For many years now the narrative on California is that it is a country unto itself and it generates so many tax dollars the federal government and red states should be throwing a garden party in its honor.  In reality, California is not a "donor state" as the Rockefeller Institute claims.  It can't even support itself, let alone bolster the rest of the country.

This problem has become more evident in the past year as Los Angeles hits a budget deficit of a billion dollars and, the state government doesn't have the funds to help the city recover because of it's own $68 billion deficit.

In response to the lack of aid from the state or federal government, Los Angeles Mayor Karen Bass unveiled a proposed $13.9 billion municipal budget for fiscal year 2025-26, which includes more than 1,600 layoffs and the consolidation of four city departments in an effort to eliminate the overdraft.  Though LA employs around 50,000 people in total and the layoffs might seem minor in comparison, the city's expansive programs require employee growth this year, not cuts. 

Furthermore, it is likely that the 1600 fired workers are just the beginning.  The city removed at least 2000 positions from its employee roster at the end of last year and is already moving to make cuts to existing workers.

It's no coincidence that LA is in fiscal trouble in 2025, and it's not only because of the $2 billion in damages associated with the recent wildfires.  After decades of decadent debt spending CA is deeply dependent on federal funds.  Federal budget cuts and the shutdown of agencies like USAID are having far reaching consequences, especially in progressive states with a heavy emphasis on socialized programs.  

For example, the federal Department of Health and Human Services recently terminated $12 billion in grants intended for infectious disease response, mental health services and other public health issues.  At least $1 billion of this cash was supposed to go to California in 2025.  Covid money is funneled into various health departments and other projects and California was the biggest recipient of pandemic funds by far with over $77.8 billion received through the state government and over $600 billion in total relief.  Some critics argue that covid relief in California was wrongly exploited as a financial boon for various state agencies, politicians and employees.

Now the pandemic funding is finally cut off after 5 years.  $45 million of the $1 billion lost was supposed to go to Los Angeles. 

The LAPD is also losing over $10 million due to federal funding cuts.  The agency and city officials are trying to sort out the potential impact of being cut-off from millions of dollars in law enforcement and homeland security grants, following the US Justice Department’s announcement such programs would be suspended for any municipality that considered itself a so-called, “sanctuary city,” that bars local officers from playing a role in immigration enforcement.

The Orange County Register reported last month that Orange County will lose out on more than $68 million in federal earmarks for 2025, money that was previously approved for community projects.

California schools have been warned by the Trump Administration that if they don't stop instituting DEI programs and indoctrination, they will lose at up to $16 billion in funding, with $1.26 billion of that going to the Los Angeles Unified School District.

The sheer enormity of federal funds floating around California should be taken into account, but also the fact that despite access to so much money California and LA are still facing a massive budget shortfalls.  The chances of this dilemma being solved through layoffs and department consolidation is next to nil.  The real root of the problem is policy driven; Democrat welfare programs, social programs and their open border mentality have resulted in a never ending drain on their finances, slowing destroying what was once one of the greatest states in the nation.