Newsom drops preview of $322 billion budget

TURLOCK, Calif. (CN) — California Governor Gavin Newsom on Monday pointed to some $16.5 billion in higher tax revenues while previewing the upcoming state budget, lauding steps he said the Golden State already has taken to balance the ledger sheets.

Newsom called for a $322.2 billion budget for the 2025-26 fiscal year, saying it was balanced. While touting the billions of dollars in higher tax revenues, the governor cautioned that the number is a snapshot in time and could change. He also said his proposed budget would require no tax increases. However, he added that moves by incoming President Donald Trump could lead to tariffs and the deportation of undocumented workers, which could impact the labor market.

“We are America, but in the future tense,” Newsom said of California. “California is the future. We are the tentpole of the American economy.”

The governor pointed to education funding, noting that almost $120 billion in Proposition 98 funds — required funding for schools and community colleges — is budgeted. That equates to some $24,764 per student, compared to $14,240 per student 10 years ago.

Newsom used broad strokes in his preview, regularly referring to a more detailed presentation set for Friday. On Monday, he argued that existing state laws need changing to allow government to set aside more money during good years.

Focusing on accountability, the governor highlighted some steps he said are saving the state money. Cutting 6,500 vacant state jobs has saved $1.2 billion over two years.

“That has already taken shape,” Newsom added.

Another $3.5 billion was saved on operational expenses.

The governor pointed to what he called an accountability website that will provide Californians with data about homelessness, housing and behavioral health. Visitors will be able to view county homeless point-in-time counts, which detail the number of homeless people in each county. They’ll also see which local governments have implemented their housing element, which they must create. They show how they’ll provide housing to everyone in their respective areas.

Newsom delivered his comments at California State University, Stanislaus — referred to as Stan State. It was his sixth stop on his California Jobs First tour. The governor during that tour has highlighted jobs, manufacturing and the economic impacts of different regions.

The governor first planned to deliver his state of the state address and the budget presentation later this week. He then opted to deliver the budget preview Monday in order to attend former President Jimmy Carter’s memorial service.

Law requires the governor to submit his budget by this Friday.

Newsom said a goal for this budget process was to make it a non-event, meaning the state would face no major budget deficit like it did last year. Officials during last year’s budget process filled the 2024-25 budget gap and accounted for an anticipated gap in the upcoming fiscal year.

The Legislative Analyst’s Office in November said it appeared Newsom met that goal, saying it considered the upcoming budget balanced.

The budget process each year takes months and involves many different versions and bills. Newsom acknowledged that his budget will undergo change once in the Legislature’s hands. Based on April tax receipt information, what’s called a “May revise” budget will be unveiled. That will follow with a final budget the Legislature must approve by mid-June.

Newsom’s budget preview came on the first day of the legislative session this year. Lawmakers arrived at the Capitol as the governor’s presentation was ongoing. Assembly Republican leaders pushed back against Newsom’s proposal once their session ended.

“Californians were clear in the last election — they want lower prices, safer streets and a government that works for them,” said Assemblymember James Gallagher, a Yuba City Republican and minority leader, in a statement. “This budget doesn’t even come close to getting that done.”

But Assemblymember Carl DeMaio, a San Diego Republican, denounced the budget before Newsom began his presentation. He said in a statement that no level of accounting maneuvers would change the fact that Newsom faces a fiscal crisis.

“I’m calling on my colleagues to declare the governor’s budget ‘dead on arrival’ and commit to passing a better plan — one that balances the budget without tax hikes and preserves the core services that Californians rely on the most,” DeMaio said.