Answers to Questions.

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Around 300 Billion.

To fund our state government, California collects nearly $300 billion annually. A rough breakdown of where that massive sum comes from shows our heavy reliance on a few key streams: about 60% comes from Personal Income Tax (PIT), roughly 20% comes from Sales Tax, and the remaining 20% is made up of corporate taxes and Special Funds (which are legally restricted pots of money funded by specific fees, like the gas tax for transportation or licenses for regulatory agencies).

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Both.

Our Personal Income Tax is highly progressive. The top 1% of earners pay up to half of all income tax revenue, and the top 10% pay a whopping 75%—a massive share reflecting their outsized portion of state income. However, a look at the overall tax burden reveals a more complex reality. When you flip to the highly regressive costs of sales tax and fees, the burden evens out across the board. In terms of overall percentage of income, the latest data shows the bottom 20% devote about 12% of their income to state and local taxes, the middle 20% actually do a bit better at around 10%, and the top 1% pay roughly 12%. Ultimately, the progressive income tax is heavily flattened by the regressive sales taxes and fees we all pay simply to live here.

While the raw percentages of income spent on taxes are similar across brackets, the real-world sacrifice is not. Ultimately, the pain of not renting the fancier Airbnb of one’s choice doesn’t compare to the pain of going dark due to the high cost of electricity.

It is also worth noting that measuring tax burden by taxable income does not capture total wealth accumulation. Higher-income households, particularly the top 10%, often experience significant financial growth through capital gains, unrealized investments, and tax-advantaged retirement accounts. Because much of this growth is not classified as taxable income, analyzing state revenue solely through the lens of income tax provides an incomplete picture of overall economic capacity.

Still, it is undeniable that the massive income and wealth generated by our most profitable sectors are critical to the state. This economic engine is the primary driver of California’s revenue stream—both directly through outsized income tax contributions, and indirectly by elevating salaries and economic activity across all other sectors.

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Schools, healthcare... and the infrastructure that holds the state together.

Here is a rough breakdown of where California’s nearly $300 billion in state revenue goes each year:

1. K-12 Education & Community Colleges (~$80 Billion): A legally mandated chunk of the state budget goes directly to public education. (Note: When you add in local property taxes, total school funding pushes well past $115 billion).
2. Health and Human Services (~$85 Billion): This funds the state’s share of Medi-Cal (which covers roughly a third of Californians), public health programs, and the broader social safety net.
3. Transportation (~$30 Billion): Heavily funded out of special funds (like the gas tax), this maintains highways, local roads, and public transit infrastructure.
4. Higher Education (~$25 Billion): Funding for the University of California (UC) and California State University (CSU) systems, as well as state financial aid.
5. Corrections and Rehabilitation (~$18 Billion): Funding for the state prison system, parole operations, and rehabilitation programs.
6. Everything Else (~$27 Billion): The remainder covers Natural Resources (environmental protection, state parks, wildfire management), housing initiatives, the judicial branch, and general government administration.

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Maybe.

Prior to 1978, local property taxes paid for almost everything. But Proposition 13 capped those taxes, forcing the state to aggressively step in and fund schools from general revenue to make up the difference.

Today, the state sets a funding target for every student. For property-rich cities like Palo Alto or San Jose, local property taxes generate more than enough to meet that target, making them largely self-sufficient.

Conversely, cities like Stockton or Oakland do not generate nearly enough local property tax. In fact, for most school districts across California, the state steps in to pay the bulk of the costs.

However, all schools—even the wealthiest—receive at least some state money for legally targeted programs like special education.

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Actually, no.

The roughly $115 billion in state and local funding spent on K-12 education is allocated primarily toward operations. This covers recurring expenses such as teacher and staff salaries, textbooks, and daily utility costs.

Funding for the construction and maintenance of school facilities comes from a different source entirely: capital expenditures. When districts need to build new schools or modernize existing ones, they typically issue debt.

The primary mechanism for this is local general obligation bonds, which require local voter approval and are repaid through property tax assessments. The state also provides matching funds for these projects, which are financed through statewide bond measures.

California’s school facility needs are significant. Estimates suggest the state requires $3 billion to $4 billion annually for routine maintenance, with projected construction and modernization needs exceeding $115 billion over the next decade. In response to these requirements, local districts have issued over $100 billion in facility bonds in recent decades.

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Because of state mandates and market economics.

The sheer size of modern textbooks is primarily driven by state curriculum requirements. California is one of the largest textbook markets in the country, and its state educational frameworks are exceptionally broad. In order for a textbook to be approved for state adoption, it must check the box on hundreds of highly specific academic standards.

To ensure their books pass these exhaustive checklists, textbook publishers simply include everything. Furthermore, market economics strongly incentivize publishers to create “one-size-fits-all” editions that satisfy the combined mandates of multiple large states simultaneously. This dynamic results in massive, encyclopedic volumes that also serve to justify premium price tags.

This approach to instructional materials has a significant financial impact. Curriculum adoption is a major recurring expense. Between state-allocated block grants—which frequently range from $1 billion to $3 billion—and massive local district expenditures, billions of dollars are collectively spent across California just to purchase these mandatory, newly updated materials. With 5.8 million public school students in the state, replacing just one core subject’s textbooks can command nearly a billion dollars in local district spending alone.

After all, fundamental concepts like F=ma, work as F·d, and kinetic energy as ½mv²—along with a few pages of clear explanation—cover a large fraction of high school physics. Yet an out-of-touch State Board of Education maintains a constant drive to reinvent the curriculum—an approach that is neither effective nor financially efficient. And if, despite all this spending, our kids still aren’t learning the material, it is not right.

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The California Department of Corrections and Rehabilitation (CDCR) currently employs approximately 61,200 people. Out of roughly 260,000 total state employees, this means nearly 1 in 4 work within the prison system.

Contextualized against a declining prison population of roughly 90,000 inmates, California employs two staff members for every three incarcerated individuals.

Consequently, the CDCR budget exceeds $14.5 billion annually, which now equates to over $161,000 per inmate. For scale, tuition, room, and board at Stanford University costs around $90,000 per year. For an interstate comparison, New York spends approximately $116,000 per inmate annually.

This suggests structurally high administrative costs that warrant careful auditing, particularly when evaluating resource allocation against other core state missions like public education.

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A comparative look at New York—a state with similar demographic density and complex urban centers—provides useful insight.

In terms of public safety outcomes, New York’s violent crime rate is roughly 380 per 100,000 residents. California’s rate is notably higher, at approximately 480 per 100,000 residents.

Despite the higher crime rate, California also maintains a proportionally larger prison population. California incarcerates roughly 230 individuals per 100,000 residents, whereas New York incarcerates about 165 per 100,000.

In summary, California dedicates a massive percentage of its workforce and budget to incarcerating 40% more people per capita than New York, yet experiences a 26% higher violent crime rate. The correlation between this high bureaucratic expenditure and the intended societal outcomes appears weak.

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New York’s prison population has plummeted by over 50% since 1999—not by accident, but through specific structural policy choices that California has struggled to emulate efficiently.

First, New York functionally overhauled its drug laws, eliminating strict mandatory minimums for most non-violent drug offenses and aggressively expanding verifiable diversion-to-treatment programs. Today, drug offenses make up fewer than 10% of their prison population.

Second, they reclassified significant swaths of low-level, non-violent crimes into civil infractions. This structural effort to “defelonize” minor offenses stopped the cycle of arrests and re-incarceration for non-violent behavior.

Third, their courts rely heavily on robust ‘Alternatives to Incarceration’ (ATI) programs. For cases involving substance abuse or mental health crises, judges increasingly bypass state prison entirely, instead mandating individualized, community-supervised treatment plans.

Because these community interventions largely worked, the underlying crime rates ultimately dropped alongside the prison population. New York has proven that a state can drastically lower incarceration rates without sacrificing public safety, provided the government commits to focused, verifiable diversion programs rather than endlessly funding a massive prison bureaucracy.