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California state budget and finances

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California budget and finances
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General information
Budget calendar:
Annual
Fiscal year:
2015
State credit rating:
A (as of 2014)
Current governor:
Jerry Brown
Financial figures
Total spending (state and federal funds):
$221.3 billion (estimated for 2014)
Per capita spending:
$5,703 (estimated for 2014)
Total state tax collections:
$133.2 billion (2013)
Per capita tax collections:
$3,466 (2013)
State debt:
$778 billion (as of 2014)
Per capita state debt:
$20,449 (as of 2014)
State budgets and finances
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Total state expendituresState debtTax policy in California
Note: This page utilizes information from a variety of sources. As such, the currency of the information varies somewhat. The information presented on this page reflects the most recent data available as of February 2015.
Between fiscal years 2013 and 2014, total government spending in California decreased by approximately $6.6 billion, from $227.9 billion in fiscal year 2013 to an estimated $221.3 billion in 2014. This represents a 2.9 percent decrease. The cumulative rate of inflation during the same period was 1.58 percent, calculated using the Consumer Price Indices for January 2013 and January 2014. As of 2014, financial services firm Standard and Poor's had assigned California a credit rating of A.[1][2][3]
In fiscal year 2014, total estimated spending in California amounted to $221.3 billion. California ranked ninth in the nation for its state debt per capita, which stood at $20,449.

Spending

Definitions

The information below comes from the National Association of State Budget Officers (NASBO). These spending figures are broken into three broad categories in order to facilitate comparison between the states.[3]

  • State funds: State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
  • Federal funds: Federal funds are "funds received directly from the federal government."
  • Total spending: Total spending is calculated by adding together the totals for state and federal funds.

These figures exclude spending from the sale of bonds.

2014 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2014 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.[3]

In 2014 total estimated spending in California amounted to $221.3 billion. Estimated per capita spending amounted to $5,703.

Total estimated state spending, FY 2014 ($ in millions)
State State funds Federal funds Total spending Population Per capita spending
California $140,239 $81,059 $221,298 38,802,500 $5,703.19
Hawaii $9,612 $2,148 $11,760 1,419,561 $8,284.25
Nevada $5,903 $2,823 $8,726 2,839,099 $3,073.51
Oregon $20,175 $8,090 $28,265 3,970,239 $7,119.22
Washington $25,171 $9,102 $34,273 7,061,530 $4,853.48
Per capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census estimates.[4]
Source: National Association of State Budget Officers

Spending by function

See also: State spending by function as a percent of total expenditures
Breakdown of spending by function in FY 2013.
Source: National Association of State Budget Officers

State spending in California can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2013 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.[3]

In 2013 California dedicated a larger portion of its budget to public assistance, Medicaid and corrections than its neighboring states. The largest portion of its budget was dedicated to Medicaid at 25.1 percent.

State spending by function as a percent of total expenditures, FY 2013
State K-12 education Higher education Public assistance Medicaid Corrections Trans-
portation
Other
California 21.4% 6.6% 3.9% 25.1% 5% 6% 31.9%
Hawaii 15.5% 10.9% 0.8% 14.4% 2% 9.9% 46.5%
Nevada 22.3% 8.5% 0.6% 22.7% 3.2% 7.4% 35.3%
Oregon 14.3% 1.1% 0.7% 21.4% 3.9% 6.1% 52.6%
Washington 23.4% 14.3% 0.9% 11.9% 2.7% 8.9% 38%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Spending trends

Between 2009 and 2013, the portion of California's budget dedicated to Medicaid increased from 20.6 percent to 25.1 percent. See the table below for further details (figures are rendered as percentages, indicating the share of the total budget spent per category).[3][5][6][7][8]

Spending by function from 2009 to 2013 (as percentages)
Year K-12 education Higher education Public assistance Medicaid Corrections Transportation Other
2013 21.4% 6.6% 3.9% 25.1% 5% 6% 31.9%
2012 19.9% 7.0% 3.8% 21.6% 5.4% 6.3% 36.0%
2011 19.8% 7.7% 4.7% 24.2% 4.5% 4.3% 34.9%
2010 19.6% 8.1% 4.9% 18.9% 3.9% 5.3% 39.2%
2009 23.6% 7.7% 5.3% 20.6% 4.9% 4.1% 34.0%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Revenues

2013 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2013 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "population" and "per capita revenue" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "population" and "per capita revenue" have not been abbreviated).[9]

In 2013 California's total revenue collections amounted to $133.2 billion. Per capita collections equaled about $3,466.

State tax collections by source ($ in thousands)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes Total 2013 population Per capita collections
California $1,982,208 $48,074,580 $8,743,748 $66,809,000 $7,462,000 $112,710 $133,184,246 38,431,393 $3,465.51
Hawaii N/A $3,932,220 $230,189 $1,735,718 $123,661 $71,105 $6,092,893 1,408,987 $4,324.31
Nevada $235,143 $5,468,363 $586,801 N/A N/A $736,319 $7,026,626 2,791,494 $2,517.16
Oregon $19,893 $1,369,266 $923,123 $6,260,161 $459,744 $128,700 $9,160,887 3,928,068 $2,332.16
Washington $1,939,883 $14,647,173 $1,359,685 N/A N/A $720,303 $18,667,044 6,973,742 $2,676.76
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
California tax collections by source in 2013.
Source: Tax Policy Center

The table below lists 2013 tax collections by source as percentages of total collections. The bulk of California's collections were generated by individual income taxes, amounting to 50.2 percent of collections. Much of the remaining amount was generated from sales taxes and gross receipts.[9]

State tax collections by source (as percentages)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes
California 1.49% 36.10% 6.57% 50.16% 5.60% 0.08%
Hawaii N/A 64.54% 3.78% 28.49% 2.03% 1.17%
Nevada 3.35% 77.82% 8.35% N/A N/A 10.48%
Oregon 0.22% 14.95% 10.08% 68.34% 5.02% 1.40%
Washington 10.39% 78.47% 7.28% N/A N/A 3.86%
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014

Current fiscal year budget

See also: Historic California budget and finance information

Fiscal year 2015

DocumentIcon.jpg See budget bill: SB 852

Governor Jerry Brown announced his fiscal year 2015 budget proposal on January 9, 2014. Under the governor's proposal, total general fund spending for fiscal year 2015 would have equaled approximately $106.8 billion, an 8.5 percent increase over fiscal year 2014. Brown proposed a 9.5 percent increase in K-12 education funding over fiscal year 2014. The governor's budget proposal also included $1.6 billion for the state's rainy day fund.[10]

On June 20, 2014, Brown signed into law the fiscal year 2015 budget, which totaled roughly $156.3 billion, including approximately $108.0 billion in general fund spending (a 7.2 percent increase over fiscal year 2014). Brown exercised some line item vetoes.[10]

State debt

See also: State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, California had a state debt of approximately $778 billion. Its state debt per capita was $20,449. The report revealed that state governments faced a combined $5.1 trillion in debt. The obligation amounted to $16,178 per capita in the nation.[11]

Total state debt, 2014
State Total state debt State debt per capita Per capita debt ranking
California $777,918,403,000 $20,449 9
Hawaii $46,100,856,000 $33,111 2
Nevada $52,838,629,000 $19,152 13
Oregon $86,678,268,000 $22,229 8
Washington $89,579,477,000 $12,988 32
Sources: State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014

Public pensions

See also: California public pensions and California public employee salaries

A 2012 report from the Pew Center on the States noted that California's pension system was funded at 78 percent at the close of fiscal year 2010, below the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern."[12]

The funding ratio for the state's pension system decreased from 88.78 percent in fiscal year 2006 to 77.48 percent in fiscal year 2011, a decrease of 11.3 percentage points, or 12.7 percent. Likewise, unfunded liabilities increased from just over $47 billion in fiscal year 2006 to more than $133 billion in fiscal year 2011.[13][14][15]

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This in turn results in lower interest costs, thereby lowering the cost to taxpayers.[16][17]

The table below lists the Standard and Poor's credit ratings for California and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[18]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
California A A A- A- A- A A+ A+ A+ A A
Hawaii AA AA AA AA AA AA AA AA AA- AA- AA-
Nevada AA AA AA AA AA+ AA+ AA+ AA+ AA+ AA AA
Oregon AA+ AA+ AA+ AA+ AA AA AA AA AA- AA- AA-
Washington AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA AA AA
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014

Federal aid to state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[19]

The table below notes what share of California’s general revenues came from the federal government in 2012. That year, California received approximately $54.1 billion in federal aid, 27.2 percent of the state's total general revenues. Figures from surrounding states are provided for additional context.[19]

Federal aid to state budgets, 2012
State Total federal aid ($ in thousands) Federal aid as a % of general revenue Ranking
California $54,145,284 27.16% 40
Hawaii $2,352,114 23.55% 48
Nevada $2,798,426 25.48% 44
Oregon $7,830,552 36.04% 13
Washington $9,743,127 28.59% 37
Source: United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014

Stimulus

According to Recovery.gov, the official government website for the Recovery Accountability and Transparency Board, under the American Recovery and Reinvestment Act, California received $28,700,400,000.00 in federal funding between February 2009 and June 2013.[20]

Budget process

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:[21][22]

  1. Budget instructions are sent to state agencies beginning in April.
  2. Agencies submit their budget requests to the governor in September.
  3. Agency hearings are held from September through November.
  4. Public hearings are held from March through June.
  5. The governor submits his or her proposed budget to the state legislature in January.
  6. The legislature adopts a budget in June. A two-thirds majority is required to pass a budget. The fiscal year begins July 1.

California is one of 44 states in which the governor has line item veto authority.[22]

The governor is legally required to submit a balanced budget to the legislature. In turn, the legislature is legally required to adopt a balanced budget.[22]

Agencies, offices and committees

The following standing committees in the California State Legislature deal with budget and finance matters:

  1. Appropriations Committee, California State Assembly
  2. Appropriations Committee, California State Senate
  3. Budget and Fiscal Review Committee, California State Senate
  4. Budget Committee, California State Assembly
  5. Legislative Budget Committee, California State Legislature
  6. Revenue and Taxation Committee, California State Assembly

The California Controller is the state's accountant and bookkeeper. The controller oversees the funds in the treasury, administers payroll for the state's employees, and manages state aid for local governments. The controller is elected in midterm election years and is a partisan position.

The California State Auditor is the head of the California Bureau of State Audits, which conducts reviews of the finances of state agencies and investigates waste and misconduct within the California state government. The position is appointed by the Governor of California for a term of four years and is a nonpartisan position.

The California Treasurer manages the state's bank account and investments. The office is elected in midterm election years and is a partisan position.

Studies and reports

U.S. PIRG "Following the Money" report

See also: "Following the Money" report, 2014

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[23] According to the report, California received a grade of F and a numerical score of 34, indicating that California was "failing." in terms of transparency regarding state spending.[23]

Budget and finance ballot measures

See also: Spending and finance on the ballot and List of California ballot measures

Ballotpedia has tracked 80 ballot measures relating to state and local budget and financial matters in California.

  1. California Deficit Prevention Amendment (2012)
  2. California Proposition 1, Deposit of Moneys Belonging to the State (1912)
  3. California Proposition 1, Public Retirement Funds (1966)
  4. California Proposition 10, Loans from State Government to Corporations (1970)
  5. California Proposition 10, Post-Disaster Restoration of Private Property (1966)
  6. California Proposition 10, Proceeds from Sale of Land Grant Lands (1964)
  7. California Proposition 10, State Agency Claims and Budgets (1934)
  8. California Proposition 10 (June 1976)
  9. California Proposition 11, State Permitted to Own Shares in Mutual Water Companies (1940)
  10. California Proposition 12, Maximum Permissible Term of Statutory State Bond Issues (1956)
  11. California Proposition 12, State Budget Deadlines (1922)
  12. California Proposition 125, Allocation of Gas Taxes to Purchase of Railroad Equipment (1990)
  13. California Proposition 13, Allocation of Public School Funds (1946)
  14. California Proposition 14, Allowed Uses of Street and Highway Funds (1960)
  15. California Proposition 14, Apportionment of State Funds to Political Subdivisions (1940)
  16. California Proposition 15, Creation of a State Budget Board (1918)
  17. California Proposition 16, Annual Sixty-Day Legislative Sessions (1940)
  18. California Proposition 16, Repaying the City of Venice's Debts (1918)
  19. California Proposition 162, the "Pension Protection Act" (1992)
  20. California Proposition 165, the "Government Accountability and Taxpayer Protection Act" (1992)
  21. California Proposition 169, the "Budget Implementation Amendment" (1993)
  22. California Proposition 17, State Treasurer Trustee of Certain State Moneys (1942)
  23. California Proposition 18, Gas Tax and License Fee Revenues Used for Pollution Control (1970)
  24. California Proposition 18, State Funds Held in Trust by State Treasurer (1938)
  25. California Proposition 19, Rules Governing State Indebtedness (1934)
  26. California Proposition 19, Surplus Funds Distributed to War Veterans (1938)
  27. California Proposition 1A, Temporary Tax Increase (May 2009)
  28. California Proposition 1C, Borrowing Against Future Lottery Proceeds (May 2009)
  29. California Proposition 2, Annual Legislative Sessions and Budgets (1942)
  30. California Proposition 2, Deposit of Public Moneys (1918)
  31. California Proposition 2, Loans of Transportation-Related Revenues (1998)
  32. California Proposition 2, Per Pupil Subsidies to Public School Districts (1952)
  33. California Proposition 2, Rainy Day Budget Stabilization Fund Act (2014)
  34. California Proposition 2, State Government Allowed to Borrow Money (1935)
  35. California Proposition 20, State Funds for Hospital Construction (1952)
  36. California Proposition 21, Retirement and Pension Fund Investments (1984)
  37. California Proposition 22, Ban on State Borrowing from Local Governments (2010)
  38. California Proposition 23, Deposits of Public Money (1922)
  39. California Proposition 25, Majority Vote for Legislature to Pass the Budget (2010)
  40. California Proposition 3, Schedule for Submitting and Approving State Budget (1970)
  41. California Proposition 3, State Legislative Salaries and Per Diem Allowances (1949)
  42. California Proposition 31, Two-Year State Budget Cycle (2012)
  43. California Proposition 35, Call for a Federal Balanced Budget (1984)
  44. California Proposition 3 , Rules about Deposit of Public Moneys for Local Governments (1924)
  45. California Proposition 4, Public School Appropriations in Event of Delayed Budget (1970)
  46. California Proposition 4, the "Gann Limit" Initiative (1979)
  47. California Proposition 41, Limits on Welfare Spending (1984)
  48. California Proposition 45, Use of Credit Unions for State Deposits (1986)
  49. California Proposition 47, Vehicle License Fees Allocated to Cities and Counties (1986)
  50. California Proposition 48, Cap on Retirement Payments (1986)
  51. California Proposition 49, Funding for Before and After School Programs (2002)
  52. California Proposition 5, Funds Transfers to Political Subdivisions (1924)
  53. California Proposition 5, Public and Non-Profit Hospital Loan Guarantees (1968)
  54. California Proposition 51, Non-Economic Damages Assessed in Lawsuits (1986)
  55. California Proposition 53, State and Local Infrastructure Investment Act (October 2003)
  56. California Proposition 56, Lower Threshold Required to Pass the State Budget (March 2004)
  57. California Proposition 57, Bonds to Pay Off State Government's Deficit (March 2004)
  58. California Proposition 58, Balanced Budget Act (March 2004)
  59. California Proposition 6, Annual 60-Day State Legislative Session (1944)
  60. California Proposition 6, Deposit of Public Moneys (October 1915)
  61. California Proposition 6, Legislature to Convene Annually (1946)
  62. California Proposition 6, Rules Governing Pension Fund Investments (1982)
  63. California Proposition 60A, Surplus Government Property Sold to Lower Deficit (2004)
  64. California Proposition 7, Funds Allocated to Cities and Counties (1968)
  65. California Proposition 7, Los Angeles County Borrowing (1918)
  66. California Proposition 7, Pension Funds May Be Invested in Stocks and Shares (1964)
  67. California Proposition 7, State Aid for Disaster Relief (June 1980)
  68. California Proposition 71, State Government Spending Limitations (June 1988)
  69. California Proposition 76, Cap on Growth of State Budget (2005)
  70. California Proposition 8, Constitutional Provisions Dealing with State Fiscal Affairs (1949)
  71. California Proposition 8, Deposits of Public Money in Savings & Loan Associations (June 1976)
  72. California Proposition 8, Legislative Budget Session in February (1956)
  73. California Proposition 8, Municipality Maintenance Loans (1982)
  74. California Proposition 8, State Funds Allocated for County and Municipal Purposes (1938)
  75. California Proposition 88, Deposit of Public Moneys (1988)
  76. California Proposition 9, Bond Proceeds Fund for General Obligation Bonds (1962)
  77. California Proposition 9, Funds for Elementary Schools (1944)
  78. California Proposition 92, Funding for Community Colleges (February 2008)
  79. California Proposition 98, Mandatory Education Spending (1988)
  80. California Senate Constitutional Amendment 13 (2009)

Recent news

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Contact information

California Department of Finance
915 L Street
Sacramento, CA 95814
Telephone: 916-445-3878

See also

External links

Additional reading

References

  1. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  2. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 National Association of State Budget Officers, "State Expenditure Report: 2012-2014," accessed February 18, 2015
  4. United States Census Bureau, "State and County QuickFacts," accessed February 23, 2014
  5. National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  6. National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  7. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  8. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  9. 9.0 9.1 Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  11. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  12. Pew Center on the States, "Widening Gap Update: California," June 18, 2012
  13. California Public Employees' Retirement System, "2012 Comprehensive Annual Financial Report," accessed November 25, 2013
  14. California State Teachers' Retirement System, "2012 Comprehensive Annual Financial Report," accessed November 25, 2013
  15. University of California Retirement Plan, "2012 Actuarial Valuation Report," accessed November 25, 2013
  16. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  17. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  18. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  19. 19.0 19.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  20. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  21. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  22. 22.0 22.1 22.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  23. 23.0 23.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014