Here's the state of fiscal governance in California: Sacramento has spent itself into a roughly $70 billion deficit hole, and instead of making hard choices about spending, leadership is crossing its fingers that OpenAI, Anthropic, and SpaceX will IPO this year and rain capital gains tax revenue down from the heavens.

Let that sink in for a moment. The fifth-largest economy in the world is functionally relying on three companies going public to paper over years of fiscal mismanagement. It's like maxing out your credit cards and then telling your landlord not to worry because you've got a "feeling" about your fantasy football lineup.

To be fair, the numbers are potentially significant. These three IPOs could generate billions in taxable gains for employees and early investors — many of whom are California residents. The state's top marginal income tax rate of 13.3% means Sacramento would take a very healthy cut of every newly-minted millionaire's windfall. That's real money.

But here's the problem: this isn't a budget strategy. It's a lottery ticket.

California has been down this road before. The state has long been dangerously dependent on capital gains revenue from the tech sector, which is fantastic in boom years and catastrophic during downturns. The 2022 tech correction obliterated state revenue projections almost overnight, contributing directly to the deficit mess we're in now. Building your budget around volatile windfalls is the fiscal equivalent of surfing during a hurricane — thrilling until it isn't.

What Sacramento should be doing is scrutinizing the spending side of the ledger. California's per-capita state spending has ballooned over the past decade, and outcomes on housing, homelessness, and infrastructure have gotten worse, not better. Maybe — just maybe — the problem isn't insufficient revenue.

If those IPOs materialize, great. Use the windfall to pay down debt and build reserves. But if the state's entire fiscal solvency hinges on whether Sam Altman rings the opening bell at the NYSE, we have a governance problem that no stock ticker can fix.