If you take Gov. Gavin Newsom at his word, California will have a budget surplus for the first time in several years, and his fellow Democrats who control the legislature won’t need to cut more programs as they try to make the state more livable.
In reality, the state’s financial future is murkier.
Newsom’s proposal for the 2025-2026 budget, unveiled Friday, has plans to pull $7.1 billion from the state’s rainy day reserve fund. That’s on the heels of a $5.1 billion draw from the fund that the governor agreed to last year, along with sizable cuts to government agencies and programs. Newsom and state lawmakers agreed to those cuts in June 2024 to balance a deficit of tens of billions of dollars.
Plus, the governor and nonpartisan experts agree that California’s future finances could be threatened by booms and busts in the stock market, the ongoing Southern California firestorm, President-elect Donald Trump’s plans to slash federal spending and more.
“We’re a lot better off than the last couple years,” California Director of Finance Joe Stephenshaw told reporters Friday. “We’re not facing a budget shortfall. We do recognize that we still have work to do to ensure sustainability.”
Republicans blasted Newsom on Friday for planning some new spending while dipping further into reserves.
“Only Gavin Newsom could raid over $7 billion from our rainy day savings and have the audacity to call it a ‘surplus,’ ” said Republican Senate Minority Leader Brian Jones of San Diego.
All told, the state will have a “modest” budget surplus of $363 million the next fiscal year — when dips into reserves and last year’s cuts are included, according to Newsom’s office. The proposal is a formal request to fund government programs through the next fiscal year, which stretches from July 2025 through June 2026.
Newsom is proposing $229 billion in general fund spending, up from $212 billion he approved last year. The plan would leave $17 billion in reserves…
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