Governor Gavin Newsom unveiled his $322.3 billion spending plan for 2025-26 on Friday. The budget proposal was released in the midst of one of the worst fire disasters in state history, adding to an existing air of uncertainty.
Much could change, and likely will change, between now and June 15 when a final budget must be adopted. The fires in L.A. have racked up at least $150 billion in damages. Republicans in Congress are already talking about withholding federal aid from California unless certain conditions are met. Needless to say, Newsom’s proposal comes with caveats.
The Governor's Office is projecting a $363 million surplus for the upcoming year. State revenues are expected to be $16.5 billion more than previous projections, yet he still wants to withdraw $7 billion from the state’s rainy day fund. His proposal calls for $228.9 billion in general fund spending.
Newsom wants to eliminate 6,500 vacant government positions, which would save around $1.2 billion over two years.
Homelessness
The plan calls for the creation of a new Housing and Homelessness Agency to speed up housing development and reduce homelessness. It allocates $100 million to local governments for removal of encampments. However, it includes no new funding for the Homeless Housing, Assistance and Prevention Grant Program, which provides assistance to local governments for homelessness prevention.
Education
The proposed budget fully funds K-12 education and the state’s expanded early education program, also known as universal TK. It also includes $100 million in funds to help community colleges provide course credits for students with prior work experience. The University of California and California State University systems would see an 8% cut, however.
Public Safety
“Recognizing the importance of keeping Californians safe, the budget maintains an investment of approximately $1.6 billion since 2022-23—including $283.6 million in 2025-26—to support state and local public safety efforts. This includes funds to implement new laws to enhance enforcement, prosecution, and accountability are included in the proposal,” according to the Governor’s Office.
The state would invest another $200 million annually through 2028-29 for healthy forest and fire prevention programs under the proposal. See more on the wildfire prevention portion here.
Reactions
California State Association of Counties President and Inyo County Supervisor Jeff Griffiths issued the following statement on the proposal:
“Today’s budget proposal reflects the values that guide our state, but it must also respond to the evolving realities of ongoing emergencies like the devastating Southern California wildfires.
“Counties are on the frontlines, working tirelessly to protect lives and support recovery. As we navigate these challenges, we will lean into budget negotiations to ensure the final plan addresses both immediate needs and long-term solutions.”
League of California Cities Executive Director and CEO Carolyn Coleman was much more pointed in her critique of the plan.
“Time and time again, surveys show that homelessness and housing costs are a top concern for residents throughout California. In addition, recent federal and state reports demonstrate that targeted and sustained funding reduces homelessness,” said Coleman. “That’s why it is disappointing that the Governor’s 2025-26 budget proposal fails to include any new funding for the Homeless Housing, Assistance and Prevention Grant Program and affordable housing programs.”