Gov. Gavin Newsom touted higher-than-expected tax revenues and a “decent surplus” in an unusual preview of next fiscal year’s $322.2 billion spending proposal, but his office still says the state’s rainy day reserve fund remains He said he plans to withdraw funds from the Regarding policy priorities.
The Democratic governor gave a selective presentation of his 2025-26 initial budget at Cal State Stanislaus on Monday, which largely praised the state’s economic performance under his leadership. It was difficult to understand the full extent of the governor’s spending plans. Newsom said more details will be announced over the weekend.
An early but incomplete review of his proposal shows that Newsom’s annual spending plan is a $24 billion increase compared to the current budget enacted in July. The governor announced a projection of $16.5 billion in additional tax revenue, above the administration’s prior estimates, but the Treasury Department said it would be spread out over three years.
“Our top priorities include a balanced budget, no deficits,” Newsom said.
The proposal would begin an annual six-month process in which the governor and lawmakers will negotiate a final spending plan that will be approved in late June. Mr. Newsom’s presentation on the university’s campus in the Central Valley town of Turlock was an unusual twist to the ceremony, driven by his decision to travel to Washington, D.C., later this week for former President Carter’s funeral. It was something.
Because the governor presented his budget several days earlier than originally planned, Monday’s announcement did not include the detailed budget documents that typically accompany the governor’s presentations.
Newsom described his proposal as a “serious commitment to accountability, transparency and results” and “maintaining fiscal discipline in a time of great uncertainty.”
Despite the increase in revenue, it will still provide medical insurance to seniors and undocumented immigrants, provide preschool to all 4-year-olds, create a new $420 million tax break for Hollywood movie studios, and more. Newsom’s signature policies, including funding, will be costly. Leaving California due to spending problems.
Mr. Newsom’s office declared a fiscal emergency last year and announced that he would take $5.1 billion and an additional $900 million from the safety net reserve to balance the current budget, and that California’s budget for the next budget year would be It announced plans to take an additional $7.1 billion out of its rainy day reserve.
The decision to put money into the state’s savings account follows an agreement last year with lawmakers to slow plans, cut spending and occasionally rely on fiscal gimmicks to resolve the $46.8 billion deficit. It was part of it. California leaders had to adjust to a $31.7 billion deficit the previous year.
Senate Pro Tem Mike McGuire (D-Healdsburg) said these tough decisions have improved California’s fiscal position today.
“I look forward to carefully considering the governor’s full proposal later this week,” McGuire said in a statement. “Major work will be done in the coming months as we work in earnest to create a responsible and balanced budget that will make California more livable and affordable.”
Rep. Carl DeMaio, a Republican elected to represent inland San Diego County in November, called the governor’s proposal “negligent” even before Newsom made his presentation.
“Gavin Newsom is crazy and hopes no one notices, but no matter how much Enron-style accounting he does, there are concerns that Gavin Newsom caused the financial crisis,” DeMaio said in a statement. The reality of what needs to be done remains unchanged,” he said, calling on his fellow members to: Reject the governor’s proposal.
Analysts have warned that the economy could be further disrupted under the incoming Trump administration, worsening future fiscal prospects.
California’s Office of Legislative Analysis predicted in November that the budget would be nearly balanced in 2025-26, with a shortfall of $2 billion, but a deficit of about $20 billion in 2026-27 and a deficit of about $20 billion in 2028-29. predicted that the shortfall would be about $30 billion.
California’s economy has gradually slowed over the past two years, with overall unemployment increasing by about 25% and consumer spending trending downward, LAO reports.
Mr. Newsom did not provide a projected budget deficit for the next few years, saying he would reveal more deficits when he presents a revised budget in May.
California Republican Party Vice Chairman Colin Rankin criticized the governor for not doing enough to help ordinary Californians.
“Tax cuts for Hollywood and spending on AI are great for the state’s billionaires,” Rankin said in response to Newsom’s presentation. “But the rest are drowning in rising costs and feel their lives are not improving.”
Assembly Speaker Robert Rivas (D-Hollister) agreed the state needs to address cost of living issues.
“We need to prepare for the challenges ahead and we need to rein in our spending,” Rivas said in a statement. “I am committed to working with the governor and my colleagues to create a budget that protects essential services and makes life more affordable.”
The Newsom administration says President-elect Trump’s international tariff plans, uncertainty over federal health care funding, and threats to withhold disaster funds are increasing the likelihood of more budget uncertainty in the coming years. said.
“We really need to see the kind of fire and fury that President Trump unleashes in the coming weeks to understand the true implications,” Newsom said.
The governor is scheduled to spend Tuesday with President Biden in California to celebrate the new Chuckwalla National Monument near Joshua Tree and Sattitra National Monument near the Oregon border before departing for Carter’s funeral.
Joe Stephenshaw, director of the California Department of Treasury, is scheduled to formally submit the budget to the Legislature on Friday and answer questions.
Newsom plans to leave the state on Saturday for a vacation with his family.
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