California Gov. Newsom’s proposed budget avoids big promises while pouring money into schools
California – Governor Gavin Newsom has sent the California Legislature his proposed state budget for 2026–27. It is a balanced financial plan that focuses on restraint, long-term stability, and continuing to invest in the things that Californians already rely on.
The approach is based on better-than-expected revenues and a stable economic outlook. It also avoids making big new long-term commitments because of uncertainties at the global and federal levels.
The proposal costs $348.9 billion for the next fiscal year and is backed by strong financial markets and more cash flowing in than expected. The General Fund is set to get more than $42 billion in extra money over the next three years compared to the budget that was passed last year.
There is a small anticipated shortfall on paper, but the solution takes care of it completely. Officials say that the strategy does not yet take into account the very good income from December. This shows that they continue to be cautious even though things are getting better.
Rebuilding the state’s reserves is a key part of the budget. The plan puts $23 billion into California’s reserves, with $3 billion going to the Rainy Day Fund. At the same time, the state would make a big effort to lower long-term debts by promising to pay down pension commitments with $11.8 billion over four years.
The goal of all of these steps is to make the economy more stable in the face of changes in revenue and outside shocks.
The budget is additionally attempting to cut expenditures and make sure that things are being watched more closely. It suggests cutting $1.55 billion from state operations and saving even more money by getting rid of thousands of long-vacant jobs.
To make things more accountable, structural changes are being made. These include changes to how education is run and putting all housing and homelessness programs under one framework, with future financing linked to clearer performance indicators.
Education remains the largest focus of new and ongoing spending. Funding per student would reach an all-time high, allowing for universal transitional kindergarten, greater access to daycare and preschool, community schools, free programming before and after school, and free meals for all students.
The plan also keeps up big investments in literacy, college and job paths, and higher education. The University of California, California State University, and community college systems will continue to get more money.
The plan includes specific help for affordable housing, reproductive health care, public safety, climate resilience, clean transportation, safe drinking water, and getting ready for wildfires, in addition to education. At the same time, it takes into consideration the higher expenditures caused by recent changes in federal policy that influence food and health care programs.
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Overall, the proposed budget shows that California’s economy is on solid ground and sends a message of discipline by putting reserves first, maintaining past gains, and making smart investments in the state’s long-term future.
The full text of the Governor’s Budget summary document is available at ebudget.ca.gov.
