Gov. Newsom Proposes Billions in Budget Cuts, No New Taxes | Travis Gillmore

Gov. Newsom Proposes Billions in Budget Cuts, No New Taxes | Travis Gillmore
California Insider Opinion

California Governor Gavin Newsom has released the May revision of his budget proposal, introducing a series of measures aimed at addressing the state’s significant budget deficit. The revised proposal comes amidst a wide range of projections and considerable debate over the true extent of the financial shortfall. This article explores the key elements of Newsom’s revised budget and the various reactions it has elicited from different stakeholders.

The Deficit: A Moving Target
The budget deficit figures have been a moving target this year, with initial estimates from Newsom at $38 billion, while the Legislative Analyst’s Office (LAO) projected a deficit closer to $73 billion. Newsom’s latest revision places the deficit at $27.6 billion after factoring in $17.3 billion from an early action budget plan, bringing the total closer to $45 billion. This discrepancy underscores the complexity of budget forecasting and the challenges inherent in aligning projections with actual fiscal realities.

Strategies for Closing the Gap

Newsom’s strategy to address the deficit involves a combination of spending cuts, deferrals, and strategic financial maneuvers. The revised budget includes approximately $32 to $33 billion in reductions, spread across a two-year fiscal window (2024-2025 and 2025-2026). This approach aims to create a more sustainable financial foundation for the state.
Key elements of the budget cuts include:
  • One-Time Spending Cuts: $19 billion in one-time reductions.
  • Ongoing Spending Cuts: $14 billion in continuous spending cuts.
  • Government Operations: An 8% cut in government operations, potentially saving up to $5 billion.
  • Vacant Positions: The decision not to fill 10,000 vacant state positions, saving approximately $800 million.

Impact on Core Services and Programs

The proposed cuts will affect nearly 260 programs, spanning essential services such as climate initiatives, housing, education, and public health. Significant cuts include:
  • Education: A $500 million reduction in the middle-class scholarship program and $1.5 billion in cuts to the Student Aid Commission. K-12 and higher education facilities grants also face substantial reductions.
  • Corrections: An $80.6 million annual cut to the Department of Corrections, with potential prison closures under consideration.
  • Homeless Spending: While not as heavily cut as other areas, the budget includes reductions to performance-based bonus programs, emphasizing accountability and measurable success.
Controversial Choices and Criticisms

Newsom’s budget has not been without controversy. One notable point of contention is the decision to maintain healthcare services for undocumented immigrants, despite broader cuts. Critics argue that during a deficit, prioritizing taxpayer-funded services should take precedence. However, Newsom defends this choice as foundational to the state’s values.

Moreover, the budget proposal has sparked debate over whether the state’s fiscal woes stem from excessive spending or inadequate revenue. While Newsom has ruled out new taxes, he has proposed limiting the net operating loss credit for corporations, effectively increasing their tax burden without officially raising taxes.

Looking Ahead: Legislative Challenges and Potential Outcomes

The legislature has until June 15 to pass a balanced budget, with Governor Newsom’s signature required by July 1. The budget bill includes provisions addressing the state’s home insurance crisis, indicating a multi-faceted approach to fiscal and regulatory challenges.

Newsom’s budget aims to balance immediate fiscal needs with long-term stability. By introducing creative solutions and prioritizing essential services, the governor seeks to navigate California through its current financial challenges. However, the success of these measures will depend on legislative approval and effective implementation, highlighting the complex interplay between policy decisions and fiscal realities.


Governor Newsom’s revised budget proposal reflects a pragmatic approach to addressing California’s significant budget deficit. By balancing spending cuts with strategic financial management, the governor aims to place the state on a more sustainable fiscal path. The coming weeks will reveal whether these measures gain the necessary legislative support and how they will impact the diverse array of services and programs critical to Californians.

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