An array of charts buried in the fine print of the state budget, unknown to all but a few fiscal nerds, details what California has collected in revenues and spent over the last half-century.<\/p>\n
The current charts in Gov. Gavin Newsom\u2019s proposed 2026-27 budget<\/a> reveal how spending has exploded during his governorship, far outstripping stagnant population growth, inflation and even a hefty increase in revenues.<\/p>\n The result, according to both Newsom\u2019s Department of Finance and the Legislative Analyst Office, is a multibillion-dollar \u201cstructural deficit<\/a>,\u201d meaning that revenues cannot cover spending that Newsom and the Legislature have enacted.<\/p>\n \u201cBoth our office and the administration expect the state to face multiyear deficits, with estimates ranging from $20 billion to $35 billion annually,\u201d Legislative Analyst Gabe Petek says in his overview of the proposed budget.<\/a><\/p>\n \u201cThese deficits are concerning for three reasons. First, after four years of projected deficits and a cumulative total of $125 billion in budget problems solved so far, the state\u2019s negative fiscal situation is now chronic.<\/p>\n \u201cSecond, structural deficits have grown \u2014 our November outlook is the most negative forecast of the budget\u2019s position since the pandemic. Finally, deficits have persisted even as the state\u2019s economy and revenues have grown, underscoring that the problem is structural rather than cyclical. Taken together, these trends raise serious concerns about the state\u2019s fiscal sustainability.\u201d<\/p>\n The budget\u2019s historic charts are important because they support Petek\u2019s deficit warning and undercut politicians\u2019 temptation to shift the blame to economic conditions, emergencies such as the Los Angeles wildfires or reductions in federal aid by President Donald Trump.<\/p>\n In the seven budgets Newsom has signed, beginning with 2019-20, and the eighth one he has proposed, revenues have increased by 60%, mostly from taxes that tapped into a 48% increase in Californians\u2019 personal income during the period. Total spending, however, jumped 72%, from $203 billion to $349 billion.<\/p>\n During that same period, the state\u2019s population has been stagnant at 39.6 million while inflation at the national level<\/a> has been 29%, averaging 3.4% a year, with California\u2019s inflation slightly lower at about 3%.<\/p>\n In other words, revenues have increased at roughly twice the rate of inflation while spending has jumped even higher.<\/p>\n Those numbers are reflected in a nearly 28% increase in the state\u2019s workforce, from 376,990 to 481,850, as the budget expanded programs that were in place when Newsom became governor and added new categories. Spending on health care, especially for low-income Californians, has been one major driver, while constitutional formulas for financing public schools have been another.<\/p>\n Another chart<\/a> provides a clue to the massive error in revenue projections by Newsom\u2019s budget staff in 2022 which sparked the spending surge.<\/p>\n In 2021, as the state\u2019s economy began recovering from the COVID-19 pandemic shutdown and as billions of dollars in federal relief flooded the state, general fund revenues jumped 53% above the pre-pandemic 2019 level, topping $200 billion for the first time in history.<\/p>\n For reasons known only to themselves, Newsom and his aides assumed that the new revenues figure would be at least semi-permanent. It fueled Newsom\u2019s claim, as the 2022-23 budget was being finalized, that the state enjoyed a $97.5 billion surplus<\/a>, and his bragging that \u201cno other state in American history has ever experienced a surplus as large as this.\u201d<\/p>\n