CA Dept. of Finance Releases Newsom’s Proposed Budget
Last week, the Department of Finance released details on Gov. Newsom’s 2025-2026 budget while he was in Los Angeles helping to manage firefighting efforts.
The new plan largely retains investments made in previous years without increasing or funding new programs. The second largest spending plan ever, the $322 billion proposal has a much more optimistic outlook than last year’s $46 billion shortfall. In November, the nonpartisan Legislative Analyst’s Office said California could face $20 billion or more deficits annually in upcoming years. Yet, Newsom’s proposal cites $17 billion more in revenues for this year’s budget. He also continues his plan to withdraw $7 billion from the state’s “rainy day fund” approved in last year’s budget bill.
The budget also mentions that much remains uncertain based on the incoming federal administration. Approximately one-third of California’s budget relies on federal funding, including tens of billions of dollars for health care. Newsom has already opened a special legislative session, asking legislators to approve $50 million in funding to defend California policies against the Trump administration, and has also rolled wildfire relief funding into that session.
The governor’s budget continues its investment in California families, including childcare slots, CalFRESH, foster care and prevention, and In-Home Supportive Services. CalWORKS for low-income families will see a .2% increase for those with the highest need. In addition, $7.4 million this year and $12.5 million the following year will go to hospitals to provide a three-month supply of diapers for families with newborn babies.
The budget also notes that the birth rate will decline from 409,000 births in 2023 to 328,000 births in 2070, with the fertility rate dropping from 1.5 to 1.3 children per woman by 2038. Deaths will likely outnumber births, increasing from 2023 (300,000 deaths) to 2070 (482,000 deaths).
To encourage community connection, the Office of Community Partnerships and Strategic Communications will receive $5 million to launch a Belonging Campaign to combat loneliness, which is critical for overall health and well-being.
The impact of the passage of November’s Prop. 36, which increased sentencing penalties for some criminal offenses, remains to be seen. Still, the governor seeks to cut prison funding by $400 million.
While his plan does not provide new or additional funding for housing and homelessness, Newsom’s proposal calls for a new “California Housing and Homelessness Agency” to coordinate housing policy and efforts in the state.
Newsom also fully funded schools and has specified that $500 million be allocated to TK-12 Literacy and Mathematics Coaches. This builds upon and expands the existing Literacy Coaches and Reading Specialists Grant Program and includes a new opportunity to support mathematics coaches in addition to literacy coaches. This investment is welcomed as California’s students score at the bottom in ELA and Math compared to other states.
According to the National Assessment of Educational Progress (NAEP), California generally ranks near the bottom compared to other states in ELA (English Language Arts) and math scores, typically around 33rd in reading and 38th in math. This means it falls significantly below the national average and is considered one of the lowest-performing states in the country.
Newsom also wants to add $40 million in funding for schools to screen students for reading difficulties, including dyslexia.
Newsom is also proceeding with last year’s plan to reduce state support for the University of California and California State University systems by nearly 8% in 2025-26, a combined $772 million hit.
The governor will now negotiate budget details with lawmakers, with a final proposal due in June.
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