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What you need to know: Governor Newsom’s balanced budget proposal for the 2025-26 fiscal year includes increased savings to the state’s reserves while maintaining important investments in critical priorities such as wildfire prevention, public safety, housing, education, and more.
SACRAMENTO – Governor Gavin Newsom today sent to the Legislature his budget for fiscal year 2025-26 – a balanced funding plan that maintains the state’s fiscal stability while preserving key investments for education, public safety, and wildfire and forest resilience. The budget additionally continues support for robust economic growth, climate action, and high-paying jobs and career development while bolstering strong accountability measures to address housing, homelessness, and mental health care reform.
“The budget I present to you today builds on a framework that balanced the books over two years instead of just one—an unprecedented effort to address the budget shortfall we faced. However, work remains to ensure California’s finances remain in order in the years to come.
In the months ahead, California is facing a new federal administration that has expressed unreserved and uninformed hostility toward Californians, threatening the funding of essential services for political stunts. Continued global instability and the prospect of another downturn in the financial markets, as well as additional pressure on state expenditures, are warning signs to remain vigilant and prudent.
We will continue to assess the state’s ongoing fiscal position and include appropriate adjustments in the May Revision. I look forward to working with new and returning members of the Legislature on a final 2025-26 budget that assures California a strong economic future well into the 21st century.” - Governor Gavin Newsom
The $322.3 billion fiscal plan provides for $228.9 billion in general fund spending and nearly $17 billion in combined reserves – including nearly $11 billion in the state’s Rainy Day Fund and an additional discretionary set-aside of $4.5 billion in the Special Fund for Economic Uncertainties.
A balanced budget and a forward-leaning state
Governor Newsom’s 2025-26 budget proposal includes:
No deficit, increased revenues: The budget proposal is fully balanced with no deficit. Since the 2024 Budget Act was signed, the economy, stock market, and cash receipts have performed better than expected, resulting in an upgraded revenue forecast. Over three fiscal years, the state now projects $16.5 billion in additional revenue above original expectations.
Cutting spending, making government leaner: The budget proposal includes savings from the elimination of 6,500 vacant government positions, which result in taxpayer savings of $1.2 billion over two years. The budget also includes operational efficiencies, including a reduction in state travel budgets, printing, and IT system modernization that result in $3.5 billion in reduced taxpayer costs.
Balanced and responsible approach: There are no new cuts to core programs and limited new investments in the proposal. The proposal funds housing support, transportation, healthcare, mental health, and clean energy and climate programs while ensuring accountability and results. The proposal also maintains progress across critical areas while celebrating the full implementation of transformative initiatives, including:
Education, economic growth and jobs: The budget proposal continues to maintain support for tuition-free community college for eligible students, and bolster workforce development. Proposition 98 funding for K-14 schools is set at $118.9 billion for 2025-26, a nearly 51% increase since the Governor took office. The Budget also reflects full implementation of universal transitional kindergarten, increased funding for universal school meals, and implementation grants that will be fully disbursed in 2025-26 to support the community school model to support improved educational outcomes at more than 2,000 public schools.
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.
Increased accountability for homelessness spending: The budget proposal reflects stronger accountability measures for homelessness funding, requiring frequent reporting of data and expenditures of the Homeless Housing, Assistance, and Prevention program, increased oversight of existing funds, and strict eligibility and accountability measures for any new homelessness funding.
Preserving wildfire and forest resilience
The budget builds on $2.5 billion in wildfire and forest resilience activities in recent years by proposing an additional $1.5 billion in spending over multiple years from the voter-approved Climate Bond. This $4 billion in total funding will go toward projects to protect communities, keep wildfires from growing larger and more dangerous, and aid firefighters in combating wildfires.
In addition, the state is investing $200 million annually through 2028-29 for healthy forest and fire prevention programs, including prescribed fire and other fuel reduction projects.
Investments since 2021 have supported over 2,000 wildfire resilience and forest health projects that are completed or underway, including fuel breaks around communities, prescribed fire projects, and landscape scale forest health projects.
Investments to protect Californians in a hotter, drier world
Since the start of his administration in 2019, Governor Newsom has made the following significant investments to enhance the state’s firefighting capacity:
The full text of the Governor’s Budget summary document is available at www.ebudget.ca.gov.