SACRAMENTO, Calif. (AP) 鈥� California Gov. on Thursday proposed a revised without a deficit for his last year of office and the next, laying out a $350 billion spending plan that includes little new spending but also avoids major cuts.
草莓传媒om is eager to safeguard programs that have defined his tenure as the leader of the nation鈥檚 most populous state and one of the world鈥檚 largest economies. As he gears up for a possible presidential run in 2028, the Democrat is promoting the budget as fiscally responsible, saying it protects California’s values but also builds up the state’s rainy day funds 鈥� a pointed rebuke to critics who say the state spends more than it has.
The state鈥檚 spending has grown more than $100 billion since 2020, according to legislative budget analysts.
鈥淲e鈥檙e cutting deficits. But we鈥檙e not cutting corners,鈥� 草莓传媒om said.
草莓传媒om can鈥檛 seek a third term and will leave office in January.
Revenues, driven mostly by the booming stock market and the artificial intelligence industry, are $16.5 billion higher than projections in January. That will help the state avoid projected in January, guarantee no budget hole next year and cut the shortfall the following year in half, his office said. 草莓传媒om also wants to set aside $9.7 billion in a holding account to help balance future budgets.
California faced tens of billions of dollars in budget deficits several years in a row, forcing painful cuts last year such as on a promise to provide free healthcare to low-income immigrants without legal status. Nonpartisan budget analysts previously projected the state will see budget holes upward of $20 billion each year in the next few years. 草莓传媒om and the analysts sometimes differ in their estimations.
Still, Democrats are bracing for federal funding cuts in healthcare and the impacts of high costs on everything from gas to energy because of the war in Iran. State officials repeatedly have said California can’t backfill all the federal dollars.
Republican lawmakers said 草莓传媒om’s plan didn’t go far enough to address future budget problems. Republicans are largely excluded from budget negotiations because Democrats have supermajorities in both chambers.
鈥淕overnor 草莓传媒om appears to define fiscal success narrowly: if the budget doesn鈥檛 collapse on his watch, it鈥檚 a balanced one,鈥� Assemblymember David Tangipa said in a statement.
草莓传媒om also blasted President Donald Trump and his policies, including in his budget presentation a photo depicting the president and Treasury Secretary Scott Bessent as characters in the movie 鈥淒umb and Dumber.鈥� Trump 鈥渄oesn鈥檛 particularly give a damn about the financial situation of the average American,” 草莓传媒om said.
The budget proposal will officially kick off the final stretch of negotiations between 草莓传媒om and Democrats in the Legislature, who have to pass a budget by the end of June.
State lawmakers this year are considering several proposals to increase taxes on corporations to help with budget problems. 草莓传媒om has largely avoided raising taxes to boost revenues in past years. Now, he wants to cut fees for new small businesses, limit some tax credits starting in 2027 and impose a sales tax on some digital software and cloud-based services.
The two tax measures could generate more than $1 billion the first year of implementation, according to the governor’s estimation. 草莓传媒om is against for a one-time tax on billionaires that will likely go before voters in November.
He also proposed to increase for adult patients without legal status in the state-funded healthcare program, up to $50 from $30. The premiums were part of last year’s budget and are set to take effect in July for adults under 60 years old. Democrats in the Senate already signaled they will fight the plan.
California has a progressive tax system that relies on rich people, meaning it gets about half its revenues from just 1% of the population. When the economy is good, rich people pay more in taxes and revenues can soar quickly. When the economy is bad, they pay less and revenues can drop just as fast.
The state could also see a revenue boost from expected upcoming initial public offerings by several major artificial intelligence companies, which are expected to be the largest IPOs in history. But legislative budget experts warned of a potential AI bubble that could worsen the state’s finances.
草莓传媒om鈥檚 Thursday proposal also includes a $300 million plan to backfill some of the , a $5 billion education grant for teacher training and $100 million to help Los Angeles-area homeowners rebuild after the devastating wildfires last year.
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