Consider what happened four years ago, when Gov. Gavin Newsom announced that California was sitting on a jaw-dropping $97.5 billion surplus, boasting that no state in U.S. history had ever seen a windfall that large. Lawmakers wasted no time ramping up spending based on that figure. The problem: that number never actually showed up anywhere in the real budget documents, and it turned out to be the product of a stunning $165 billion miscalculation in revenue projections.

By the time the error came to light, the spending commitments were already locked in, setting the stage for the string of multibillion-dollar deficits California has faced ever since. One of those costly decisions — extending Medi-Cal coverage to immigrants without legal status — ended up costing $6.2 billion more than budget planners had estimated, forcing the state to scale back benefits.

Despite these blind spots, the budget isn’t entirely useless as a research tool. Buried within its lengthy technical schedules is a wealth of hard data for anyone willing to dig. These supplemental documents show, for instance, that California currently employs 482,088 people, carries $73 billion in outstanding bond debt, and collects $328.4 billion annually from a long list of taxes and fees.

One especially revealing chart tracks state revenue and spending trends going back to 1975. For decades, the size of California’s government — its budget and workforce — grew roughly in step with the state’s population and personal income. That pattern broke down after Newsom took office in 2019.

Since then, the state has added roughly 100,000 employees to its payroll, a one-third increase relative to population growth. General fund spending, meanwhile, jumped from 7.9% of the state’s total personal income in 2019-20 to a record 9.58% in 2023-24 — the highest level recorded since the state began tracking the measure five decades ago. It has since eased slightly to 9.42%, but remains historically elevated.

That spending trajectory helps explain why Newsom is expected to hand his successor a budget that, regardless of how it’s described publicly, remains structurally out of balance. State projections show deficits persisting through the next governor’s entire first term, even under the unlikely scenario that spending stays flat.

For those wanting an even more rigorous look at California’s finances, there’s another resource: the state controller’s Annual Comprehensive Financial Report, a dense 372-page document submitted annually to the federal government. Unlike the budget, these figures are independently audited and considered far more reliable.

State Controller Malia Cohen released the 2024-25 report in May — two months past the federal filing deadline, but a notable improvement nonetheless. California hadn’t managed to file this report on time since 2018, largely due to years of struggles with FI$Cal, the state’s troubled financial management system that arrived late, ran wildly over budget and for years failed to produce trustworthy numbers.

The comprehensive report paints a far larger financial picture than the budget alone, covering 201 state agencies and programs. It shows $595.5 billion in total revenue and $582.5 billion in spending — about 66% more than the $351.7 billion reflected in the current state budget.

Among the report’s more sobering findings: California is carrying $176.5 billion in unfunded liabilities tied to state employee pensions and retiree health benefits. The document also offers detailed breakdowns of taxable sales, personal income trends and other economic indicators that shape state revenue.

One chart takes on new relevance amid the ongoing debate over Proposition 40, the ballot measure that would impose a wealth tax on California’s roughly 200 billionaires. Critics of the measure warn it could push high-net-worth residents to relocate out of state.

A chart on page 322 underscores just how much is at stake: it confirms that the state’s top 1% of earners — about 175,000 taxpayers — generate nearly half of all personal income tax revenue collected by California, a reminder of how heavily the state depends on its wealthiest residents to keep government running.

Original source: CalMatters

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