Californians and their communities are facing many ongoing challenges, including skyrocketing housing costs, families’ urgent need for affordable child care, and workers’ wages that aren’t keeping up with rising living costs. Fortunately, when state leaders addressed a $55 billion shortfall in the 2024-25 budget, they avoided many deep and harmful cuts that would have jeopardized Californians’ well being. However, their failure to permanently raise significant additional state revenue will limit their ability to protect progress from the emerging federal threats and meet the ongoing needs of Californians.
California spends tens of billions of dollars each year on tax breaks, some of the largest of which benefit the wealthy and profitable corporations. These tax breaks take billions of dollars away from communities, while perpetuating racial income and wealth gaps. Yet the ongoing revenue increases in the 2024-25 budget from reducing tax breaks amounted to just 0.2% of all budget “solutions” to close the shortfall. This year, the governor proposes tax policies that, when taken together, would raise a modest amount of revenue on net in 2025-26 but in future years would likely result in a net revenue loss or a roughly offsetting revenue impact.
With looming threats of deep federal funding cuts from the Trump administration and Congress, and the human, economic, and fiscal impacts of the Southern California wildfires adding to the list of challenges facing Californians, state leaders should act boldly by raising revenues — including eliminating tax breaks for the wealthy and profitable corporations — and investing in programs that help all Californians thrive. The budget should reflect the promise of the California dream — ensuring every California family has access to food, a safe and affordable place to live, quality child care, and economic security.
