How California dug out of a $54 billion shortfall during the pandemic.

California is expecting a roughly $15 billion budget surplus next fiscal year, which runs from July through June, according to its most recent forecast. The state is so flush that it is now running its own stimulus program, writing one-time checks of $600 or $1,200 to poorer households and spending some $2 billion on aid for small businesses.

Less than a year ago, the state was facing a $54 billion shortfall, Matt Phillips reports for The New York Times. Here’s how the state’s fortunes were turned around:

• Almost half of the personal income taxes that California collects comes from the top 1 percent of the state’s earners. Since much of that group’s income comes from stock holdings and stock-based compensation, their fortunes are tied to the performance of the stock market. After hitting a bottom in March 2020, the S&P 500 is up nearly 90 percent, creating close to $17 trillion in paper gains.

• Last year, 457 companies sent public, raising $167.8 billion, both records, according to Dealogic. Almost a quarter of those dollars were destined for the 100 California companies that made the jump — the most of any state.

• The governor’s office projects that revenue from capital gains taxes next fiscal year will top $18 billion, a key driver of the state’s surplus. “With Silicon Valley, when entrepreneurs get stock grants that they exercise, or stock options, California makes out very well,” said David Hitchcock, the primary analyst on California for bond-rating firm S&P Global.

• California’s budget rebound was aided by larger-than-expected federal government spending that kept people afloat and the economy from complete collapse. When California’s governor revises his most recent budget next month as required by law, analysts expect it will show an additional $26 billion in federal funding to California as a result of President Biden’s $1.9 trillion American Rescue Plan passed last month.