~ SACRAMENTO - In a press conference held today, Governor Gavin Newsom announced a revised budget proposal for the 2026-27 fiscal year that eliminates California's projected deficit through July 2028. This budget not only balances the current and upcoming fiscal years, but also makes significant progress in reducing long-term operating deficits in future years.

The revised budget includes a $1.8 billion reduction in General Fund spending and eliminates the structural deficit to $0 through July 2028. This marks a major multi-year fiscal stabilization effort for the state.

Governor Newsom emphasized the importance of fiscal discipline and progressive values going hand in hand, stating, "We're balancing the budget, eliminating the deficit, cutting spending, and building reserves - all while protecting healthcare, education, and essential services for Californians."

To strengthen California's long-term position, the budget also includes a deposit of $9.7 billion into the state's Surplus Holding Account to support future fiscal years and avoid overcommitting revenues during uncertain economic conditions. Additionally, it maintains nearly $30 billion in combined reserves - a 30% increase since Governor Newsom took office - including a growing Rainy Day Fund balance.

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Despite prioritizing fiscal restraint and sustainability, the revised budget still makes transformative investments in various areas such as child care, schools, higher education, public safety, healthcare, housing, clean energy, new businesses, and protection of natural resources.

Some notable investments include a $300 million allocation to protect healthcare affordability after Trump's failure to renew Affordable Care Act subsidies; a 50% tax cut for hundreds of thousands of new small businesses through lower LLC fees; a record $5 billion block grant for priorities such as teacher training and support; and the largest special education investment in California history with an ongoing increase of $2.4 billion.

In addition to these investments, there is also a focus on addressing issues such as literacy and math support in high-need schools, disaster rebuilding for wildfire survivors, and affordable housing reforms to reduce construction costs and increase housing availability.

The full text of the Governor's Budget summary document is available at ebudget.ca.gov, with a fact sheet also available for further information. For those interested in receiving press releases in Spanish, they can subscribe here.

This revised budget proposal not only eliminates California's deficit but also maintains strong reserves and protects core services amid economic uncertainty and federal attacks on healthcare and working families. With this budget, California continues to prove that fiscal discipline and progressive values can go hand in hand.

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