Governor Newsom Unveils $322.2 Billion Budget Proposal for 2025-26

STANISLAUS COUNTY, Calif. – Governor Gavin Newsom on Monday previewed his $322.2 billion budget proposal for the 2025-26 fiscal year, highlighting a balanced spending plan with no deficits and a projected $16.5 billion in additional revenue. The announcement, made during his California Jobs First tour at Cal State Stanislaus, emphasized fiscal responsibility, economic growth, and investments in education, public safety, and accountability.

The proposed budget includes $228.9 billion in general fund spending, supported by stronger-than-expected tax revenues and operational efficiencies. Newsom’s plan eliminates 6,500 government positions, saving $1.2 billion over two years, and reduces costs by $3.5 billion through measures such as cutting travel budgets and modernizing IT systems. Despite these savings, the budget maintains transformative initiatives like Universal Transitional Kindergarten, expanded after-school programs, and Universal School Meals.

Newsom also received the North San Joaquin Valley’s regional economic plan, part of the California Jobs First Economic Blueprint, which aims to drive sustainable growth and innovation across the state. The blueprint, developed with input from over 10,000 residents and experts, focuses on ten key industry sectors and includes $120 million in competitive funding for regional projects.

“California is not only dominating but paving the way for the future of jobs and the American economy,” Newsom said. “With a balanced budget and key investments maintained for the upcoming fiscal year, we are well-positioned to continue the forward momentum we have created.”

The governor’s proposal comes amid economic uncertainty, with analysts warning of potential deficits in future years. The California Legislative Analyst’s Office predicts a $20 billion shortfall by 2026-27, driven by rising costs and potential federal policy changes under the incoming Trump administration. Newsom acknowledged these challenges but expressed confidence in the state’s resilience.

The full budget document, including detailed spending plans, will be released on Friday, January 10, 2025, by the Department of Finance. Newsom’s presentation marks the start of a six-month negotiation process with state lawmakers, who will finalize the budget by late June.