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Red Texas Has a Budget Surplus. Blue California Has a Deficit. What’s Driving the Difference?



composite illustration of california and texas scenes
California and Texas are facing two different budget realities for the 2023-24 fiscal year. (GV Wire File)
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California Gov. Gavin Newsom is seeking ways to close a $23 billion deficit while Texas Gov. Greg Abbott is looking to spend a $33 billion surplus.

These numbers are likely to be used in political discussions between blue and red states, but it is important to note that every state has its own unique economy and tax structure.

Most state budgets are currently doing well, but there is concern about what is on the horizon as a downturn may be coming.

The California vs. Texas Debate

California and Texas, of course, have an enduring rivalry that features debates about their economies, taxes, quality of life, educational opportunities, and sports teams.

In a nutshell, Texas is riding high right now because it relies on sales taxes to fund its government. Meanwhile, California faces tough choices because it’s reliant on income taxes and capital gains taxes paid by the rich. And those revenue streams can vary greatly from year to year.

Read more at Red Texas Is Flush, Blue California Has a Deficit, but It’s More About Economics Than Politics