The state budget is an obvious source for anyone interested in how California finances its programs.

However the budget, including the latest version enacted in June, is only a rough outline, a collection of suppositions and guesses, some educated, others politically motivated.

An obvious example is what happened four years ago when Gov. Gavin Newsom declared that California had a $97.5 billion surplus, bragging “no other state in American history has ever experienced a surplus as large as this.”

That number never appeared in the budget, but legislators immediately pumped up spending. The surplus turned out to be a mirage based on what officials later acknowledged was a $165 billion error in revenue estimates.

However, the spending increases were already in effect, leading to chronic, multibillion-dollar deficits ever since. Moreover, one piece of increased spending, the extension of health care coverage to undocumented immigrants, cost $6.2 billion more than assumed in the budget, resulting in cutbacks of coverage.

State Adds 100,000 Positions Under Newsom

While the budget itself is an imprecise source of financial information, its addenda provide troves of useful data for those savvy enough to find them. They reveal such statistics as how many employee positions the state has (482,088), a list of the state’s outstanding bond debts ($73 billion) and how much the state collects from dozens of specific taxes and fees ($328.4 billion).

One particularly interesting chart provides details on revenues and spending year-by-year, dating back to 1975. It reveals that income, outgo and the size of the state payroll remained stable relative to the growth in California’s population and personal income, until Newsom became governor in 2019.

Since then, the state has added about 100,000 positions to its payroll, increasing it by one-third, relative to population. State general fund spending rose from 7.9% of total personal income in 2019-20 to 9.58% in 2023-24, the highest ever recorded since 1975. It now stands at 9.42%.

Those numbers are why Newsom will be leaving his successor a very unbalanced budget — no matter what he claims. In fact, one addendum projects shortfalls lasting through the next governor’s first term, even if general fund spending remains virtually static, which it will not.

Where to Find the Real Numbers

Those seeking an even deeper understanding of the state government’s financial position have another source: The 372-page “Annual Comprehensive Financial Report” that the state controller’s office files with the federal government. Its numbers are rock solid because they have to be and are backed up by audits.

State Controller Malia Cohen issued the 2024-25 report in May, two months after the federal government’s deadline — but that was an accomplishment. The state hadn’t issued a timely report since 2018 because it was struggling with a new financial reporting tool, the Financial Information System of California, dubbed FI$Cal, that was years overdue, many millions of dollars over budget and incapable of generating accurate data.

The financial report covers a much broader array of state agencies (201) and programs than the budget, and therefore a much larger financial spread: $595.5 billion in revenue and $582.5 in spending — 66% larger than the $351.7 billion current state budget.

Among its revelations is that the state has $176.5 billion in unfunded liabilities for state employee pensions and retiree benefits, primarily healthcare. The report also contains detailed data about taxable sales, personal income and other economic sectors from which the state derives income.

Top 1% Pay Nearly Half of CA Income Taxes

One chart is especially timely, given the current debate over Proposition 40, a ballot measure that would impose a tax on the wealth of California’s approximately 200 billionaires. Opponents of the wealth tax argue it could impel one-percenters to leave the state if it passes.

A chart on page 322 hints at the ramifications, supporting the oft-quoted assertion that California’s top 1% of taxpayers by income — about 175,000 people — generate nearly half its income tax revenues.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.