California governor Gavin Newsom (D) is eyeing a year without a deficit but is waiting for first moves from president-elect Donald Trump's administration before fine tuning spending proposals for climate change policies and other programs.
Newsom on Monday previewed his proposed $322.2bn 2025-26 budget, which he said would avoid the deficit pitfalls of last year's version following a projected $16.5bn increase in state revenues.
While the governor will issue his formal proposal on Friday, Newsom said his current budget plan, which includes $228.9bn in general fund spending, will likely change between now and the May revision, as the state weighs its response to actions by the Trump administration.
"That is subject to iteration and change over the course of the next few months based on what Trump actually does versus what he says he is going to do," Newsom said.
Preparations are underway for anticipated legal battles with the administration, including over climate change policies. Newsom called lawmakers into a special session last month to consider appropriating $25mn to further flesh out legal resources for the attorney general's office.
Newsom was optimistic that the legislature, which reconvened on Monday, will get the funding through before the inauguration on 20 January.
Going forward, Newsom said this year's budget should reflect fiscal discipline in a time of deep uncertainty following the belt-tightening last year as the state navigated a deficit of more than $40bn.
The governor did not elaborate on any climate policy action in his budget preview, including his November proposal to revive a subsidy program for zero-emission vehicles using revenue from the cap-and-trade program, should Trump eliminate a $7,500 federal tax credit for electric vehicles.
But while California's budget future looks more stable compared to 2024-25 budget talks, the state's non-partisan budget office cautioned in November that government spending continues to outpace revenues. The office predicts that California will face "double digit operating deficits in the years to come."
