Newsom is eager to safeguard programs that have defined his tenure as the leader of the nation's most populous state and one of the world's largest economies. As he gears up for a possible presidential run in 2028, Newsom is promoting the budget as fiscally responsible because it protects California's progressive programs but also builds up the state's rainy day funds, a pointed rebuke to critics who say the state spends more than it has. The state's spending has grown more than $100 billion since 2020, according to the legislative budget analysts.
Newsom can't seek a third term and will leave office in January.
Gavin Newsom outlining his final California budget proposal as governor on Thursday, May 14.It is a welcoming change for the state where revenues have not kept up with spending. California faced tens of billions in budget deficits several years in a row, forcing painful cuts last year such as a rollback on a promise to provide free health to low-income immigrants without legal status. Nonpartisan budget analysts projected the state will see budget holes upward of $20 billion each year in the next few years.
Newsom used his presentation to blast President Donald Trump and his policies. Trump "doesn't particularly give a damn about the financial situation of the average American," Newsom said.
State lawmakers this year have pitched several proposals to increase taxes on corporations to help with budget problems, but Newsom has largely opposed the idea, arguing such proposals could drive businesses and wealthy people away. He has instead proposed to cut fees for new small businesses and limit some tax credits starting 2027. He is against a ballot initiative for a one-time tax on billionaires that will likely go before voters in November.
The state could also see a revenue boost from expected upcoming initial public offerings by several major AI companies, which are expected to be the largest IPOs in history. But legislative budget experts warned last year of a potential AI bubble that could worsen the state's finances.
Newsom's Thursday proposal also includes a $300 million plan to backfill some of the loss of government-sponsored health subsidies, a $5 billion education grant for teacher training and $100 million to help Los Angeles-area homeowners rebuild after the devastating wildfires last year.
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