Last week, the Legislature passed 16 bills that adjust the spending and policies in the 2026-27 budget package, which Governor Newsom signed into law earlier this summer. The new budget-related legislation passed last week includes:
- Two budget bills — Assembly Bill 113 and Senate Bill 114 — which amend multiple state budgets going back to 2022, including the 2026 Budget Act.
- Fourteen “trailer” bills that make numerous changes to state law. These bills focus on several policy areas, including health, early care and education, K-12 schools, and California’s film tax credit program.
These bills next go to Governor Newsom’s desk. The governor is expected to sign them all — the final budget-related legislation he’ll weigh in on before leaving office early next year.
What’s Next for the State Budget?
The next major budget deadline is January 10. This is the constitutional deadline for the governor to propose a balanced budget for the next fiscal year, which starts on July 1, 2027. Since January 10 falls on a Sunday next year, the proposed budget is likely to be unveiled on Friday, January 8.
As is the case every year, state agencies and departments have already been preparing the governor’s proposed budget through a process led by the Department of Finance (DOF).
But this year, there’s a big difference: With Governor Newsom termed out, California voters will soon choose a new governor, who will take office on January 4, 2027.
How will the turnover in California’s top political office impact the state budget? Here are three things to keep in mind:
- After a new governor is elected, it’s a longstanding practice for the current governor’s political appointees at the DOF to remove themselves from the budget development process, turning the reins over to the department’s career staff. There’s every reason to believe that Governor Newsom’s appointees, including the Director of Finance, will follow this practice.
- In November and early December, the DOF’s career staff will take the lead in working with the incoming administration’s transition team to further build out and refine the proposed budget that will be unveiled in January.
- Since the incoming administration will have limited time after the November election to fully develop budget proposals, the January budget will likely not reflect all of the governor-elect’s priorities. This means that the May Revision will provide the new governor with a key opportunity to present a budget that more fully reflects his priorities for California.
As always, the Budget Center will be closely monitoring the state budget process as it unfolds over the coming months and making the case for policy choices that increase affordability and support the well-being of California’s diverse communities.
