Home>Articles>California’s Budget Black Hole: Where Did the $97.5 Billion Surplus Go?

Governor Gavin Newsom at the California and New Zealand Partner to Advance Global Climate Leadership press conference, San Francisco, CA, May 27, 2022. (Photo: Sheila Fitzgerald/Shutterstock)

California’s Budget Black Hole: Where Did the $97.5 Billion Surplus Go?

A review of California Governor Gavin Newsom’s State Budgets 2019-2023

By Katy Grimes, January 10, 2023 6:00 pm

In June of 2022, the California legislature passed Gov. Gavin Newsom’s $300 billion budget – the largest in state history.

In June 2021, the California Legislature passed Gov. Newsom’s $262.6 billion 2021-2022 budget.

In June 2020, the California Legislature passed Gov. Newsom’s $202.1 billion state budget, confirming state spending for the 2020-2021 fiscal year.

In May 2019, Gov. Gavin Newsom released his revised budget, highlighting the largest tax revenue windfall in California history. Gov. Newsom’s first budget approved in June of 2019 contained a record number of local pork-barrel projects injected by individual legislators into California’s largest state budget ever (at the time) of $215 billion. California Globe covered in great detail this record making budget.

For context, when Gov. Jerry Brown returned to office eight years earlier in 2011, his first state budget was $98 billion, and increased to $200 billion by 2018 — a 110 percent increase in eight years, with a population increase of just three million.

In just his first five months in office, Gov. Newsom increased the state budget $5 billion – even with a tax revenue windfall.

One year ago in November 2021 the Globe reported, “California will have a $31 billion surplus next year,” according to the 2022-2023 California state budget Fiscal Outlook report compiled by the Legislative Analyst’s Office.

The tide completely turned in one year.

By November 2022, the Legislative Analyst’s Office reported California revenue is $41 billion below expectations, likely resulting in a massive $25 billion shortfall in the 2023-2024 state budget. The LAO recommended lawmakers start cutting the budget as they begin the January session.

The perfect storm for a recession may be upon us with high inflation, high taxes, high energy costs, high food costs, a sizable budget deficit, and now tens of thousands of big tech layoffs, which is the other issue California lawmakers and governor need to address, the Globe reported. Meta, Twitter, Salesforce and Amazon are all cutting thousands of staff. The potential for, or early economic ramifications to the cities and counties in which they reside, as well as the state, and the ripple effect these could have on startups and investment banks, looks to be immense.

Apropos, Gov. Gavin Newsom presented a $297 billion 2023-2024 budget plan on Tuesday, just $3 billion less than last year, but with a projected deficit of $22.5 billion. That’s down from a stunning $97 billion surplus last year. Where did the surplus go?

The 2023-2024 budget is $82 billion more than Newsom’s first budget in 2019, which was $215 billion. And California is is not growing – the state is bleeding businesses and losing hundreds of thousands of residents to other states.

In 2019, State Sen. Jim Nielsen noted that the state budget was flush $21 billion in surplus revenue. “But that’s not enough for some in the majority party,” Nielsen said. “They want more. They want to raise taxes on water, fertilizer, dairy, tires, guns and businesses.” Nielsen asked, “Why does the state need to raise taxes when there’s $21 billion in surplus? They are spending their way into another crushing deficit that will harm the poor, blind and disabled, and squeeze the middle class once again.”

Sen. Nielsen was right – that spending was the pork-barrel projects injected by individual legislators into California’s 2019-20 state budget.

Responses to Gov. Newsom’s 2023-2024 budget

Remember, last year California Democrats spent a historical budget surplus of $97 billion. “California Governor Gavin Newsom said Friday that his state has a record $97.5 billion operating surplus, as high tax rates on its wealthiest residents mean he has more cash to fund liberal priorities such as education and health care,” Bloomberg reported just last May. “That figure surpasses the staggering $38 billion that they had at their disposal during the previous budget season, then considered the biggest.”

How exactly did the governor and State Democrats make a $125 billion swing in revenue in one year from budget surplus to budget deficit?

“Where did that f-ing money go?” one local taxpayer asked me Tuesday as we discussed the budget.

According to Bloomberg, Newsom’s spending plans included:

  • $11.5 billion to every eligible registered vehicle owner, capped at two $400 checks per individual
  • $2.7 billion for emergency rental assistance
  • $2 billion for affordable housing production
  • $1.4 billion for overdue utility bills
  • $933 million for hospital and nursing home staff
  • $750 million for free public transit
  • $125 million to bolster access to reproductive health services

The Globe will research exactly how the surplus was spent.

Senator Shannon Grove (R-Bakersfield) responded to Gov. Newsom’s 2023-24 state budget proposal:

“Governor Newsom’s budget is a band aid on the damage that his over-taxing, over-regulating, and over-spending has done to California’s families and businesses. His budget continues to push the same policies that have resulted in the highest cost of living, the highest poverty, historically high crime rates and a worsening homeless crisis. Where is the accountability? He has spent $30 billion of our tax dollars on housing affordability proposals, but California still has the most unaffordable housing market in the country. Tens of billions have been spent on homelessness but California has the nation’s highest number of homeless.”

Gov. Newsom says he “prioritized the issues that matter most to Californians — despite declining revenues.” Oh, and he’s “transforming education.” Yikes.

One Twitter follower replied, “Transforming education by what, adding a daycare? Seriously? How about improving math and literacy scores?”


Assemblyman Vince Fong (R-Central Valley), Vice Chairman of the Assembly Budget Committee said:

“The Governor’s rhetoric does not match reality. Facing a $22 billion deficit, Governor Newsom’s budget continues his misguided habit to overspend with little accountability. Newsom’s budget again fails to adequately build water storage and conveyance infrastructure to store water and move it across the state. And this budget framework perpetuates ill-conceived energy policies that will stifle needed affordable and reliable energy supplies when Californians are demanding relief.”

Assembly Republican Leader James Gallagher (Yuba City) said:

“Democrat politicians have wasted a record surplus on new social programs and pork projects, while allowing our aging infrastructure to crumble. Now we are faced with a $22 billion deficit as a result of their fiscal recklessness. It’s high time we refocus our budget on the core functions of government.”

“As California bounces between flooding and drought, it is abundantly clear that we need new water storage, and yet there is still no dedicated funding this year or next to meet that need. Instead the Governor protects failed programs that haven’t made a dent our state’s highest-in-the-nation poverty rate.”

Senate Budget Vice Chair, Senator Roger Niello (R-Fair Oaks) said:

“California’s assumption of unending higher revenue, combined with overspending on misguided priorities, led the state down the path to the deficit we have today. And this is in contrast to other states that are considering tax rebates at this same time.”

“Republicans fought to fill the Rainy Day Fund, and we applaud today’s commitment to not tap into it. Recent on-going spending by the governor must be re-evaluated. The governor continues to celebrate how much he spends, but California has yet to see the results.

California Senate Minority Caucus Chair, Senator Janet Nguyen (R-Huntington Beach) released this statement prior to Governor Newsom’s budget proposal announcement:

“Drive down the street,” said Senator Nguyen. “Turn on the news. Go to the gas pump. There are harsh realities facing Californians up and down this state. Taxpayers cannot afford more empty promises and failures. We want results.”

Under Gov. Newsom’s watch, homelessness has increased exponentially, crime is historically high, freedoms have been restricted, taxes greatly increased, non citizens receive health care for free, public school kids’ math and literacy scores are in the toilet, the government-created water shortage has gotten worse…

And where did the $97.5 billion budget surplus go? Certainly not back into the pockets of the people who pay for everything…

The Globe will delve into California’s budget black hole and report back.

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19 thoughts on “California’s Budget Black Hole: Where Did the $97.5 Billion Surplus Go?

  1. Until we fight back and DEMAND ELECTION INTEGRITY, and get RID of the damn Demoninion Voting Systems, we will be at the mercy of these Communist Demoncrats, who have no idea about fiscal responsibility, or effective infrastructure management.
    Instead, they flout their virtue with social programs to benefit the small vocal minority, while ruining life for the silent majority…
    I firmly believe that our elections are rigged, the voting rolls are corrupted and this state is going to seize up sooner, rather than later, due to FEDERAL energy and fiscal policy that is intended to crash the economy to introduce CBDC’s and ultimate centralized command and control, but Newsom is taking his instructions (and likely payments) from the NWO/WEF globalist cabal…
    Be ready, as a storm is brewing….

    1. Very well said! Every word extremely factual!
      I am hoping against hope when he runs for President the rest of the country will take a long hard look at the poor state of affairs here and realize he would just be an extension of Biden’s piss poor democratic policies that are treasonous and destroying our country as a whole! One can dream I guess or we can all get fed up enough to try and make the United States a great place to live again!

  2. Ask that state official, I forget her name, the one that pays the bills, but won’t disclose what she’s paid; ask her where the money is. But the truth is, there never was a surplus. oh, lets look at the hi-speed rail’s accounting books to see where some of the money is.

  3. I seriously doubt there ever was a surplus. More like tricky book keeping that would land you or I in jail if we did it.

  4. Katy rightly asks where did that $97.5 billion surplus go that Newsom was always bragging about? Newsom and Democrats making California a sanctuary state by providing taxpayer funds for illegals, abortions, criminals, transgenders, and unstainable zero emission goals while chasing out employers and productive taxpayers has finally home to bite them?

  5. Extremely grateful for Katy Grimes’ commitment to sniffing out and reporting the details of this Dem-created meth-fueled horror-show. And for pledging to get to the bottom of the mysterious missing $97.5 BILLION surplus. Looking forward to the next chapter. It won’t be pretty but we have to know.

  6. Why is that narcissist still in office? He needs to be brought before a tribunal and be held accountable for crimes against humanity for locking healthy Californians and small businesses down (while excluding himself and his cronies) during the scamdemic and for mandating experimental mRNA shots that have injured and killed thousands of innocent Californians. He and his soul have a lot to answer for?

  7. With an estimated a trillion dollars or more in unfunded pension liabilities for government employees, California never had a budget surplus as Gavin Newsom erroneously claimed.

  8. Most of what’s wrong with California originates from the bay area.

    The Getty family can’t bail him out this one.

  9. Gav won’t be able to run California without Nancy’s (u.s.taxpayer’s) check book.
    DJT took a lot of the money away (health care), Nancy and Joe gave it back to him.
    We will have to see if Kevin gives it back to him to bail his sorry ass out once again.
    At the end of the day though this will haunt his political ambitions.

  10. Disgraceful.
    If any one of us were to run our household or business budgets with wasteful spending and no money in the bank we would be put onto the street. Funny how this state is looking like one continuous skid row.
    Thank You Katy for your diligence, meanwhile the MSM will sing California’s praises of the freedom to kill babies and be the enablers of the drug dependents living on the streets!
    My crystal ball predicts higher state taxes for all!

  11. Liberalism is a mental disorder.

    I would like to ask my fellow Californians – what extra services have your received from the state budget swelling to over $300B

    Even in small city USA here on the centrall coast our city streets are a mess (before the storm) and have homless zombies everywhere, just like you only used to find in San Francisco….

  12. Eventually Facebook and Google are going to have their business model challenged. How long before the courts ask “How can you sell user data without reimbursement, or at the least, informed consent?”

  13. So we have a man made budget crisis again in Cali? Are we surprised?
    California is most devastated by the heavy toll, with a whopping $23 billion…apparently, there’s your solution.
    SEAL the border. Quit allowing people who break immigration laws to benefit off the backs of Cali Tax payers.
    Problem solved.

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