Gavin Newsom touted California’s roaring economic system whereas additionally preaching fiscal prudence as he unveiled his ultimate finances as governor Thursday — the most important in state historical past.
The governor’s revised 2026-27 finances proposes $349.9 billion in whole spending and $246.6 billion from the overall fund — the very best whole spending degree of Newsom’s governorship and an almost $150 billion enhance from the finances 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 ultimate finances, as big upticks in spending recommend 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 yr.
State Sen. Roger Niello, vice chair of the Senate Finances Committee, advised The Put up that Newsom’s presentation was “a magic present filled with tips to idiot the individuals.”
“It was a little bit bit irritating to me that I needed to take heed to him speaking in regards to the federal authorities and president Trump for an hour earlier than he even began speaking about our state finances,” Niello stated.
“He can complain about that every one he desires, however the issue is the structural deficit that we’ve was created by the Newsom administration.”
A lot of the particular spending development in Newsom’s finances is concentrated in households, with an emphasis on faculties, healthcare and social packages — areas which have exploded in price over the past a number of years.
The governor’s plan consists of roughly $151.6 billion for TK-12 packages, together with about $91.3 billion from the overall fund. That marks a dramatic enhance from prior years, when whole TK-12 spending stood at roughly $80.4 billion in 2023-24.
The administration says whole per-pupil spending will now attain roughly $28,282, whereas Proposition 98 funding alone — which establishes a ground on state spending — would offer about $21,013 per pupil. The finances additionally features a 4.31% “tremendous” price of dwelling changes for faculties and neighborhood faculties, roughly 1.5 occasions bigger than legally required.
“This yr, we’re going to announce the most important funding in particular schooling in California’s historical past. I don’t know that many different states can lay declare to this sort of funding,” Newsom stated.
The governor is proposing almost $2.4 billion in extra particular schooling funding — a 43% enhance in a single yr — and 14 weeks of paid being pregnant depart for TK-12 and neighborhood faculty workers, 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 providers in Newsom’s revised finances rose to $90.4 billion from the overall 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 positive aspects tied to the inventory market and the state’s booming AI economic system. Newsom prompt these positive aspects got here regardless of Trump’s financial insurance policies, from blocking authorized immigration to levying unlawful tariffs.
“We’ve got a president who doesn’t give a rattling in regards to the economic system,” Newsom stated.
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 finances presentation to repeatedly boast that California’s economic system has “no friends,” pointing to the state’s $5.4 trillion economic system, dominance in enterprise capital and tech, and development charges that he claimed outpaced China, Germany and america total.
“With respect to these with California derangement syndrome,” Newsom stated in a nod to his political foe President Trump, “it’s time to replace your speaking factors.”
Nevertheless, Newsom additionally acknowledged that California wants to organize for doubtlessly arduous occasions.
“This inventory market seems to be loads just like the dot-com crash of 25 years in the past,” he stated. “Inventory markets by no means go up ceaselessly. And the additional they go up by way of inflated values, the more durable the autumn. And I’m very involved.”
CalMatters reported that Newsom has proposed drawing down $7 billion in reserves this fiscal yr whereas depositing $3.6 billion to a wet day fund subsequent yr. The governor’s finances abstract notes $9.7 billion might be put into the state’s new Surplus Holding Account subsequent yr to assist stabilize future budgets and cut back structural deficits.
State Sen. Tony Strickland (R-Huntington Seaside) solid severe doubt on Newsom’s finances, 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 information is predicated on details and monetary actuality,” Strickland stated in an announcement.
“The governor’s numbers are as unreliable as the high-speed rail mission.”
Assemblyman David Tangipa, vice chair of the Meeting Finances Committee, referred to as the finances “deeply regarding” because it places California liable to insolvency is spending stays at this degree within the face of an financial downturn.
“This finances displays a sample of deferred decision-making — kicking structural issues down the highway for the following governor and legislature to inherit,” Tangipa stated.
“Governor Newsom seems to outline fiscal success narrowly: If the finances doesn’t collapse on his watch, it’s a balanced one. This boom-and-bust method to budgeting is solely not sustainable.”
