SACRAMENTO, CA — Following Governor Newsom’s 2025-26 budget proposal released this morning, the California Budget & Policy Center (Budget Center), a nonpartisan research and analysis nonprofit, weighed in with the following statement from its executive director, Chris Hoene.
“The California state budget is a statement of our collective values. The 2025-26 budget proposal makes strides in upholding previous commitments, yet fails to increase investments to meet the pressing needs of Californians. To combat wasteful spending and boost investments, state leaders must closely scrutinize the billions of dollars the state spends on tax breaks that primarily benefit profitable corporations and wealthy individuals.
“The modest surplus reflects a stronger-than-expected economy; however, not everyone has benefited from the bull market. State leaders should prioritize policies — and reasonably raise revenues — to help families make ends meet and empower them to thrive and fully share in the state’s prosperity.
“Additional revenues would help curtail out-year deficits and hedge against emerging federal budget and policy challenges. To further safeguard California’s future, we urge the governor to adopt more proactive revenue strategies to strengthen and protect essential services, including health care, affordable housing, poverty reduction programs, climate resilience, and public transportation, for the state’s growing population.
“While drawing from the state’s robust reserves to safeguard critical services for Californians is a prudent decision, the governor’s misguided priorities — like proposing expanded tax credits to film studios and failing to propose additional state prison closures — weakens the state’s capacity to help Californians manage the high cost of living.
“We are encouraged by the growing interest in addressing the interaction between Proposition 2 and the decades-old spending limit, commonly known as the Gann Limit. This relationship artificially constrains the state’s ability to invest during times of prosperity, hindering state leaders’ ability to respond to the needs of Californians and disproportionately harming low-income communities and Californians of color.
“The good news is that California’s revenues have exceeded expectations. A strong stock market has generated higher-than-expected tax collections and allows the state to maintain investments that improve the well-being of Californians who are blocked from sharing in the state’s prosperity. This is evidenced by the administration’s proposal to sustain behavioral health initiatives, child care family fee reform, safety net investments, and more.
“However, the proposal does not adequately address critical gaps for Californians with low incomes, immigrants, and communities of color, such as increasing access to affordable child care, expanding safety net programs to reach more Californians, and investing in affordable housing development at the scale needed to meet demand. These glaring omissions highlight the need for more significant action in order to build an equitable state.
“State leaders have an opportunity to champion policies that uplift every Californian during a time of threat, especially those who have been left behind. By eliminating wasteful tax breaks and committing to bold investments and a vision for shared prosperity, we can build a future where everyone can thrive and fully realize the promise of the California dream.”
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About the California Budget & Policy Center:
The California Budget & Policy Center (Budget Center) is a nonpartisan research and analysis nonprofit advancing public policies that expand opportunities and promote well-being for all Californians.
