‘California is going broke’: Robert Kiyosaki warns the Golden State will raise taxes, cut subsidies to the poor, see a rise in crime — and the rest of America will follow. Here are the facts

Kiyosaki’s concerns echo beyond the state borders, emphasizing the Golden State’s role as a bellwether state: “What happens in California happens to the rest of the U.S.”

He concludes his post with a provocative thought, questioning whether it's time for residents to consider relocating.

“Is it time for you to move? I moved,” he wrote.

Budget deficit

California’s fiscal challenges have been mounting.

In December 2023, the Legislative Analyst’s Office reported that the state faced a “serious budget deficit” due to a “severe revenue decline” in 2022-23. The report also pointed out that heightened borrowing costs and reduced investments had slowed down the state’s economy.

In response to these challenges, California's government recently passed a budget for 2024-25 that aims to maintain fiscal stability and supports core programs without resorting to deep program cuts.

The budget addresses a $46.8 billion shortfall with a balanced package of solutions, including $16 billion in spending reductions.

Specific budget cuts include a $750 million reduction spread over three years to the California Department of Corrections and Rehabilitation. Healthcare workforce programs faced a cut of $746.1 million, and affordable housing initiatives saw reductions amounting to $1.1 billion.

Note, that having a budget deficit isn't unique to state governments; it's also a national issue. In fiscal year 2024, the U.S. federal government has incurred a deficit, so far spending $1.27 trillion more than its revenue collections.

5th largest economy in the world

Despite facing fiscal hurdles, California boasts a massive economy. It’s not only the largest in the U.S. by GDP but also ranks among the largest in the world.