California vs. Other States
How does California's budget compare to other states? California represents the eighth-largest economy in the world and its 38.8 million residents give it the largest population in the United States. California is not alone in its fiscal challenges. During the recession the depth of cuts in state and local government employment have been unprecedented according to the Rockefeller Institute of Government. Citing data from the U.S. Bureau of Labor Statistics, the institute reported that while private sector employment has been recovering since the Great Recession, state and local governments have continued to shed jobs. After reaching peak employment levels in August 2008, cuts in state and local government employment have continued except for education. The institute also reported that after falling short in the first half of 2014, state tax revenues resumed growth in the third quarter of 2014.
According to the Tax Foundation, California’s total state and local tax burden in 2011 ranks 4th highest nationally, at a rate of 11.4% of per capita income compared to the national average of 9.8%. According to the California Budget and Policy Center, we ranked 10th in 2009-10 for total state and local taxes as a share of personal income.
Data on the poverty rate from Compare50.org ranks California 13th of 50 states, with 15.6% of residents living in poverty. Mississippi ranks highest and New Hampshire lowest.
Comparison of Tax Rate by Type
- California has among the highest income tax rates for upper-income households and one of the lowest income tax rates for lower-income households. The top 1% of income taxpayers in California account for over 40% of income tax revenue.
- California has an above-average state sales tax rate, but taxes few services compared to other states.
- California has one of the highest corporate income tax rates and ranked 4th among the states in terms of per capita corporation tax revenues.
- California has below-average property tax rates, but because of higher property values, in 2009, Californians paid $1,465 per capita in property taxes compared to the national average of $1,388.
- California collects revenue much differently than other states. In many states, property taxes represent a greater proportion of revenues than income taxes. But the situation in California is reversed due to Proposition 13, which limits property tax rates, and its highly progressive income tax structure.
California spends more total dollars for public services than other states largely due to its large population, so per-person (or "per capita") comparisons are the most useful. California's total education spending is among the highest in the nation, but ranked 40th in per pupil spending for 2011-12 school year. Looking at the ratio of state and local government employees per 10,000 residents in 2011, California ranked the 5th lowest, with 467 state and local full-time equivalent employees per 10,000 residents. The national average was 525. California also ranks 5th lowest when comparing only state government employees among states.
On the other hand, California spends more per capita than other states on higher education, public safety and some social services.