Golden State Today

Governor Gavin Newsom has unveiled his revised budget proposal for the fiscal year 2024-25, prioritizing balanced solutions for a more effective and efficient government. The two-year budget proposal aims to reduce spending, enhance government efficiency, and maintain essential services without proposing new taxes on Californians.

The revised budget proposal addresses both this year's deficit and the projected $27.6 billion deficit for next year while preserving many essential services that Californians rely on, including education, housing, healthcare, and food assistance.

According to Governor Newsom's proposal, the state is expected to achieve a positive operating reserve balance not only in this budget year but also in the next one. This "budget year plus one" proposal is designed to bring long-term stability to state finances and create an operating surplus in the fiscal year 2025-26.

"In even when revenues were flourishing, we were responsibly preparing for potential crises by investing in reserves and paying off debts – that put us in a position to close budget gaps while at the same time protecting essential services that Californians depend on. Without raising taxes on Californians, we are delivering a balanced budget that continues the progress we have fought hard for – from helping homeless people to addressing the climate crisis and keeping our communities safe," said Governor Newsom.

The Governor's revised and balanced state budget cuts one-time spending by $19.1 billion and ongoing spending by $13.7 billion through 2025-26. This includes a nearly 8% cut in state operations and a specific elimination of 10,000 vacant state positions, improving government efficiency and reducing unnecessary spending without increasing taxes on individuals or proposing cuts to state workers' salaries.

The budget maintains service levels for key housing, food, healthcare, and other assistance programs that Californians depend on while resolving the deficit by suspending certain program expansions and decreasing numerous unique investments and ongoing investments.

Governor Newsom is balancing the budget by controlling state spending – cutting costs, not proposing new taxes on working Californians and small businesses – and reducing reliance on state reserves this year for rainy days.

California's budget deficit has its roots in two separate but related events over the past two years. Firstly, the state's revenues, which heavily depend on personal taxes including capital gains, increased in 2021 due to a strong stock market but plummeted in 2022 following a market slowdown. Secondly, the Internal Revenue Service extended the tax filing deadline for most Californian taxpayers in 2023 following severe winter storms, delaying the revelation of reduced tax revenues.

Despite these challenges, California's economy remains strong. The revised and balanced state budget prepares the state for continued economic success. For the first time in years, the state's population is increasing and tourism spending reached a record level. California ranks number one in the country for new business startups, access to venture capital financing, and manufacturing, high tech, and agriculture.

Further details about Governor Newsom's revised May budget proposal can be found at www.ebudget.ca.gov.