Gov. Gavin Newsom's proposed 2025-26 state budget, touted as balanced without new taxes, is facing scrutiny for its reliance on emergency reserves and off-the-books loans. The recent devastating wildfires in Southern California threaten to exacerbate the state's fiscal woes by impacting tax revenues and increasing spending needs. The budget's long-term sustainability is also questionable, with projections indicating multibillion-dollar deficits in future years.
Gov. Gavin Newsom delivers a briefing of his proposed 2025-26 state budget at Stanislaus State in Turlock on Jan. 6, 2025, Photo by Rich Pedroncelli, AP Photo
In fact, its purported balance assumes that at least $11 billion in drawdowns from emergency reserves, bookkeeping gimmicks and off-the-books loans can be counted as revenues. So by its own numbers, the proposed budget is actually leaking red ink. If federal aid is not forthcoming, or is markedly less than being sought, the impact on state finances — both in loss of revenue and new spending — could be immense, potentially encompassing all of the state’s emergency reserves and then some.
BUDGET WILDFIRES TAX REVENUE CALIFORNIA POLITICS FISCAL POLICY
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