What California’s $99 billion bond debt could mean for taxpayers

California debt report shows $99.1 billion burden

California Debt & Investment Advisory Commission reports California is carrying $99.1 billion in state and local bond debt as of early 2026.

The figure comes as lawmakers face a projected $18 billion budget shortfall for the 2026 to 2027 fiscal year, increasing attention on long-term obligations.

The commission report states that $90.1 billion of the total is classified as long-term debt. This includes general obligation bonds and revenue bonds used to fund infrastructure, utilities, and public programs across the state.

California’s debt load rose 8.8% year over year

The California Debt & Investment Advisory Commission reports that the state’s debt load increased by 8.8 percent compared with the prior year. This growth occurred during a period when state revenues slowed, and budget gaps widened.

The report also shows that debt levels are now 11.6 percent higher than the five-year average. That comparison highlights that recent borrowing has accelerated faster than historical norms rather than leveling off.

State and local governments both added debt

The commission report separates debt into state-issued and local government-issued obligations. Local governments across California account for $71.3 billion of the total debt load.

Cities, counties, and regional agencies issued bonds primarily to support utilities, infrastructure, and energy projects. These local obligations still affect residents because they are often repaid through rates, fees, or local taxes.

The energy sector drives much of the new borrowing

Energy-related projects account for the largest share of recent debt growth, according to the commission report. Borrowing increased sharply to support electricity generation, transmission, and grid upgrades.

Electricity demand rose significantly between 2021 and 2024 in areas where artificial intelligence data centers were built or expanded. To meet that demand, energy agencies issued more bonds to fund new capacity and infrastructure.

Joint power authorities took on most energy debt

Government-run joint power authorities issued the largest share of new energy-related bonds, according to the commission. These agencies supply electricity to private utility companies across California.

The report states that roughly 40 percent of electricity used by private utilities is purchased through joint power authorities. These agencies are allowed to issue tax-free bonds, making borrowing cheaper.

Publicly owned utilities issued $21.2 billion

Publicly owned utilities issued $21.2 billion in bonds, according to the commission report. These utilities are typically operated by cities or local governments and serve specific regions.

Bond funds were used to upgrade systems, expand capacity, and support growing electricity demand. The report links much of this demand growth to data centers and energy-intensive operations.

Other electricity programs added $4.57 billion

Beyond joint power authorities and publicly owned utilities, other electricity supply programs issued more than $4.57 billion in bonds, according to the commission.

These programs include specialized agencies that support renewable energy procurement and grid services. Their borrowing adds to the overall debt footprint tied to California’s energy transition.

While each program serves a specific function, the report shows that their combined debt contributes to rising long-term obligations. Even smaller issuances accumulate when multiple agencies borrow simultaneously.

Silicon Valley Power plans $450 million upgrade

Public filings and news reports indicate the system upgrade is scheduled for completion in 2028, with bond financing expected to cover much of the cost and add to the utility’s long-term debt obligations.

According to the report, the system upgrade is scheduled for completion in 2028. Bond financing will be used to fund the project, adding to the utility’s long-term debt obligations.

Investor-owned utilities are excluded from the debt totals

Private utilities such as Pacific Gas & Electric were not included in the commission’s bond debt totals. Industry experts classify these companies as investor-owned utilities.

The report notes that private investor-owned utilities generally finance infrastructure through a mix of customer revenues, corporate borrowing, and equity, rather than the state and local municipal bonds tracked by the commission.

Because their debt is issued as corporate securities, it is not included in California’s state and local bond debt figures.

Lawmakers warn against using bonds for budgets

State Senator Roger Niello, vice chair of the Senate Budget and Fiscal Review Committee, warned against relying on bonds to address budget shortfalls. He said borrowing to cover general fund gaps is a grave mistake.

Niello emphasized that loans must be repaid and can worsen future budget problems. He cautioned that using bond markets to offset current fiscal challenges shifts costs to future taxpayers.

Economists cite long-term fiscal risk

Wayne Winegarden, a senior fellow at the Pacific Research Institute, said the rising debt signals growing fiscal risk. He described the trend as pushing problems into the future.

Winegarden acknowledged that borrowing can be appropriate for infrastructure projects. However, he stressed that bond-funded investments must deliver higher returns than their costs.

He said current debt growth, combined with existing obligations, could put California at risk of long-term fiscal trouble if returns do not materialize.

Lawmakers debate who should pay the costs

Some lawmakers argue that residents should not bear the cost of energy-related bond debt. Senator Jerry McNerney, chair of the Senate Revenue and Taxation Committee, said ratepayers and taxpayers should be protected.

McNerney said any financial burden should fall on companies generating profits from data centers. His comments point to an ongoing debate over how costs should be allocated.

For a consumer-level view of how costs shape daily life decisions, check out the 10 reasons why people regret moving to California.

Budget pressures make debt scrutiny urgent

The $99.1 billion debt figure lands just as the Legislative Analyst’s Office projects an almost $18 billion budget shortfall for 2026–27 and warns of growing structural deficits in later years.

Together, these pressures have intensified scrutiny of how much California borrows and how it uses those bonds.

Bond payments are fixed obligations that must be paid before many other priorities. As debt grows, flexibility in future budgets shrinks. The commission report shows that debt trends are moving upward rather than stabilizing.

For the national debate over borrowing and budget pressure, check out how Trump’s ‘One Big Beautiful Bill’ draws scrutiny over debt impact.

What do you think California’s $99 billion bond debt could mean for taxpayers? Please share your thoughts and drop a comment.

This slideshow was made with AI assistance and human editing.

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