Dan Walters
August 14, 2026
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.