On Friday, January 10th, Governor Newsom released his Administration’s 2025-26 Proposed Budget. This proposal begins the budget development process between the Governor and Legislature; with the onus on lawmakers who must pass a budget by June 15th for the July 1st start of the 2025-26 fiscal year.
The Governor’s 2025-26 Proposed Budget of $229 billion continues the multi-year approach proposed by the Governor in 2024 and reflects an economy that has performed better than was projected in the 2024-25 State Budget. The upgraded revenue forecast projects to be higher by $16.5 billion in the three-year budget window begun last year. While the Governor’s 2025-26 Proposed Budget does not reflect a recession, it does predict several risk factors that could have negative impacts on California’s economy and revenues, including stock market and asset price volatility, geopolitical instability, and shortfalls in subsequent fiscal years. The proposal also considers possible impacts of federal policies in the areas on international trade and immigration that could alter California’s economic output. The Administration cautions that additional decisions may be necessary in the May Revision to maintain a balanced budget in 2025-26 and beyond.
The Rural Rundown captures highlights of the proposal as it relates to RCRC member counties and can be accessed here.