Gov. Gavin Newsom’s (D-CA) new $300 billion budget agreement aims to address California’s $45 billion deficit and revive his standing within the Democratic Party.
This final budget from Newsom comes as the state faces a significant deficit, just two years after experiencing a $100 billion surplus.
With Newsom overseeing the economic challenges, Californians’ confidence in him has diminished. A recent poll found 57% of voters believe the state is on the wrong track. Newsom’s budget attempts to reverse this sentiment and stabilize his political career.
The budget agreement includes cutting $1.1 billion for affordable housing, delaying a minimum wage increase for healthcare workers, eliminating $750 million in prison system funding, and reducing water storage funding. Additionally, it proposes suspending tax breaks for businesses sooner than planned and allows Newsom to declare a “budget emergency” to access $12 billion from reserves.
This compromise follows criticism from some California Democrats in May over reductions in social services and other priorities. The June agreement has brought some critics to Newsom’s side, with strategists suggesting it could enhance his credibility and support a potential presidential run in 2028. They believe Newsom can use the deal to demonstrate his ability to negotiate and achieve financial responsibility.
Currently, Newsom is dealing with the aftermath of historic spending increases, from $201.4 billion in 2018 to $454.7 billion in 2023, marking over a 60% increase during his tenure.
Despite these expenditures, the state’s middle class has faced economic decline, and California’s homeless population has surged. Newsom has directed $24 billion to address homelessness, half the size of the budget deficit, yet over a third of the nation’s homeless population is in California. A recent state audit revealed leaders are unsure how effectively these funds have been used.
