Gov. Gavin Newsom will leave office next January with the state in a fiscally precarious position. The data are in his budget proposal for fiscal year 2026-27, which begins July 1. There are two key numbers I have used for 25 years in my analyses of state budgets.
The first is general fund spending as a percentage of personal income, shown this year in Schedule 6 on Appendix page 12. Perusing the numbers years ago, I realized whenever that number rose above 6.2%, the state ran into fiscal trouble. When Gov. Gray Davis splurged on revenue from the dot-com boom, the number soared, from 6.0% in Gov. Pete Wilson’s last budget, for 1998-99, to 6.88% in 2000-01.
When the dot-com bust hit in early 2000, the excess spending could not be supported. In May 2002, Davis announced a deficit of $23 billion. That crisis contributed to his recall a year later and replacement by Gov. Arnold Schwarzenegger – who repeated the folly.
Arnold’s original prudence was followed by overspending. That key personal-income number rose from a sensible 6.04% in 2004-05, to 6.76% in 2006-07, just before the subprime meltdown. He exited office in 2011 with a $23 billion deficit and a record $13 billion tax increase.
Gov. Jerry Brown in both his stints as governor knew how to craft a sensible budget. From the first budget of his second term in 2011-12, to his last in 2018-19, the highest for my key number was 5.82% in 2014-15. As lieutenant governor during that time, Newsom seemed to have learned. His first two budgets clocked 5.56% and 5.87%, well below the 6.2% threshold.
Then in 2021-22 the key number soared to 7.21%. Spending rose from $194.6 billion to $232.5 billion. That was during COVID, so give him a pass. Unfortunately, since then, the average of my key number from 2022-23 to 2026-27 is 6.61%. For the 2026-27 proposal, it’s 6.66%. Newsom is projecting a $3 billion deficit.
No wonder the Legislative Analyst’s Office, in its Jan. 12 overview of the proposal, called the future “alarming,” projecting deficits “ranging from $20 billion to $35 billion annually.”
The reason for the overspending is shown with our second figure from Schedule 6, the number of state employees per 100,000 population. Frugal Jerry Brown averaged 9.3. Newsom goosed that to 12.2 in his new proposal, a 31.2% increase.
The raw numbers are shocking: 376,990 state workers in Brown’s last year, to 481,850 in Newsom’s proposal. That’s an increase of 104,860, or 27.8%. Yet California’s population, according to a December report by Newsom’s Department of Finance, was 39.53 million in 2019 – and 39.53 million in 2025.
A charge against King George III from the Declaration of Independence comes to mind: “He has erected a multitude of new offices, and sent hither swarms of officers to harass our people, and eat out their substance.”
Of course, all those “swarms of officers” have come in handy boosting Newsom’s elections, including last November’s passage of his Proposition 50 gerrymandering scheme. And the public-employee unions in the 2028 primary states surely will take notice.
There’s also an old saying in politics: It’s better to be lucky than good. The only reason the deficits aren’t soaring from so much overspending was explained right in Newsom’s budget. To pay for the excessive spending, the revenue “surge is attributable … to investor enthusiasm in artificial intelligence.” But “history indicates that these surges cannot be sustained indefinitely.”
Newsom is like one of those California State Lottery winners who blows millions in a few months and again is broke. Only in that case, at least it’s the winner’s own money. For his last irresponsible budget, Newsom is blowing our money. And if the inevitable budget disaster strikes in two years, he’ll be gone campaigning in the snows of New Hampshire.
John Seiler is on the SCNG Editorial Board. He also writes at johnseiler.substack.com