Newsom Says Revised California Budget Eliminates State Deficit Through 2028

The proposed budget would cut $1.8 billion in spending and deposit $9.7 billion in reserves.

California Gov. Gavin Newsom at the 62nd Munich Security Conference on Feb. 13, 2026. Johannes Simon/Getty Images

Gov. Gavin Newsom on May 14 released a revised 2026–2027 California budget proposal that his office says eliminates the state’s projected operating deficit through July 2028.

Late last year, the state’s nonpartisan budget analyst warned that California was on track to spend about $18 billion more than it would bring in next year. Newsom says the new proposal closes that gap, largely because tax revenue came in higher than expected.