser, a professor of political science at UC San Diego.
Budget Deficits Threaten State Spending
The incoming governor and state Legislature face an estimated $18.5-billion operating deficit for the fiscal year, according to the state’s nonpartisan Legislative Analyst’s Office. By the end of the year, that office predicts the state’s wall of debt will balloon to about $29 billion.
Lee Ohanian, a professor of economics at UCLA, notes that the state budget has expanded about 75% over the last eight years. This translates to a 40% increase when adjusted for inflation. Meanwhile, student performance metrics remain low; the state’s school budget per classroom exceeds $500,000 a year, but only about 38% of California students met or exceeded state standards in mathematics.
Medi-Cal Expansion Faces Rollbacks
After pledging in 2018 to bring universal healthcare to the state, Newsom expanded the Medi-Cal program to cover all income-eligible adults regardless of immigration status in 2024. This fiscal year, outlays for Medi-Cal are projected to hit $219 billion, representing 40% of the entire state budget.
Faced with federal funding cuts and rising healthcare costs, the state has begun rolling back commitments. Officials agreed to freeze new enrollment for adult immigrants without legal status, and many adults under 60 in the program will face a $30 monthly premium.
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