BREAKING: California Facing a Massive Imminent Fiscal Crisis – Fires Speeding It Up

California’s fires aren’t the state’s only problem, the state is going bankrupt and this may be it.

Chriss Street at Mountain Top Times on Substack shared the following:

Gov. Newsom issued 30-day notice to announce that with California in a cash crisis; schools, counties, cities and state agencies “should have no expectation of full funding.” This is gov-speak for we are about to default.

The process known as issuing a “Budget Letter” came just 13 days after Newsom claimed in his January 10 budget proposal for the coming 2025-26 fiscal year beginning on July 1^st, that the budget “is balanced and reflects minor revenue growth over the three-year budget window.”

At the time, Newsom was indicating the total economic losses from the Los Angeles wildfires would be a manageable $10 billion, with insurance covering $2 billion of property losses and state losing $1 billion in taxes.

The Mountain Top Times (MTT) reported on January 15^th that reinsurance consultants were predicting the ongoing wildfire losses would set a global record of $200 billion, and insurance losses had spiked to $25 billion.

Additionally, the state-sponsored FAIR Plan insurer-of-last resort was insolvent with $3 billion of assets to cover $8 billion of claims. With Fair Plan allowed to push losses to every insured property holder, MTT warned every insured property in California was at risk for a $5,200 assessment.

Verisk’s Extreme Event Solutions on January 22^ndupped the reinsurers’ estimates of wildfire total economic losses to $275 billion. With Palisades and Eaton Fire insured losses of between $28 to $35 billion, every insured homeowner is would now be at risk of a $7,300 assessment.

With $275 billion in total economic losses and 9 fires still burning, the State of California tax and revenue losses this year could be over $20 billion.

The Palisades coastline and foothills of Altadena were populated with the same type of wealthy millennials that have been leading the out-migration from California. With out-migration reducing state tax collection by $6 billion this year, the fires will drastically increase out-migration tax losses.

With the Trump Administration initiating a federal extension for California wildfire victims, the state must postpone 2024 tax return filing and payments until October 15, 2025. That delay will cut cash by $30billion.

The new “Budget Letter” states that Gov. Newsom’s Department of Finance intends to drastically reduce mandatory spending based on K-12 class enrollments, MediCal caseloads, and local population revenue sharing.

California by April will have a $40 billion deficit. Gov. Newsom might like to cut spending, but the state Constitution has been amended 524 times to mostly lock-in spending for powerful money interests.

…Gov. Newsom before the wildfires had lobbied the legislature for $50 million for litigation to relentlessly resist Trump 47 policies. But he now intends to be standing by on the tarmac at LAX to meet Air Force One, despite not being officially invited.

In early January Street reported that the state reported a qualified opinion for it’s year ending June 30, 2024.  This is a terrible result that indicates serious problems in the state’s financials.

California’s Broke – State Auditor Issues Qualified Opinion on 2023 Financial Statements

In June we reported that government offices were cutting back hours because the state was broke.

BREAKING: Democrat Run California Is Officially Broke – Government Offices Cutting Back Hours

Now this.

California’s fiscal status is a fire burning downhill with massive tail winds behind it.