California Budget Basics


The COVID-19 pandemic caused significant disruption to California as much of the economy temporarily shut down in March 2020. Since then, the state has experienced a quicker rebound than expected, but it has been very unequal as many low-income Californians remain out of work and have generally been more negatively impacted than higher-income residents. As a result, General Fund revenues have been much higher than expected when the state passed the 2020-21 budget in June 2020. As of May 2021, the Legislative Analyst’s Office estimates there is $38 billion in discretionary funds this year as a result of these higher revenues and lower-than-anticipated costs related to the pandemic. California has also received tens of billions of dollars in economic relief from the federal government, both directed to the state itself and passed through to Californians, such as the larger and extended unemployment benefits. Most recently, California has received an estimated $150 billion total ($26 billion in direct state aid) from the federal American Rescue Plan passed in March 2021.

To help provide further context on these tradeoffs and the budget status this year, Next 10's new California Budget Basics series provides a comprehensive overview of the various components of the California state budget—from healthcare and education to revenue and reserves. This series includes information on the enacted 2021-22 budget, including proposals from both the Governor and Legislature, along with key background facts and context.