California state budget and finances

California budget and finances

General information

Budget calendar: Annual

Fiscal year: 2017

State credit rating: AA- (as of 2017)

Current governor: Jerry Brown

Financial figures

Total spending (state and federal funds): $265,894,000,000 (estimated 2016)

Per capita spending: $6,774 (estimated 2016)

Total state tax collections: $155,231,252,000 (2016)

Per capita tax collections: $3,955 (2016)

State debt: $151,715,007,000 (2014)

Per capita state debt: $3,891 (2014)

State budget and finance pages • Total state expenditures • State debt • Tax policy in California

Note: In comparing dollar amounts across the states, it is important to note that the cost of living can differ from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis. This article, which is updated on an annual basis, was last updated in June 2017. It contains information from several sources; consequently, the currency of the information can vary from source to source.

In California, as in other states, lawmakers and public officials are elected in part to manage the state's finances. This includes generating revenues (money coming into the state from various sources) and approving expenditures (the money spent on governmental functions and servicing state debt). State budgets are complex and fluid, as they depend on anticipated revenues and planned expenditures, which may alter over the course of a fiscal year. If revenues do not keep pace with expenditures, states generally have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions are also influenced by policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, and issues at the local level, such as crime and the quality of education.

HIGHLIGHTS

Between fiscal years 2015 and 2016, total government spending in California increased by approximately $15.6 billion—from $250.3 billion in fiscal year 2015 to an estimated $265.9 billion in 2016. This represents a 6.2-percent increase.

In California in fiscal year 2015, 58.4 percent of total tax revenues came from income taxes.

Education accounted for 28.3 percent of state expenditures in fiscal year 2015, while 33.5 percent went to Medicaid.

The California state budget and financial data presented here come from different years because the states and the federal government report and publish information at different times. See the sections below for further information on the following topics:

1. Definitions: This section defines the terms used in state budgets and on this page.
2. Revenues: This section details the revenues of the state, as well as the sources of the revenues.
3. Spending: This section details the expenditures of the state, in amounts as well as by type of spending.
4. State debt: This section details the total outstanding debt in the state, as well as the debt per capita.
5. Economic indicators: This section details various factors that are used to measure the health of the state's economy, such as poverty rate.
6. Budget process: This section details the process involved in passing a state budget, as well as the agencies and groups that are involved in the process and a timeline of the process.
7. Budget and finance ballot measures: This section lists ballot measures in the state relating to the state's budget and other financial matters.
8. Budget and finance legislation: This section lists recent bills introduced by the state legislature relating to budget and finance matters.

Definitions

The following terms are used to describe a state's finances:

• Revenues come mainly from tax collections, licensing fees, federal aid, and returns on investments.
• Expenditures generally include spending on government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation.
• State debt refers to the money borrowed to make up for a deficit when revenues do not cover spending.
• The state credit rating is the grade given by a credit rating agency based on the general financial health of the state's government and economy.
• 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 are "funds received directly from the federal government."
• Total spending is calculated by adding together the totals for state and federal funds used for expenditures.

Revenues

2016 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.

State tax collections by source ($ in thousands), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes	Total	2016 population	Per capita collections
California	$2,513,157	$53,365,753	$8,551,427	$90,655,530	$145,385	$155,231,252	39,250,017	$3,955
Arizona	$943,008	$8,680,009	$482,362	$4,538,472	$32,524	$14,676,375	6,931,071	$2,117
Nevada	$280,055	$6,347,777	$651,067	N/A	$746,147	$8,025,046	2,940,058	$2,730
Oregon	$20,587	$1,532,190	$1,048,709	$8,299,887	$141,938	$11,043,311	4,093,465	$2,698
United States	$18,364,298	$442,909,995	$52,164,396	$392,286,910	$24,538,146	$930,263,745	322,762,018	$2,882.20
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed June 26, 2017

The table below lists 2016 tax collections by source as percentages of total collections. About 58.4 percent of California's total state tax collections came from income taxes.

State tax collections by source (as percentages), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes
California	1.6%	34.4%	5.5%	58.4%	0.1%
Arizona	6.4%	59.1%	3.3%	30.9%	0.2%
Nevada	3.5%	79.1%	8.1%	N/A	9.3%
Oregon	0.2%	13.9%	9.5%	75.2%	1.3%
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed April 4, 2016

Federal aid to the state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, mainly in the form of grants for such things as Medicaid, education, and transportation. In 2014, federal aid to the states accounted for roughly 31 percent of all state general revenues. Federal aid varies from state to state. For example, Mississippi received approximately $7.2 billion in federal aid in 2014, accounting for about 41 percent of the state's general revenues, the highest percentage of all of the states. By contrast, North Dakota received about $1.5 billion in federal aid in 2014, or just 17 percent of the state's general revenues, the lowest percentage in the nation.

The table below notes what share of California’s general revenues came from the federal government in 2014. That year, California received approximately $59.9 billion in federal aid, 26.0 percent of the state's general revenues. Taking into consideration the state's 2014 population, this came out to about $1,549 in federal aid per capita. Figures from surrounding states are provided for additional context.

Federal aid to state budgets, 2014
State	Total federal aid ($ in thousands)	Federal aid as a % of general revenues	Ranking (by % of general revenues)	Est. 2014 population	Aid per capita
California	$59,925,650	26.0%	43	38,680,810	$1,549
Arizona	$10,549,101	35.5%	11	6,719,993	$1,570
Nevada	$2,842,077	24.8%	46	2,833,013	$1,003
Oregon	$8,775,637	36.0%	10	3,968,371	$2,211
Sources: United States Census Bureau, "2014 State and Local Government Finances," accessed June 26, 2017 Note: Per-capita figures were generated by Ballotpedia by dividing total federal aid for the state by the estimated population of that state in 2014.

Spending

Estimated 2016 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2016 (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.

The total estimated government spending in California in fiscal year 2016 was $265.9 billion.

Total estimated state spending, FY 2016 ($ in millions)
State	State funds	Federal funds	Total spending	Population	Per capita spending
California	$169,765	$96,129	$265,894	39,250,017	$6,774
Arizona	$24,820	$15,809	$40,629	6,931,071	$5,862
Nevada	$7,543	$3,984	$11,527	2,940,058	$3,921
Oregon	$26,809	$10,317	$37,126	4,093,465	$9,070
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 Bureau estimates. Source: National Association of State Budget Officers, "State Expenditure Report (Fiscal 2014-2016)," accessed June 26, 2017

Spending by function

See also: State spending by function as a percent of total expenditures

State spending in California can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2015 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.

In fiscal year 2015, Medicaid accounted for 33.5 percent of California's total expenditures.

Spending by function from 2010 to 2015 (as percentages)
Year	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Transportation	Other
2015	21.1%	7.2%	4.0%	33.5%	4.9%	5.4%	23.9%
2014	21.3%	7.5%	3.6%	24.3%	5.3%	6.1%	31.9%
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%
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."

Spending trends

The table below details the spending trends in California in previous years. Figures are rendered as percentages, indicating the share of the total budget spent per category.

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State debt

See also: California state debt

State debt refers to any debt owned by a state government. Debt may include any financial obligations a state has that have not been paid, such as bonds issued by state governments, money borrowed by a state government that has not been repaid, or post-retirement benefits promised to state employees. According to the U.S. Census Bureau, California had a debt of $151,715,007,000 in fiscal year 2015. The state debt per capita was $3,891. This ranked California first among the states in debt and 14th in per capita debt. The total state debt owned by the 50 states was $1.15 trillion with a per capita debt of $3,582.

Economic indicators

See also: Economic indicators by state

California's GDP increased by 2.8 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.

California's median annual household income for years 2011 through 2013 was $57,161, highest among neighboring states. The state also had the largest percentage of residents that earned incomes of at least 400 percent above the federal poverty level.

Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

Various economic indicators by state
State	Distribution of population by FPL* (2013)				Median annual income (2011-2013)	Unemployment rate		Total GSP (2013)†
	Under 100%	100-199%	200-399%	400%+		Sept. 2013	Sept. 2014
California	15%	21%	28%	36%	$57,161	8.8%	7.3%	$2,202,678
Arizona	20%	23%	25%	31%	$49,698	8%	6.9%	$279,024
Nevada	17%	26%	28%	29%	$49,204	9.6%	7.3%	$132,024
Oregon	15%	19%	31%	35%	$54,066	7.6%	7.1%	$219,590
United States	15%	19%	30%	36%	$52,047	7.2%	5.9%	$16,701,415
* Federal Poverty Level. "The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $18,751 in 2013. This is the official measurement of poverty used by the Federal Government." † In millions of current dollars. "Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state." Source: The Henry J. Kaiser Family Foundation, "State Health Facts"

Budget process

State documents and agenciesBelow are links to official California budget and financial documents. The first is the state's Comprehensive Annual Financial Report (CAFR). A CAFR is a detailed presentation of a government entity's financial condition. This includes fiscal activities and balances for a fiscal year. The second link is to the state's relevant budget agency or office. California CAFR California budget agency

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

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.

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.

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.

Public Interest Research Group 2016 report

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 2016. The report, entitled "Following the Money," measured how transparent and accountable state websites were with regard to state government spending. 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.

Budget and finance ballot measures

Voting on state and local government budgets, spending, and finance
Policy
Budget policy
Ballot measures
By state
By year
Not on ballot
Local City budgets County budgets Spending limits School budgets

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

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

1. California Appropriations for Incurred Debt, Amendment 5 (1892)
2. California Debt Refund, Proposition 4 (1892)
3. California Deficit Prevention Amendment (2012)
4. California Deposit of Moneys Belonging to the State, Proposition 2 (1912)
5. California Deposit of Public Moneys, Proposition 15 (1914)
6. California Deposit of Public Moneys, Proposition 23 (1922)
7. California Deposit of Public Moneys, Proposition 2 (1918)
8. California Deposit of Public Moneys, Proposition 3 (1924)
9. California Deposit of Public Moneys, Proposition 6 (1915)
10. California Irrigation Districts, Proposition 24 (1926)
11. California Los Angeles County Funds, Proposition 7 (1918)
12. California Municipal Debt Limitations, Amendment 7 (1892)
13. California Payment of Bonds, Proposition 42 (1914)
14. California Proposition 1, Public Retirement Funds (1966)
15. California Proposition 10, Loans from State Government to Corporations (1970)
16. California Proposition 10, Post-Disaster Restoration of Private Property (1966)
17. California Proposition 10, Proceeds from Sale of Land Grant Lands (1964)
18. California Proposition 10, State Agency Claims and Budgets (1934)
19. California Proposition 10 (June 1976)
20. California Proposition 11, State Permitted to Own Shares in Mutual Water Companies (1940)
21. California Proposition 12, Maximum Permissible Term of Statutory State Bond Issues (1956)
22. California Proposition 125, Allocation of Gas Taxes to Purchase of Railroad Equipment (1990)
23. California Proposition 13, Allocation of Public School Funds (1946)
24. California Proposition 14, Allowed Uses of Street and Highway Funds (1960)
25. California Proposition 14, Apportionment of State Funds to Political Subdivisions (1940)
26. California Proposition 16, Annual Sixty-Day Legislative Sessions (1940)
27. California Proposition 162, the "Pension Protection Act" (1992)
28. California Proposition 165, the "Government Accountability and Taxpayer Protection Act" (1992)
29. California Proposition 169, the "Budget Implementation Amendment" (1993)
30. California Proposition 17, State Treasurer Trustee of Certain State Moneys (1942)
31. California Proposition 18, Gas Tax and License Fee Revenues Used for Pollution Control (1970)
32. California Proposition 18, State Funds Held in Trust by State Treasurer (1938)
33. California Proposition 19, Rules Governing State Indebtedness (1934)
34. California Proposition 19, Surplus Funds Distributed to War Veterans (1938)
35. California Proposition 1A, Temporary Tax Increase (May 2009)
36. California Proposition 1C, Borrowing Against Future Lottery Proceeds (May 2009)
37. California Proposition 2, Annual Legislative Sessions and Budgets (1942)
38. California Proposition 2, Loans of Transportation-Related Revenues (1998)
39. California Proposition 2, Per Pupil Subsidies to Public School Districts (1952)
40. California Proposition 2, Rainy Day Budget Stabilization Fund Act (2014)
41. California Proposition 2, State Government Allowed to Borrow Money (1935)
42. California Proposition 20, State Funds for Hospital Construction (1952)
43. California Proposition 21, Retirement and Pension Fund Investments (1984)
44. California Proposition 22, Ban on State Borrowing from Local Governments (2010)
45. California Proposition 25, Majority Vote for Legislature to Pass the Budget (2010)
46. California Proposition 3, Schedule for Submitting and Approving State Budget (1970)
47. California Proposition 3, State Legislative Salaries and Per Diem Allowances (1949)
48. California Proposition 31, Two-Year State Budget Cycle (2012)
49. California Proposition 35, Call for a Federal Balanced Budget (1984)
50. California Proposition 4, Public School Appropriations in Event of Delayed Budget (1970)
51. California Proposition 4, the "Gann Limit" Initiative (1979)
52. California Proposition 41, Limits on Welfare Spending (1984)
53. California Proposition 45, Use of Credit Unions for State Deposits (1986)
54. California Proposition 47, Vehicle License Fees Allocated to Cities and Counties (1986)
55. California Proposition 48, Cap on Retirement Payments (1986)
56. California Proposition 49, Funding for Before and After School Programs (2002)
57. California Proposition 5, Public and Non-Profit Hospital Loan Guarantees (1968)
58. California Proposition 51, Non-Economic Damages Assessed in Lawsuits (1986)
59. California Proposition 53, State and Local Infrastructure Investment Act (October 2003)
60. California Proposition 53, Voter Approval Requirement for Revenue Bonds above $2 Billion (2016)
61. California Proposition 56, Lower Threshold Required to Pass the State Budget (March 2004)
62. California Proposition 57, Bonds to Pay Off State Government's Deficit (March 2004)
63. California Proposition 58, Balanced Budget Act (March 2004)
64. California Proposition 6, Annual 60-Day State Legislative Session (1944)
65. California Proposition 6, Legislature to Convene Annually (1946)
66. California Proposition 6, Rules Governing Pension Fund Investments (1982)
67. California Proposition 60A, Surplus Government Property Sold to Lower Deficit (2004)
68. California Proposition 69, Transportation Taxes and Fees Lockbox and Appropriations Limit Exemption Amendment (June 2018)
69. California Proposition 7, Funds Allocated to Cities and Counties (1968)
70. California Proposition 7, Pension Funds May Be Invested in Stocks and Shares (1964)
71. California Proposition 7, State Aid for Disaster Relief (June 1980)
72. California Proposition 70, Vote Requirement to Use Cap-and-Trade Revenue Amendment (June 2018)
73. California Proposition 71, State Government Spending Limitations (June 1988)
74. California Proposition 76, Cap on Growth of State Budget (2005)
75. California Proposition 8, Constitutional Provisions Dealing with State Fiscal Affairs (1949)
76. California Proposition 8, Deposits of Public Money in Savings & Loan Associations (June 1976)
77. California Proposition 8, Legislative Budget Session in February (1956)
78. California Proposition 8, Municipality Maintenance Loans (1982)
79. California Proposition 8, State Funds Allocated for County and Municipal Purposes (1938)
80. California Proposition 88, Deposit of Public Moneys (1988)
81. California Proposition 9, Bond Proceeds Fund for General Obligation Bonds (1962)
82. California Proposition 9, Funds for Elementary Schools (1944)
83. California Proposition 92, Funding for Community Colleges (February 2008)
84. California Proposition 98, Mandatory Education Spending (1988)
85. California Rural Credits, Proposition 5 (October 1915)
86. California San Francisco Harbor Improvements, Proposition 48 (1914)
87. California Senate Constitutional Amendment 13 (2009)
88. California State Aid for Veterans, Proposition 1 (1922)
89. California State Aid to Institutions, Proposition 19 (1920)
90. California State Budget, Proposition 12 (1922)
91. California State Budget Board, Proposition 15 (1918)
92. California State Highways, Proposition 8 (1926)
93. California State Indebtedness, Amendment 29 (1908)
94. California Transfer of Funds, Proposition 5 (1924)

Budget and finance legislation

The following is a list of recent budget and finance bills that have been introduced in or passed by the California state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, no legislation pertaining to this topic has been introduced in the legislature recently.

Recent news

The link below is to the most recent stories in a Google news search for the terms California budget. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

California state budget and finances - Google News

Contact information

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

See also

• Historical California budget and finance information
• Tax policy in California
• California government sector lobbying
• California public pensions
• Governor of California
• California State Senate
• California House of Representatives
• California State Legislature

External links

• State Budget Solutions, California
• Department of Finance, California Budget for 2009-2010
• Department of Finance, California Budget
• California State Legislature
• California Budget Project
• Pacific Research Institute
• Independent Institute
• Model transparency legislation from the American Legislative Exchange Council
• National University System Institute for Policy Research

Additional reading

• U.S. PIRG, "Report: Transparent & Accountable Budgets," April 8, 2014
• The New York Times, "Battles loom in many states over what to do with budget surpluses," February 3, 2014
• Center on Budget and Policy Priorities, "Policy Basics: The ABCs of State Budgets," February 7, 2013