Governor Newsom was in the spotlight once again as he addressed the media during a press conference revealing his updated budget proposal for 2025-26 at the Capitol Annex Swing Space in Sacramento. The event took place on May 14, 2025, and was captured by photographer Fred Greaves for all to see.
Initially, Newsom had projected a “modest surplus” when he presented his $322 billion state budget plan back in January. However, unforeseen circumstances such as a general economic slowdown in the U.S., a decrease in income tax revenue due to stock market repercussions from President Trump’s tariffs, and a significant Medi-Cal budget deficit have led to a stark change in the financial outlook. Now, California is grappling with a daunting $12 billion budget deficit as outlined by CalMatters’ Alexei Koseff.
The revised budget proposal paints a rather bleak economic picture for the state. With ongoing tariff disputes under the Trump administration causing uncertainty and potential inflation spikes, coupled with anticipated sluggish job growth through 2026, Newsom faces a challenging road ahead. To bridge the gap, the governor has put forth several strategies that require legislative approval, including measures to address Medi-Cal costs, prison closures, and the allocation of cap-and-trade funds for various projects aimed at combating climate change.
