Newsom proposes 'balanced' budget with no deficits

California Gov. Gavin Newsom (D) on Monday proposed a $322 billion budget that he said would be "balanced" and without deficits — marking a significant turnaround after two years of shortfalls.

Newsom delivered a "top-line" version of the 2025-2026 budget proposal at a Monday press conference, noting that more details will be released by his administration later this week. While the governor's January proposal is due to lawmakers on Friday, the document typically undergoes many revisions before it must be finalized in June.

"We are America, but in the future tense, the future happens here first," Newsom said. "We are America's coming attraction. California is the future, and we certainly are the future of the American economy, because we're the tentpole of the American economy."

The governor's proposal included a $228.9 billion general fund and would rely on $17 billion in reserves. He also noted that state tax revenues are up $16.5 billion dollars, while acknowledging that "this is a snapshot subject to change."

"We endeavored to make this year's budget a nonevent," Newsom said. "Last year, we endeavored to solve the problems this year and did something we haven't done in the past."

The 2024-2025 budget included total expenditures of $297.9 billion and a deficit of $46.8 billion, requiring cuts to a variety of programs, including climate and health care initiatives.

Newsom described this year's "leveling" as an expected outcome after "two extreme years of volatility, the likes of which we haven't seen in quite some time in California."

"This budget reflects a foundational focus," Newsom said. "While it's aspirational in many respects, it's also just driving accountability. It's about more transparency, it's about reform and it's about being prepared for uncertainties into the future."

Asked if he could guarantee that this budget wouldn't raise taxes, Newsom responded, "As long as I'm around, I'm going to fight hard against that."

He did, however, recognize the "proverbial elephant in the room," referring to the incoming Trump administration and the possibility of financial unknowns ahead.

Slamming President-elect Trump and Elon Musk's proposed "Department of Government Efficiency" (DOGE), Newsom recognized that their plan to cut $2 trillion in government spending inherently comes with "a level of uncertainty."

"Our DOGE is spelled O-D-I: We created it years and years ago with the Legislature, an Office of Digital Innovation," Newsom said.

"It's been focused on a myriad of reforms over the course of many, many years," the governor added. "We didn't wake up to this reality."

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