Gavin Newsom touted California’s roaring financial system whereas additionally preaching fiscal prudence as he unveiled his remaining price range as governor Thursday — the biggest in state historical past.
The governor’s revised 2026-27 price range proposes $349.9 billion in complete spending and $246.6 billion from the final fund — the best complete spending degree of Newsom’s governorship and an almost $150 billion improve from the price range he inherited in 2019.
The governor’s critics had been fast to grab on this level, accusing Newsom of dwelling in a “fantasyland” and utilizing mathematical magic for his remaining price range, as enormous upticks in spending counsel a rosier image than many anticipated — simply earlier than he walks out the door (and sure runs for president).
An ominous report final month by California legislative analysts predicted the state’s extreme spending may result in structural deficits as excessive as $30 billion a 12 months.
State Sen. Roger Niello, vice chair of the Senate Price range Committee, advised The Publish that Newsom’s presentation was “a magic present stuffed with methods to idiot the folks.”
“It was just a little bit irritating to me that I needed to hearken to him speaking in regards to the federal authorities and president Trump for an hour earlier than he even began speaking about our state price range,” Niello mentioned.
“He can complain about that each one he desires, however the issue is the structural deficit that we have now was created by the Newsom administration.”
A lot of the particular spending development in Newsom’s price range is concentrated in households, with an emphasis on faculties, healthcare and social applications — areas which have exploded in value over the past a number of years.
The governor’s plan contains roughly $151.6 billion for TK-12 applications, together with about $91.3 billion from the final fund. That marks a dramatic improve from prior years, when complete TK-12 spending stood at roughly $80.4 billion in 2023-24.
The administration says complete per-pupil spending will now attain roughly $28,282, whereas Proposition 98 funding alone — which establishes a flooring on state spending — would offer about $21,013 per scholar. The price range additionally features a 4.31% “tremendous” value of dwelling changes for faculties and group faculties, roughly 1.5 instances bigger than legally required.
“This 12 months, we’re going to announce the biggest funding in particular training in California’s historical past. I don’t know that many different states can lay declare to this type of funding,” Newsom mentioned.
The governor is proposing practically $2.4 billion in further particular training funding — a 43% improve in a single 12 months — and 14 weeks of paid being pregnant depart for TK-12 and group faculty staff, in addition to one other $428.8 million for literacy coaches and studying specialists by way of 2031.
State spending on well being and human companies in Newsom’s revised price range rose to $90.4 billion from the final fund, a rise of just about $3 billion. State officers blamed cuts made by federal laws from Trump and Home Republicans.
California introduced in $16.5 billion extra in tax revenues than anticipated since January, largely due to capital features tied to the inventory market and the state’s booming AI financial system. Newsom urged these features got here despite Trump’s financial insurance policies, from blocking authorized immigration to levying unlawful tariffs.
“We now have a president who doesn’t give a rattling in regards to the financial system,” Newsom mentioned.
The governor’s opponents within the California Legislature have leveled the identical accusations.
The state Legislative Analyst’s Workplace has reported that eliminating all discretionary spending expansions adopted since Newsom turned governor would save about $15 billion — simply half of the potential annual shortfalls.
Newsom used his price range presentation to repeatedly boast that California’s financial system has “no friends,” pointing to the state’s $5.4 trillion financial system, dominance in enterprise capital and tech, and development charges that he claimed outpaced China, Germany and the US total.
“With respect to these with California derangement syndrome,” Newsom mentioned in a nod to his political foe President Trump, “it’s time to replace your speaking factors.”
Nonetheless, Newsom additionally acknowledged that California wants to arrange for doubtlessly laborious instances.
“This inventory market seems to be loads just like the dot-com crash of 25 years in the past,” he mentioned. “Inventory markets by no means go up perpetually. And the additional they go up by way of inflated values, the tougher the autumn. And I’m very involved.”
CalMatters reported that Newsom has proposed drawing down $7 billion in reserves this fiscal 12 months whereas depositing $3.6 billion to a wet day fund subsequent 12 months. The governor’s price range abstract notes $9.7 billion might be put into the state’s new Surplus Holding Account subsequent 12 months to assist stabilize future budgets and cut back structural deficits.
State Sen. Tony Strickland (R-Huntington Seaside) forged critical doubt on Newsom’s price range, saying the governor has a “historical past of dwelling in Fantasyland.”
“I’m ready for the true numbers from the revered, nonpartisan Legislative Analyst’s Workplace as a result of their knowledge relies on info and monetary actuality,” Strickland mentioned in an announcement.
“The governor’s numbers are as unreliable as the high-speed rail challenge.”
Assemblyman David Tangipa, vice chair of the Meeting Price range Committee, known as the price range “deeply regarding” because it places California prone to insolvency is spending stays at this degree within the face of an financial downturn.
“This price range displays a sample of deferred decision-making — kicking structural issues down the street for the following governor and legislature to inherit,” Tangipa mentioned.
“Governor Newsom seems to outline fiscal success narrowly: If the price range doesn’t collapse on his watch, it’s a balanced one. This boom-and-bust strategy to budgeting is just not sustainable.”
