California budget swells 70% under Gov. Gavin Newsom

This week, Democratic legislators approved a state budget — Gavin Newsom’s last as governor.

When Newsom took office in 2019, California’s budget totaled approximately $209 billion. The budget he and the Legislature are now sending to his desk comes in at roughly $356 billion. In seven years, total state spending has increased by nearly $147 billion — a staggering 70% increase (40%, after inflation).

That is not merely a budget increase. It is a governing philosophy expressed in dollars.

California’s population did not grow by anything close to 70% during those years. Inflation did not come close to that either. State government grew because the political conditions existed to make it grow.

When a liberal governor sits down with liberal supermajorities in both the State Senate and State Assembly, the result is not difficult to predict. More programs become permanent. Temporary spending becomes ongoing spending. Every surplus becomes an excuse to expand government rather than prepare for the downturn that eventually follows every economic expansion.

The state spent tens of billions of dollars addressing homelessness, yet California still has the nation’s largest homeless population. Medi-Cal spending climbed to record levels and has become one of the major drivers of the state’s budget pressure. Education spending continued rising even as enrollment declined in many districts throughout the state.

This is not complicated. Sacramento demanded more money, spent more money, and promised better results. Yet the core failures remain: homelessness, affordability, weak schools, rising energy costs, insurance instability and basic quality of life.

Taxpayers are entitled to ask what exactly they received in exchange for an additional $147 billion in annual spending.

California has built one of the most progressive — and volatile — tax systems in America. In boom years, stock market gains, IPO activity and investment income can flood Sacramento with revenue. That money feels permanent when it arrives, but much of it is tied to financial markets that can reverse quickly.

That is the trap. Sacramento builds ongoing programs with revenues that may not continue. When markets rise, politicians expand government. When markets fall, capital gains disappear, tax receipts drop, and the state suddenly discovers that permanent spending commitments were built on temporary money.

Put plainly, California’s budget does not simply rise and fall with the economy. It rises and falls with the stock market.

The volatility would be risky enough on its own. But California’s political class has added another danger: It increasingly treats wealth creation as something to punish rather than protect.

Just the mere possibility of California imposing a billionaire wealth tax has already sent a message to the taxpayers Sacramento depends upon to keep the money flowing. You may be next. California has already watched entrepreneurs, investors and business leaders leave for states with lower taxes and less hostility toward success. Whether Sacramento likes it or not, the people capable of paying the largest tax bills are also among the people most capable of leaving.

Building a $356 billion government while telling your largest taxpayers that they are the enemy is not fiscal planning. It is wishful thinking.

For much of the Newsom era, California benefited from technology booms, surging markets and extraordinary capital gains revenues. Sacramento treated those revenues not as temporary windfalls, but as the new normal.

But the bigger issue is not simply whether California can afford a $356 billion government.

It is whether Californians should want one.

America was founded on a very different idea: That free people, families, communities, businesses, religious institutions, and civic associations should carry the primary responsibility for building prosperous lives and strong communities, with government serving as a limited backstop rather than the central actor in every aspect of society.

California’s political leadership has embraced a different vision. Under Gov. Newsom and Democratic supermajorities, the assumption increasingly seems to be that every problem requires another program, another subsidy, another bureaucracy, and another demand on taxpayers.

Seven years later, the bill has arrived.

And so has the question of whether a government this large, this expensive, and this dependent upon perfect economic conditions was ever sustainable in the first place.

Jon Fleischman, a longtime strategist in California politics and a lifelong baseball fan, writes at SoDoesItMatter.com.

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