On January 7, 2025, California Governor Gavin Newsom unveiled a proposed budget of $322 billion, marking a significant shift as the state aims to avoid a budget deficit for the first time in two years. The proposed budget is attributed to strategic planning in the previous fiscal year, which Newsom claims has allowed the state to sidestep a shortfall.
The governor's office estimates that tax revenues for the current year will exceed projections by $16.5 billion. The budget includes a general fund of $228.9 billion and relies on $17 billion in reserves. California, boasting the fifth-largest economy globally, previously faced budget deficits of $46.8 billion and $32 billion in the last two years.
Among the key proposals is the introduction of a universal transitional kindergarten program, designed to provide free education for approximately 400,000 four-year-olds across the state. Additionally, the budget seeks to enhance California's film and TV tax credit to $750 million to attract filmmakers back to Hollywood.
Despite the ambitious proposals, the budget is perceived as a temporary measure, pending potential changes in federal funding under the incoming Trump administration. The future of California's high-speed rail project, which has faced numerous challenges, remains uncertain as federal support has fluctuated in recent years.
Newsom's administration plans to release further details on the budget before the upcoming deadline to submit to lawmakers. The announcement came as Newsom traveled to Washington for the funeral services of former President Jimmy Carter.