Governor Newsom Signs 2024-2025 State Budget

Governor Gavin Newsom signed the 2024-2025 state budget legislation Saturday, officially putting the new $297.9 billion budget into effect on Monday.

The California State Legislature approved the 2024-2025 budget plan on Wednesday night, giving the green light on California spending $297.9 billion beginning on July 1st.

For months, Governor Newsom, Assembly members, and Senators have been at odds over how much to spend on the upcoming 2024-2025 state budget. The deficit amount has widely ranged in recent months, with the Governor’s office giving the optimistic deficit amount of $46.8 billion over the next two years, while the Legislative Analyst’s Office (LAO) has given actual state deficit figures of $73 billion and, more recently in May, $55 billion. Not wanting to make many cuts, they went after the $46.8 billion amount.

While the budget was originally proposed to be for around $330 billion, the deficit issue resulted in it getting slashed in January by Newsom to around $291 billion, with state budget reserves taking much of the weight, with $13 billion and budget cuts only coming to $8.5 billion. Overall, over $30 billion of reductions were proposed. But in the 2024-2025 budget agreement this past weekend, only $16 billion in reductions made the cut. With other agreements in place, Newsom and Legislators finally agreed to a $297.9 billion budget. Only $211.5 billion of spending is to come from the general fund in 2024-2025, as compared to $225.9 billion in 2023-2024 and $234.6 billion in 2022-2023. Overall, compared to last year, the budget was also slashed, going from $310 billion in 2023-2024 to $297.9 billion for 2024-2025.

“In California, you don’t have to be profligate to be progressive,” said Governor Newsom during his State of the State address on Tuesday night. “We understand how to balance budgets while protecting working families, children and the most vulnerable people in this state.”

However, both the Legislature and the Governor still needed to approve it by the end of the month. With the deadline ticking, the Legislature approved the budget on Wednesday night in the State Capitol in Sacramento, albeit with significant GOP opposition.

Senator Brian Jones (R-Santee) said following Wednesday’s signing that “Tonight, Democrat politicians passed a budget package that is not balanced, not sustainable, and not representative of the needs of everyday Californians. Rather than being responsible with California’s checkbook, Democrats chose to play shadow games with accounting. They shifted, swept, and shuffled money around, stealing it from disabled kids and taking money from a host of necessary services to fund unneeded social experiments and pet projects. It’s unfathomable. But it’s real.”

Despite the urgency, Governor Newsom didn’t sign the bill into effect immediately afterwards. Newsom, in fact, waited several days to sign off on the 2024-2025 budget, even giving multiple speeches on how he supported the budget. Finally on Saturday night, Newsom signed the budget.

“This is a responsible budget that prepares for the future while investing in foundational programs that benefit millions of Californians every day,” said Newsom in a statement. “Thanks to careful stewardship of the budget over the past few years, we’re able to meet this moment while protecting our progress on housing, homelessness, education, health care and other priorities that matter deeply to Californians. I thank the Legislature for their partnership in delivering this sound and balanced plan.”

The 2024 state budget is a balanced plan that ensures fiscal stability while maintaining investments in core programs.

We’re meeting the needs of Californians while keeping the state on firm economic footing.https://t.co/mB8xCyFsHX

— California Governor (@CAgovernor) June 29, 2024

The budget subsequently went into effect on Monday with the new fiscal year, meaning that California is now officially on the 2024-2025 budget year. However, Newsom is also facing growing scrutiny for trying to slip by a proclamation made before signing where he said that there is now a budget emergency, as there is not enough funds in the general fund to cover the budget.

“I have determined that estimated resources are inadequate to fund General Fund expenditures for the current or ensuing fiscal year, which constitutes a budget emergency within the meaning of Article XVI, section 22, subdivision (b), paragraph (2), of the State Constitution,” said Newsom in his proclamation last week.

Also concerning is that there is only $22.2 billion in reserves at the end of this new fiscal year. Should a major emergency occur, or the budget falls under spending once again, the state’s reserves could be dipped even lower.

“Newsom is playing fast and loose with these next few budgets,” said accountant Lee Greenman, a California-based accountant who helps city and other regional entities fix budget problems, on Monday. “He has, theoretically, a balanced budget by mid-2026. But that is ignoring what the LAO is telling him about the deficit actually being higher, not considering any big cash flow problems like less tax money coming through, allowing pet projects to still go through, considering potentially huge future expenditures like reparations, and generally not being really flexible on the budget.”

The 2024-2025 State Budget went into effect on Monday.