California Residents Flee As State Faces Multi-Billion-Dollar Shortfall

In a continuing trend, residents of California are leaving the state in droves, with many choosing to relocate to Arizona, Texas, Florida, and North Carolina. The exodus began in 2020, when 410,000 residents packed their bags, followed by another 340,000 in the subsequent year. This trend shows no signs of slowing down, as California is now dealing with a staggering $38 billion deficit, with projections indicating a further $68 billion deficit for the next fiscal year.

A recent report from moving company Pods revealed that Los Angeles remains the top city for residents moving out, followed closely by the San Francisco/Bay Area. Stockton-Modesto and Santa Barbara also made the list, ranking ninth and tenth, respectively. On the other hand, the Carolinas, Florida, and Texas are experiencing an influx of new residents.

Wilmington, North Carolina, and Myrtle Beach, South Carolina, have emerged as the most popular destinations, attracting Californians seeking a fresh start. Other North Carolina locations, including Charlotte, Asheville, and Raleigh, have also made the top 20 list. In Texas, Houston, Dallas-Fort Worth, and San Antonio are the favored destinations for those seeking greener pastures.

Phoenix, Arizona, has become a hot spot for Californians looking to relocate alongside Texas. According to a report from the San Francisco Chronicle, more than 175,000 California residents moved to Arizona (74,000) and Texas (102,000) between 2021 and 2022. Although 69,000 individuals moved westward from these states, California still experienced a net migration loss of -106,000.

This net-negative migration has been a growing concern under Governor Gavin Newsom’s administration. From 2017 to 2021, one in every five people moving to Arizona was from California, according to Yahoo! News.

As reported by the LA Times, adding to California’s woes is the loss of more than 500,000 residents with at least a bachelor’s degree between 2021 and 2022. Although approximately 350,000 college graduates moved into the state during the same period, there remains a net loss of 150,000 highly educated individuals.

This brain drain has had a significant impact on the state’s finances. Personal income tax collection dropped by 25% in 2023, exacerbating California’s $68 billion deficit projection. Overspending and the mass exodus are critical contributors to the state’s mounting debt.

The state’s report highlights that revenues have fallen short of projections by $58 billion while anticipating a deficit of approximately $14 billion. California consistently spends more money than it generates, primarily due to overestimating revenues and underestimating its deficit.

Within a fiscal year, the state’s debt skyrocketed, increasing over seven times from -$5.1 billion to -$38 billion. Projections for the next fiscal year suggest nearly doubling the debt to -$67.59 billion.