Gov. Newsom Unveils $350B State Budget Proposal
Governor Gavin Newsom unveiled his proposed state budget for fiscal year 2026-27, a roughly $348.9 billion plan that attempts to balance fiscal caution with strategic investments. The proposal forecasts a modest $2.9 billion shortfall for the year — significantly smaller than some independent estimates — and is built on stronger-than-expected revenue, much of it tied to California’s tech-driven economy.
Education remains the centerpiece of the governor’s proposal. The budget includes record-level funding for K–12 schools and community colleges, driven by the state’s Proposition 98 guarantee, along with continued investments in early learning, before- and after-school programs, and summer enrichment. Additional funding supports community schools that integrate academic instruction with health and social services, as well as expanded dual-enrollment programs that strengthen pathways from high school to college and careers.
The budget also makes significant investments in food security, housing, and homelessness prevention. It includes $3.2 billion for CalFresh and nutrition programs, reflecting the state’s increased share of administrative costs following federal policy changes, with an additional $328.9 million to offset reduced federal cost-sharing. The proposal also allocates $73.4 million to support outreach and transaction costs for the SUN Bucks program, which provides federally funded summer food benefits to approximately 5.4 million children who lose access to free or reduced-price school meals during summer break.
Housing production and the preservation of existing affordable housing remain priorities, with housing bonds and legislation expected to advance new development, while homelessness prevention efforts include a planned $500 million seventh round of Homeless, Housing, Assistance and Prevention (HHAP) funding, contingent on stronger local accountability, and continued investment through Proposition 1, which has already allocated $636 million to support 1,818 units, with $1.6 billion more anticipated in the coming year to expand housing and supportive services for people experiencing homelessness.
Beyond these core areas, the budget proposes strengthening the state’s rainy-day reserves, continuing targeted workforce and infrastructure investments, and exercising restraint on new, ongoing commitments. As with all January budget proposals, Newsom’s plan marks the opening bid in negotiations with the Legislature, which will debate priorities and look to finalize a budget by the June 15 constitutional deadline.
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