Gov. Gavin Newsom on Wednesday gave an update on California’s financial situation and pitched his proposed $322 billion state spending plan for the upcoming year. The governor revealed he and lawmakers will have to figure out how to close a $12 billion budget hole, which could mean tough conversations about some of the state’s key programs moving forward. Newsom noted the deficit represents a small fraction of the overall money California has to work with but acknowledged the need to tighten spending. One way he’s trying to do that is by setting new limits on the state program that provides health insurance to undocumented people. The governor blamed a big part of the budget problems on President Trump’s tariffs. The proposed budget the governor rolled out Wednesday represents one of the largest he’s presented since taking office. In 2019, the first budget he negotiated with state lawmakers totaled $208 billion. The state’s spending plans have grown by more than 50%, or $114 billion more than when Newsom became governor. When KCRA 3 asked if the budget problems are entirely to blame on President Trump, or if they’re self-inflicted, the governor defended his spending on education, mental health, public safety and social safety net services.Here’s a look at other takeaways from the governor’s proposal: The will of the voters: Props 35 and 36California voters resoundingly passed two measures in the last election, and supporters of those measures said Gov. Newsom’s budget doesn’t do enough to implement them fully. First, Prop 36 was the crime measure that ramped up the penalties for repeat thieves and drug dealers. It created a “treatment mandated felony” for offenders, but the ballot initiative did not have a specific funding mechanism. The governor’s budget doesn’t set aside any special funds for that but does make some adjustments in prison spending to account for an increase of people behind bars. The governor said local governments should figure out the money for the other aspects of the new law. “Counties have to do their job, and there are a lot of supervisors in the counties that promoted it. So, this is their opportunity to step up, fund it,” the governor said Wednesday. “There are city mayors that supported it. It’s their opportunity to step up, fund it.” But several groups, including the California State Association of Counties, disagree. “Voters were very clear. Nearly 70% of voters declared Prop 36 a priority. And as a result, the state should do the same,” said Graham Knaus, the association’s CEO. Prop 35 was a measure backed by medical groups who have been trying raise the reimbursement rates for doctors and other providers who care for lower income patients. The rates have not seen the boost they’ve been hoping for, because the state legislature and governor continue to divert the money meant for that to other healthcare expenses. The governor said he’s proposing to put $1.3 billion toward base rates. He said this is consistent with the rules. But the California Medical Association disagrees, noting the governor is trying to divert funds again and calling it a violation of voter trust.”This isn’t just a broken promise – it’s a dangerous precedent that will worsen California’s health care crisis,” said CMA President Shannon Udovic-Constant.”With federal Medicaid cuts looming and 15 million Californians relying on Medi-Cal, this budget move threatens access to care across the state and is an attack on our most vulnerable communities.”High-Speed Rail The governor’s slideshow presentation made no mention of the High-Speed Rail construction, but he continued to defend the project that has been plagued by delays and cost overruns. It’s expected to cost more than $100 billion after voters agreed to put $40 billion toward it. Lawmakers earlier this spring were notified the project will need $7 billion by next June in order to keep progressing. A spokesperson for Gov. Newsom’s Department of Finance told KCRA 3 it is the administration’s intent to put $1 billion toward the project every year. Fast-tracking new housing lawsGov. Newsom signaled Wednesday he will try to use the state’s budget process to quickly pass two proposed laws that are expected to speed up housing construction in the state. Those proposals aim to exempt new housing in urban areas from the California Environmental Quality Act, which is notoriously used to speed or slow down projects through lawsuits. “To meet California’s housing goals, we need certainty, accountability, and smarter land use — not the endless regulatory delays that have held us back for decades,” the governor said. “The Golden State was built on boldness and innovation, not red tape — we can’t continue to block our own economic success. We’re done with barriers. Let’s get this built.”Abortion cuts? Planned Parenthood Affiliates of California said proposed healthcare cuts by the governor could slash the organization’s funding by a third. “Governor Newsom is effectively defunding Planned Parenthood in the state of California,” said Jodi Hicks, the President and CEO of the organization. She also posted on X, taking a jab at the governor, “Happy to go on his Podcast and explain why this devastates women’s health in his state.” Izzy Gardon, a spokesman for the governor told KCRA 3 the funding changes were communicated to the organization ahead of time. “At a time when Donald Trump and Mike Johnson are working to gut access to basic reproductive care, Governor Newsom is not going to sign a budget that would shut down health clinics across California. Any suggestion otherwise is laughably absurd,” he said. See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channel
Gov. Gavin Newsom on Wednesday gave an update on California’s financial situation and pitched his proposed $322 billion state spending plan for the upcoming year.
The governor revealed he and lawmakers will have to figure out how to close a $12 billion budget hole, which could mean tough conversations about some of the state’s key programs moving forward. Newsom noted the deficit represents a small fraction of the overall money California has to work with but acknowledged the need to tighten spending.
One way he’s trying to do that is by setting new limits on the state program that provides health insurance to undocumented people.
The governor blamed a big part of the budget problems on President Trump’s tariffs.
The proposed budget the governor rolled out Wednesday represents one of the largest he’s presented since taking office.
In 2019, the first budget he negotiated with state lawmakers totaled $208 billion. The state’s spending plans have grown by more than 50%, or $114 billion more than when Newsom became governor.
When KCRA 3 asked if the budget problems are entirely to blame on President Trump, or if they’re self-inflicted, the governor defended his spending on education, mental health, public safety and social safety net services.
Here’s a look at other takeaways from the governor’s proposal:
The will of the voters: Props 35 and 36
California voters resoundingly passed two measures in the last election, and supporters of those measures said Gov. Newsom’s budget doesn’t do enough to implement them fully.
First, Prop 36 was the crime measure that ramped up the penalties for repeat thieves and drug dealers. It created a “treatment mandated felony” for offenders, but the ballot initiative did not have a specific funding mechanism. The governor’s budget doesn’t set aside any special funds for that but does make some adjustments in prison spending to account for an increase of people behind bars. The governor said local governments should figure out the money for the other aspects of the new law.
“Counties have to do their job, and there are a lot of supervisors in the counties that promoted it. So, this is their opportunity to step up, fund it,” the governor said Wednesday. “There are city mayors that supported it. It’s their opportunity to step up, fund it.”
But several groups, including the California State Association of Counties, disagree.
“Voters were very clear. Nearly 70% of voters declared Prop 36 a priority. And as a result, the state should do the same,” said Graham Knaus, the association’s CEO.
Prop 35 was a measure backed by medical groups who have been trying raise the reimbursement rates for doctors and other providers who care for lower income patients. The rates have not seen the boost they’ve been hoping for, because the state legislature and governor continue to divert the money meant for that to other healthcare expenses.
The governor said he’s proposing to put $1.3 billion toward base rates. He said this is consistent with the rules. But the California Medical Association disagrees, noting the governor is trying to divert funds again and calling it a violation of voter trust.
“This isn’t just a broken promise – it’s a dangerous precedent that will worsen California’s health care crisis,” said CMA President Shannon Udovic-Constant.
“With federal Medicaid cuts looming and 15 million Californians relying on Medi-Cal, this budget move threatens access to care across the state and is an attack on our most vulnerable communities.”
High-Speed Rail
The governor’s slideshow presentation made no mention of the High-Speed Rail construction, but he continued to defend the project that has been plagued by delays and cost overruns. It’s expected to cost more than $100 billion after voters agreed to put $40 billion toward it.
Lawmakers earlier this spring were notified the project will need $7 billion by next June in order to keep progressing.
A spokesperson for Gov. Newsom’s Department of Finance told KCRA 3 it is the administration’s intent to put $1 billion toward the project every year.
Fast-tracking new housing laws
Gov. Newsom signaled Wednesday he will try to use the state’s budget process to quickly pass two proposed laws that are expected to speed up housing construction in the state.
Those proposals aim to exempt new housing in urban areas from the California Environmental Quality Act, which is notoriously used to speed or slow down projects through lawsuits.
“To meet California’s housing goals, we need certainty, accountability, and smarter land use — not the endless regulatory delays that have held us back for decades,” the governor said. “The Golden State was built on boldness and innovation, not red tape — we can’t continue to block our own economic success. We’re done with barriers. Let’s get this built.”
Abortion cuts?
Planned Parenthood Affiliates of California said proposed healthcare cuts by the governor could slash the organization’s funding by a third.
“Governor Newsom is effectively defunding Planned Parenthood in the state of California,” said Jodi Hicks, the President and CEO of the organization.
She also posted on X, taking a jab at the governor, “Happy to go on his Podcast and explain why this devastates women’s health in his state.”
Izzy Gardon, a spokesman for the governor told KCRA 3 the funding changes were communicated to the organization ahead of time.
“At a time when Donald Trump and Mike Johnson are working to gut access to basic reproductive care, Governor Newsom is not going to sign a budget that would shut down health clinics across California. Any suggestion otherwise is laughably absurd,” he said.
See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channel
