California Governor Proposes $322 Billion Budget Without a Deficit

Gavin Newsom's plan marks a turnaround from years of shortfalls but faces uncertainty under the incoming Trump administration.

Gov. Gavin Newsom unveiled a $322 billion budget proposal for 2025-26, projecting no deficit after two years of significant shortfalls.
The budget benefits from $16.5 billion in higher-than-expected tax revenues, driven by stock market gains and income growth among the wealthiest taxpayers.
Key initiatives include fully implementing universal transitional kindergarten for 400,000 children and doubling the state’s film and TV tax credit to $750 million annually.
Newsom plans to withdraw $7.1 billion from the state’s rainy day reserves to address spending priorities, despite a modest surplus.
The proposal faces potential challenges from incoming President Trump’s policies, which could jeopardize billions in federal funding critical to California’s budget.