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-Editorial
Governor Gavin Newsom released the May Revision of his proposed 2025–26 state budget on May 14, presenting a balanced fiscal plan that prioritizes key investments in housing, education, and infrastructure while addressing an estimated $11.95 billion budget shortfall.
The revised budget adjusts for economic challenges attributed in part to what the administration has called a “Trump Slump” — a term used to describe revenue losses linked to market volatility, tariffs, and a decline in international tourism. According to state officials, these factors have contributed to a projected $16 billion drop in California’s revenues.
Despite these fiscal pressures, the Governor’s budget proposal maintains long-term investments and seeks to restrain unsustainable spending growth. “California’s fundamental values don’t change just because the federal winds have shifted,” Newsom said in a statement accompanying the budget release.
A central feature of the revised budget is a comprehensive legislative package designed to accelerate housing production. The proposal aims to streamline permitting processes, including aligning timelines across regulatory agencies such as the Coastal Commission. It also supports pending reforms to the California Environmental Quality Act (CEQA) for infill and transit-oriented housing projects. In addition, the Governor proposes a new housing and infrastructure bond to fund faster home construction.
The revision includes new measures to regulate Pharmacy Benefit Managers (PBMs), to increase transparency and reduce prescription drug costs. The proposal expands the CalRx program’s authority to procure brand-name drugs and respond to supply disruptions, including those potentially affecting access to medications like mifepristone.
To address water security in the face of climate change, the Governor is proposing to expedite the modernization of the State Water Project through the Delta Conveyance Project. The revised budget seeks to streamline permitting and reduce legal delays to ensure water delivery to 27 million Californians while preparing for future droughts and floods.
The May Revision reaffirms funding for universal transitional kindergarten for all four-year-olds and continues to provide free school meals statewide. The budget also expands before and after-school programs and allocates $545 million for literacy initiatives, with targeted support for multilingual learners.
To address increasing wildfire risks, the proposal includes expanded investments in firefighting and emergency response. It also introduces a tax cut for military retirees aimed at improving their financial stability.
The Governor proposes the creation of a new state agency to coordinate housing and homelessness services more effectively. Additionally, the budget advances California’s Cap-and-Invest program, which supports major climate projects such as high-speed rail and provides utility credits projected to return up to $60 billion to Californians through 2045.
The full Legislature will now consider the revised proposal ahead of the June 15 deadline to pass the final state budget.