But the budget Newsom announced Monday is mostly a placeholder as California waits to see if incoming President Donald Trump will follow through on threats to revoke billions in federal dollars, which could force lawmakers to make painful cuts to essential programs. About a third of California's budget relies on funding from the federal government, including tens of billions to provide health care services. Trump takes office Jan. 20, and Newsom must sign the final budget by the end of June.
Newsom's administration plans to provide more details on the budget proposal on Friday, the deadline to present it to lawmakers. Newsom announced the numbers early before heading out of state for former President Jimmy Carter's funeral services.
He said good planning in the last budget allowed the state to avoid a major shortfall this year.
The governor's office also estimates tax revenues for this year are $16.5 billion above projections, thanks to the booming stock market and rapid income growth for high-income Californians.
California's economy is the fifth largest in the world. Last year the state faced an estimated $46.8 billion budget deficit and in the year before, a $32 billion budget shortfall. Such deficits have forced the state to pare back or delay some of its progressive policies that were fueled by record-breaking surpluses during the COVID-19 pandemic.
In November, the nonpartisan Legislative Analyst's Office warned the state will face double-digit shortfalls in the next five years. That could curtail California's ability to shield its programs from Trump's attacks.
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