California Gov. Gavin Newsom previewed a balanced state budget Monday during an appearance ahead of his administration's formal reveal of the plan later this week.
The proposed budget is "fully balanced with no deficit and projects $16.5 billion in additional revenue above the 2024 Budget Act thanks to a stronger economy, stock market, and cash receipts," Newsom said Monday.
The preview – advertised as outlining his top line budget items – stretched to nearly two hours between his presentation and media questions.
His initial full 2025-26 budget proposal will be released Friday at an in-depth briefing at which the Department of Finance will more fully outline his budget proposal.
Historically, the governor has presented the budget to lawmakers in mid-January.
But Newsom will be in Washington for former President Jimmy Carter's funeral on Thursday, and then plans to meet with President Joe Biden about preserving Federal Emergency Management Agency reimbursements and other funding promised to the state that President-elect Donald Trump could conceivably claw back after he takes office on Jan. 20, Newsom said during his presentation.
The state Legislative Analyst's Office announced in February that the state had come in
The governor wouldn't say whether his administration is anticipating a surplus for this year, adding that the Department of Finance will go into more detail on that on Friday.
Newsom will propose a $322.2 billion budget, which includes a $228.9 billion general fund, $16.9 billion in reserves and no plans to raise taxes.
The governor said as long as he is around he will fight hard to not increase taxes, but it's hard to predict the effect the Trump administration's plans to cut $2 trillion from the federal budget could have on social programs.
"The bottom could fall out," Newsom said. "Trump could implement 20% tariffs against China or deport millions of people, which could impact the labor market and interest rates."
If Trump implements $2 trillion in tax cuts, it would most certainly affect social services and "that could radically change our outlook," Newsom said.
Since California's budget schedule allows for adjustments between his budget introduction and the May revision, it gives the governor and the Legislature the flexibility to take federal program cuts or an economic downturn into account, he said.
His proposal to allocate $25 million to the attorney general's office to pay for lawsuits to litigate any clawbacks of promised federal money under a Trump administration would also be discussed during the regular legislative session.
"The Legislature has been exceptional," Newsom said regarding his proposed outlay to the AG's office. "They awarded money to cover the costs associated with lawsuits during the last Trump administration. We should anticipate nothing less than that."
Newsom said he has been meeting with other state governors, who are concerned they could lose promised FEMA funding and face other hits to federal funding that could come once Trump takes office.
"We are hopeful we don't have to spend a dollar of that $25 million," Newsom said.
"We are preparing for the worst and hoping for the best," he said.
"He is not a dictator," Newsom said. "He may assert dictatorial points of view, but there is still rule of law and there is still a court system."
"Ultimately, he will pay federal dollars, but in the interim we want some flexibility," Newsom said.
"Sometimes fire and fury signifies something, and fire and fury often signifies nothing," he said.
