By SDCN Staff
Sacramento, CA–Governor Gavin Newsom on Wednesday unveiled his May Revision proposal for the 2025–26 state budget, presenting a balanced plan aimed at reinforcing California’s long-term stability.
The updated budget blueprint comes amid ongoing economic uncertainty fueled by federal instability, yet maintains the state’s fiscal responsibility while investing in California’s future.
Facing a projected $11.95 billion budget shortfall—largely attributed by Newsom to a so-called “Trump Slump” caused by tariffs, market instability, and reduced international tourism that have cost the state an estimated $16 billion in revenue—his proposal still prioritizes strategic investments in housing, education, and infrastructure. At the same time, it aims to rein in unsustainable spending and address rising healthcare costs.
“California’s fundamental values don’t change just because the federal winds have shifted. Even as the Trump Slump slows the economy and hits our revenues, we’re delivering bold proposals to build more housing, lower costs for working families, and invest in our kids,” Gov. Newsom said.
As part of his revised budget, the governor is proposing a sweeping legislative package to slash red tape, align permitting timelines, and unlock faster, smarter housing development. The proposal streamlines Coastal Commission approvals to match the timelines of other permitting agencies, prioritizes infill and transit-oriented development to reduce toxic pollution and vehicle miles traveled, and supports incorporating pending legislation that would reform CEQA for infill housing and other development projects, along with a housing and infrastructure bond to build more homes, faster.
The state is shining a light on the middlemen who inflate prescription drug prices, while protecting access to essential medications, including abortion pills. Newsom’s revised budget leads efforts to license and regulate Pharmacy Benefit Managers for the first time, increasing transparency and accountability in the pharmacy supply chain. It also expands CalRx’s authority to procure brand-name drugs and respond to politically motivated supply disruptions, helping shield access to critical medications like mifepristone.
With climate extremes intensifying, the governor is fast-tracking modernization of the State Water Project through the Delta Conveyance Project. His proposal streamlines permit and reduces litigation delays to accelerate construction while protecting water access for 27 million Californians and preparing for a future marked by more severe droughts, floods, and climate volatility.
Newsom’s revised budget continues transformational investments that make education more accessible. Universal transitional kindergarten is now fully funded for all four-year-olds. Free school meals remain available to every student and expanded before-school, after-school, and summer programming will benefit children across the state. The budget also invests $545 million in literacy programs to boost reading outcomes, with a strong focus on supporting multilingual learners.
The governor’s revised budget also includes historic funding in firefighting and emergency response to match escalating wildfire risks, and a tax cut for military retirees, recognizing their service and supporting their financial security.
The budget reflects Newsom’s push for a more effective government — including a new state agency to better coordinate housing and homelessness programs, and continued progress on California’s Cap-and-Invest program to fund major climate projects like high-speed rail and a utility credit that will put up to $60 billion back into the pockets of Californians through 2045.
Additional details on the May Revise proposal can be found here.
