In early January Governor Newsom will present the Legislature with a proposed budget for the next fiscal year. The last budget dealt with a large deficit caused by excessive spending. To address that deficit, Newsom and the Legislature raided the Rainy Day Fund, borrowed money, shifted funds and deferred spending, steps that should be reserved for deficits caused by recessions, not by excessive spending. In so doing, they left California less protected against the risks of a recession and smaller federal disbursements to states. Worse, all that spending — more than $1 trillion from the General Fund alone since Newsom took office — has produced little of value to residents. That’s because a good deal of it went to favored political classes and cronies, including public sector unions who rewarded Newsom with political and financial support.
With past as prologue and because he is seeking the Democratic Party nomination for president, we don’t expect anything different from Newsom this time. Perhaps he will surprise us but if not, a healthy budget will depend on the Legislature, which should demand the changes we outlined last April and restore funds to the Rainy Day Fund. But there’s little reason for optimism. That’s another reason our priorities include the 2026 race for governor and boosting California’s political philanthropy ecosystem. Healthy state budgets will require success on both fronts.
