California Gov. Gavin Newsom on May 14 laid out the revised budget for the 2025–2026 fiscal year, compensating for a $12 billion deficit.
During his speech, Newsom said the state anticipates $16 billion in tax revenue losses largely as a result of President Donald Trump’s policies—including tariffs—which he said are attacking California’s “growth engines” and have “created a climate of deep uncertainty.”
“California is under assault,” he said.
“The impacts are being felt disproportionately in the fourth-largest economy in the world.”
Republican state Sen. Tony Strickland from Huntington Beach told The Epoch Times the state has a deficit because of how it spends taxpayer money.
“California doesn’t have a revenue problem. It has a spending problem and it has a wasteful spending problem,” said Strickland.
Newsom acknowledged the concern to reporters on May 14.
“We’ve got a spending problem,” he said.
The governor said that the problem was not being ignored and that he was trying to “avoid massive cuts” to critical programs.
The California Legislative Analyst’s Office (LAO) said the budget has expanded over the past 10 years from $160 billion to the proposed $322 billion, due in part to inflation and program expansions made during a period of strong economic growth in the state.
“This has led to expenditure growth in recent years that has exceeded the long term average growth rate,” the LAO told The Epoch Times via email.
Proposition 36 Funding
The governor’s budget in January did not include any funding for Proposition 36, which passed in all 58 counties in November 2024. That didn’t change in his May Revise on May 14, which some lawmakers said they were disappointed about.“Even the most liberal counties of Marin and San Francisco voted in the affirmative [on] Prop. 36 and had 70 percent of the vote of the people of California, and the governor chose not to fund Prop. 36 and [is] therefore not keeping us safe across the state of California,” Strickland said.
Republican state Sen. Roger Niello of Sacramento said the governor’s decision not to fund the measure shows he is out of touch with Californians.
“It’s almost like he didn’t like those propositions and the vote,” Niello told The Epoch Times. “But the voters approved them.”
Nearly 70 percent of Californians voted yes on Prop. 36, which increased penalties for certain drug and theft crimes and classified some drug offenses as treatment-mandated felonies.
Prop. 36 didn’t include a funding mechanism in the measure’s language, or a requirement for the state to provide funding to local governments for the substance abuse treatment outlined in the measure.
Ahead of the vote in 2024, Newsom spoke out against the measure, saying it represented a promise that could not be delivered.
On May 14, Newsom encouraged counties and cities that supported Prop. 36 to help fund it in their areas.
However, the governor’s budget provides additional funding based on the anticipated increase in the inmate population due to the measure, a senior state official told The Epoch Times via email.
