How does the state pay for building freeways, operating schools and other key functions? Through a mix of money: federal funds, state revenue from taxes and fees, and income from investments made by the state treasurer’s office.
It’s worth noting that a big chunk of total federal funding nationwide comes from California. A 2021 analysis by the California Budget & Policy Center found that collectively, California taxpayers — both individuals and businesses — contribute nearly $1 in every $6 in total net federal tax revenues.
The Legislature and the governor decide on the budget each year. But occasionally, you get to decide spending priorities. Proposition 98, for example, was approved by voters in 1988 and guarantees a certain level of spending for K-12 education.
While state government has enjoyed record surpluses and billions in federal COVID relief the last few years, the Legislature and governor must deal with a projected $31.5 billion budget deficit this year. Why the budget whiplash? The mix and volatility of state revenue sources is a key reason.
