Proposal closes a $32 billion shortfall while protecting key investments in education, health care, public safety, housing and homelessness, and climate action, despite global economic uncertainty
Includes $37.2 billion in total reserves amid increased economic risks
SACRAMENTO – Governor Gavin Newsom today released his May Revision proposal, a balanced budget plan that maintains critical investments to address our biggest challenges while preparing for continued economic uncertainty due to global economic issues. The Governor’s budget closes a projected $32 billion budget shortfall while protecting key investments in the issues that matter most to Californians, including education, health care, housing and homelessness, public safety, and climate action.
Following two years of unprecedented growth, revenues have fallen short of monthly estimates since the 2022 Budget Act was enacted last June. California has planned for this potential shortfall, with the Governor and Legislature paying down the state’s prior debts, building unprecedented reserves and prioritizing one-time investments.
“In partnership with the Legislature, we have made deep investments in California and its future – transformative efforts that will benefit generations of Californians, and that this budget will continue to guide as we navigate near-term ups and downs in revenue,” said Governor Newsom. “As we prepare for more risk and uncertainties ahead, it’s critical that we keep the state on a solid fiscal footing to protect Californians and our progress in remaking the future of our state.”
Governor Newsom presents revised budget plan in Sacramento
With unprecedented investments over the past two state budgets, in addition to federal funding targeting infrastructure and inflation reduction, California will invest more than $180 billion over the next several years in clean energy, roads, bridges, public transit, water storage and conveyance and expanded broadband service. These investments will create hundreds of thousands of new jobs while building the infrastructure to make our state better connected, safer and more prepared for our future.
While the May Revision does not forecast a recession, it recognizes increased risks to the budget since January that could significantly change the state’s fiscal trajectory in the near term. Taking this into account, the plan reflects $37.2 billion in total budgetary reserves, including $22.3 billion in the Budget Stabilization Account.
In addition to addressing the budget shortfall, the May Revision maintains investments in key priorities for Californians. This includes:
PROTECTING HEALTH CARE ACCESS. Following Governor Newsom’s actions to expand health care access and reduce costs, the May Revision maintains billions to continue implementing these measures – programs like CalAIM to transform Medi-Cal, extending health care to low-income Californians of all ages regardless of immigration status, making insulin more affordable through CalRx, and more.
TACKLING HOMELESSNESS. Governor Newsom has invested $15.3 billion to address homelessness – up from $500 million when he took office and more than ever before in state history. The May Revision maintains billions of dollars for aid to local governments, encampment resolution grants, and more. With this funding will come new accountability – no more status quo.
INCREASING HOUSING SUPPLY. In the last four years, California invested more to increase housing supply than ever before in state history while holding local governments accountable. The state continues to deploy a comprehensive set of strategies – improving state financing, targeting housing investments, providing technical assistance, eliminating regulations, and leveraging land use tools. The state adopted a legally binding goal that local governments must plan to build approximately 2.5 million new units by 2030, and 1 million of these units must be affordable.
CALIFORNIA’S CLIMATE COMMITMENT. California is advancing a $48 billion multi-year commitment to implement its world-leading agenda to achieve carbon neutrality by 2045, protect communities from harmful oil drilling, deliver 90% clean electricity by 2035, and more. It also proposes the development of a Climate Resilience Bond to increase and sustain investments in our climate initiatives.
KEEPING CALIFORNIANS SAFE. The May Revision sustains over $800 million in record-level public safety investments, including supports for victims’ services, officer wellness and training, non-profit security grants, efforts to combat fentanyl, and more.
UNIVERSAL TRANSITIONAL KINDERGARTEN. The May Revision continues to fully fund the first and second years of expanded eligibility for TK, creating a whole new grade.
FREE MEALS FOR EVERY STUDENT. California is investing $1.6 billion for all students, regardless of income, to access two free school meals per day – up to 12 million meals per day statewide.
Additional details on the May Revision can be found at www.ebudget.ca.gov.