🕷️ Crawler Inspector

 1. Join the conversation on California's future, May 21. [GET YOUR TICKET](https://sites.google.com/calmatters.org/2026-ideas-festival/home) Nonprofit & Nonpartisan News - [About Us](https://calmatters.org/about) - [Newsletters](https://calmatters.org/subscribe-to-calmatters) - [Donate](https://give.calmatters.org/campaign/564470/donate?c_src=website&c_src2=stickynav) [About](https://calmatters.org/about/) [Newsletters](https://calmatters.org/subscribe-to-calmatters/) [Search](https://calmatters.org/commentary/2026/03/california-budget-red-trump-cuts/) - [Politics](https://calmatters.org/category/politics/) - [Justice](https://calmatters.org/category/justice/) - [Environment](https://calmatters.org/category/environment/) - [Economy](https://calmatters.org/category/economy/) - [Health](https://calmatters.org/category/health/) - [Housing](https://calmatters.org/category/housing/) - [Education](https://calmatters.org/category/education/) - [Inequality](https://calmatters.org/category/california-divide/) - [Digital Democracy](https://calmatters.digitaldemocracy.org/) - [Technology](https://calmatters.org/category/economy/technology/) - [Commentary](https://calmatters.org/category/commentary/) - [Daily Newsletter](https://calmatters.org/category/newsletters/whatmatters/) - [Explainers](https://calmatters.org/category/explainers/) - [Data & Trackers](https://calmatters.org/category/data/) - [Programs](https://calmatters.org/about/programs/) - [California Divide](https://calmatters.org/category/california-divide/) - [Knowledge Hub](https://calmatters.org/sponsored/knowledge-hub/possibility-lab/) - [CalMatters for Learning](https://calmatters.org/forlearning/) - [College Journalism Network](https://calmatters.org/category/education/higher-education/college-beat/) - [Mental Health Reporting Initiative](https://calmatters.org/tag/mental-health/) - [What’s Working](https://calmatters.org/tag/whats-working/) - [Youth Journalism](https://calmatters.org/youthjournalism/) - [Events](https://calmatters.org/events/) - [Donate](https://give.calmatters.org/campaign/564470/donate?c_src=website&c_src2=menu) - [Manage your donation](https://calmatters.org/about/contact-us/#manage-your-donation) - [Newsletters](https://calmatters.org/subscribe-to-calmatters/) - [About Us](https://calmatters.org/about/) - [Impact](https://calmatters.org/about/impact/) - [News and Awards](https://calmatters.org/about/news-and-awards/) - [Funding](https://calmatters.org/about/funding/) - [Policies](https://calmatters.org/about/policies-and-standards/) - [Sponsorship](https://calmatters.org/about/advertise/) - [Our Team](https://calmatters.org/about/team/) - [Jobs](https://calmatters.org/about/jobs/) - [Inside the Newsroom](https://calmatters.org/category/inside-the-newsroom/) - [CalMatters en Español](https://calmatters.org/category/calmatters-en-espanol/) - [Videos](https://www.youtube.com/calmatters) CalMatters is your nonprofit and nonpartisan newsroom dedicated to explaining how state government impacts our lives. - [Bluesky](https://bsky.app/profile/calmatters.org) - [Instagram](https://www.instagram.com/calmatters/) - [Facebook](https://www.facebook.com/calmatters/) - [X](https://x.com/CalMatters) - [TikTok](https://www.tiktok.com/@calmatters) - [LinkedIn](https://www.linkedin.com/company/calmatters/) - [YouTube](https://www.youtube.com/calmatters) [Join us at the CalMatters Ideas Festival on May 21. **💡 Get your tickets now.**](https://festival.calmatters.org/) - [Governor Race 2026](http://calmatters.org/tag/california-governor-2026-election) - [Politics](https://calmatters.org/category/politics/) - [Immigration](https://calmatters.org/tag/immigration/) - [Housing](https://calmatters.org/category/housing/) - [Education](https://calmatters.org/category/education/) - [Economy](https://calmatters.org/category/economy/) - [Environment](https://calmatters.org/category/environment/) - [California Voices](https://calmatters.org/category/commentary/) - [Impact](https://calmatters.org/category/impact/) - [Events](https://calmatters.org/events/) Posted in[Commentary](https://calmatters.org/category/commentary/) # California’s budget bleeds red ink with added pressure to cover Trump’s cuts  by [Dan Walters](https://calmatters.org/author/dan-walters/) March 26, 2026 March 25, 2026 [Republish](https://calmatters.org/about/republish/) ### Share this: - [Share on X (Opens in new window) X](https://calmatters.org/commentary/2026/03/california-budget-red-trump-cuts/?share=x&nb=1) - [Share on Facebook (Opens in new window) Facebook](https://calmatters.org/commentary/2026/03/california-budget-red-trump-cuts/?share=facebook&nb=1) - [Share on WhatsApp (Opens in new window) WhatsApp](https://calmatters.org/commentary/2026/03/california-budget-red-trump-cuts/?share=jetpack-whatsapp&nb=1)  A reporter holds a copy of Gov. Gavin Newsom’s budget summary at the Capitol Annex Swing Space in Sacramento on Jan. 9, 2026. Photo by Fred Greaves for CalMatters *Welcome to CalMatters, the only nonprofit newsroom devoted solely to covering statewide issues that affect all Californians. Sign up for* [*WeeklyMatters*](https://calmatters.org/subscribe-to-calmatters/weeklymatters) *for a Saturday morning digest of the latest news and commentary from the Golden State.* This story is part of **California Voices,** a commentary forum aiming to broaden our understanding of the state and spotlight Californians directly impacted by policy or its absence. Learn more [here](https://calmatters.org/category/commentary/). Nine months into the 2025-26 fiscal year, state tax revenues are running several billion dollars ahead of projections in [the budget](https://ebudget.ca.gov/publication/e/2025-26/BudgetSummary) that Gov. Gavin Newsom signed last June. That’s a bit of good news, because the [budget had a hefty gap](https://calmatters.org/tag/california-budget/) between projected general fund income and outgo, a continuation of what budget officials call a “[structural deficit](https://calmatters.org/commentary/2026/02/newsom-spending-california-chronic-deficit/)” that has plagued recent budgets. Spending has [persistently outstripped revenues](https://calmatters.org/commentary/2026/02/newsom-spending-california-chronic-deficit/), with the difference bridged by a variety of on- and off-book loans, accounting gimmicks and raids on emergency reserves [totaling \$125 billion so far](https://lao.ca.gov/reports/2026/5101/2026-27_Budget_Overview_011226.pdf), according to Gabe Petek, the Legislature’s budget analyst. Newsom’s [proposed budget for the 2026-27 fiscal year](https://ebudget.ca.gov/budget/p/2026-27/BudgetSummary) contains a \$21 billion general fund shortfall that he would shrink to \$3 billion by employing an array of the same stopgap measures. Newsom has promised that when the budget is revised in May, it will not only close its latest gap but end the deficit cycle that otherwise would continue indefinitely, according to Petek and Newsom’s budget writers. The recent uptick in revenues, cited in a [report from Petek’s office](https://lao.ca.gov/LAOEconTax/Article/Detail/777), slightly improves the income/outgo imbalance but falls way short of closing it, unless it becomes a major windfall, as Jason Sisney, a budget advisor to legislative leaders, believes it could. “No one counsels humility about revenue projections more than me, but I think the odds are that general fund revenues for the budget window will be somewhere between \$15 billion and \$40 billion above the governor’s January 9 projections,” Sisney says in a recent email. The sharp differences over revenues hinge on expectations of whether the stock market continues its mostly positive recent performance, buoyed by artificial intelligence companies, or if it falters. California’s budget is inordinately dependent on taxes on wealthy taxpayers’ investment profits and therefore is highly sensitive to stock market gyrations. With the April 15 deadline for income tax returns nearing, everyone associated with the budget awaits new revenue data. Meanwhile, the administration and legislators are besieged with pleas from those with stakes in the budget, seeking more money than Newsom’s proposed budget offers. ## READ NEXT [](https://calmatters.org/commentary/2026/01/california-issues-discourage-candidates-governor/) [Commentary](https://calmatters.org/category/commentary/) ### [Did California’s existential issues scare off potential candidates for governor?](https://calmatters.org/commentary/2026/01/california-issues-discourage-candidates-governor/) by [Dan Walters](https://calmatters.org/author/dan-walters/) January 22, 2026 January 29, 2026 On Wednesday, mayors of the state’s largest cities warned that Newsom’s budget — which would slash the traditional \$1 billion allocation for programs to battle homelessness to \$500 million — would “reverse the progress cities have made in reducing unsheltered homelessness.” The mayors don’t just want a return to \$1 billion; they seek a multi-year commitment with annual adjustments for inflation, the latest chapter in a long-running dispute. Newsom has chided cities for not spending money effectively to reduce the number of homeless people on the streets, while mayors complain that without multi-year aid, they cannot make long-term programmatic commitments. Meanwhile county officials, citing \$6 billion to \$9.5 billion in reduced federal aid in President Donald Trump’s “one big beautiful bill,” this week [asked Newsom and legislators for \$6.4 billion](https://www.counties.org/wp-content/uploads/2026/03/HR-1-Mullti-Year-Budget-Request-Summary_-FINAL.pdf) over two years to offset the losses, “in order to prevent our safety net from crumbling.” Filling the financial holes from Trump’s reductions in federal aid is also a high priority for groups representing California’s poor families, with the state’s Medi-Cal program a major concern. They have not only sought backfill from a state budget already leaking red ink but proposed tax increases for ongoing financing, including a tax on the wealth of California’s billionaires that may be on the November ballot. What we have, therefore, is a budget with chronic, multibillion-dollar deficits that’s under additional pressure due to federal aid reductions, and it must be finalized in less than three months by a governor now in the last year of his reign who is contemplating a campaign for the White House. It should be interesting. ## READ NEXT [](https://calmatters.org/commentary/2026/03/medi-cal-emergency-federal-cuts/) [Commentary](https://calmatters.org/category/commentary/) ### [Medi-Cal faces funding emergency from state miscalculations, federal budget cuts](https://calmatters.org/commentary/2026/03/medi-cal-emergency-federal-cuts/) March 24, 2026 [](https://calmatters.org/commentary/2026/01/volatility-complicates-california-budget-deficits/) [Commentary](https://calmatters.org/category/commentary/) ### [California budget volatility continues to complicate efforts to close its deficits](https://calmatters.org/commentary/2026/01/volatility-complicates-california-budget-deficits/) January 28, 2026 January 28, 2026 Read more from CalMatters [ Text Get breaking news on your phone.](https://joinsubtext.com/calmatters) [ Download Keep up with the latest via our app.](https://urlgeni.us/calmatters-app) [ Sign up Receive free updates in your inbox.](https://calmatters.org/subscribe-to-calmatters/) ## Nonpartisan, independent California news for all We’re CalMatters, your nonprofit and nonpartisan news guide. Our journalists are here to empower you and our mission continues to be essential. - **We are independent and nonpartisan.** Our trustworthy journalism is free from partisan politics, free from corporate influence and actually free for all Californians. - **We are focused on California issues.** From the environment to homelessness, economy and more, we publish the unfettered truth to keep you informed. - **We hold people in power accountable.** We probe and reveal the actions and inactions of powerful people and institutions, and the consequences that follow. But we can’t keep doing this without support from readers like you.  **********Please give what you can today. Every gift helps.********** [GIVE NOW](https://give.calmatters.org/campaign/564470/donate?c_src=website&c_src2=homepage) Tagged: [California Budget](https://calmatters.org/tag/california-budget/), [Commentary](https://calmatters.org/tag/commentary/), [Donald Trump](https://calmatters.org/tag/donald-trump/), [economy](https://calmatters.org/tag/economy/), [Gavin Newsom](https://calmatters.org/tag/gavin-newsom/) [](https://calmatters.org/author/dan-walters/) ## [Dan WaltersOpinion Columnist](https://calmatters.org/author/dan-walters/) [dan@calmatters.org](mailto:dan@calmatters.org) Dan Walters is one of most decorated and widely syndicated columnists in California history, authoring a column four times a week that offers his view and analysis of the state’s political, economic,... [More by Dan Walters](https://calmatters.org/author/dan-walters/) ###### Republish ### California’s budget bleeds red ink with added pressure to cover Trump’s cuts We love that you want to share our stories with your readers. Hundreds of publications republish our work on a regular basis. All of the articles at CalMatters are available to republish for free, under the following conditions: - - **Give prominent credit to our journalists:** Credit our authors at the top of the article and any other byline areas of your publication. In the byline, we prefer “By Author Name, CalMatters.” If you’re republishing guest commentary ([example](https://calmatters.org/commentary/2024/11/reform-california-proportional-representative-democracy/)) from CalMatters, in the byline, use “By Author Name, Special for CalMatters.” - - **Credit CalMatters at the top of the story:** At the top of the story’s text, include this copy: “This story was originally published by [CalMatters](https://calmatters.org/). [Sign up](https://calmatters.org/subscribe-to-calmatters/) for their newsletters.” If you are republishing [commentary](https://calmatters.org/category/commentary/), include this copy instead: “This commentary was originally published by [CalMatters](https://calmatters.org/). [Sign up](https://calmatters.org/subscribe-to-calmatters/) for their newsletters.” If you’re republishing in print, omit the second sentence on newsletter signups. - - **Do not edit the article, including the headline,** **except to reflect relative changes in time, location and editorial style.** For example, “yesterday” can be changed to “last week,” and “Alameda County” to “Alameda County, California” or “here.” - - **If you add reporting that would help localize the article,** include this copy in your story: “Additional reporting by \[Your Publication\]” and let us know at [republish@calmatters.org](mailto:republish@calmatters.org). - - **If you wish to translate the article**, please contact us for approval at [republish@calmatters.org](mailto:republish@calmatters.org). - - **Photos and illustrations by CalMatters staff or shown as “for CalMatters”** may only be republished alongside the stories in which they originally appeared. For any other uses, please contact us for approval at [visuals@calmatters.org](mailto:visuals@calmatters.org). - - **Photos and illustrations from wire services** like the Associated Press, Reuters, iStock are not free to republish. - - **Do not sell our stories, and do not sell ads specifically against our stories.** Feel free, however, to publish it on a page surrounded by ads you’ve already sold. - - **Sharing a CalMatters story on social media?** Please mention @CalMatters. We’re on X, Facebook, Instagram, TikTok and BlueSky. If you’d like to regularly republish our stories, we have some other options available. Contact us at [republish@calmatters.org](mailto:republish@calmatters.org) if you’re interested. Have other questions or special requests? Or do you have a great story to share about the impact of one of our stories on your audience? We’d love to hear from you. Contact us at [republish@calmatters.org](mailto:republish@calmatters.org). \<!-- Creative Commons Attribution-NonCommercial-NoDerivatives https://creativecommons.org/licenses/by-nc-nd/4.0/ --\> \<h1\>California\&\#8217;s budget bleeds red ink with added pressure to cover Trump\&\#8217;s cuts\</h1\> \<p\>By \<a href="https://calmatters.org/author/dan-walters/" title="Posts by Dan Walters" class="author url fn" rel="author"\>Dan Walters\</a\>, CalMatters\</p\> \<figure\> \<img width="1200" height="800" src="https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?fit=1200%2C800\&amp;ssl=1" class="attachment-post-thumbnail size-post-thumbnail wp-post-image" alt="Hands hold a printed booklet clipped at the top titled “Governor’s Budget Summary 2026–27, Gavin Newsom, Governor, State of California,” featuring a photo of the state capitol building on the cover." decoding="async" loading="lazy" srcset="https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?w=2000\&amp;ssl=1 2000w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=300%2C200\&amp;ssl=1 300w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=1024%2C682\&amp;ssl=1 1024w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=768%2C512\&amp;ssl=1 768w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=1536%2C1024\&amp;ssl=1 1536w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=18%2C12\&amp;ssl=1 18w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=1200%2C800\&amp;ssl=1 1200w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=780%2C520\&amp;ssl=1 780w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?resize=400%2C267\&amp;ssl=1 400w, https://i0.wp.com/calmatters.org/wp-content/uploads/2026/02/010926-Budget-Presentation-FG-CM-13.jpg?fit=1200%2C800\&amp;ssl=1\&amp;w=370 370w" sizes="auto, (max-width: 1200px) 100vw, 1200px" /\> \<figcaption\>A reporter holds a copy of Gov. Gavin Newsom’s budget summary at the Capitol Annex Swing Space in Sacramento on Jan. 9, 2026. Photo by Fred Greaves for CalMatters \</figcaption\> \</figure\> \<p\>This commentary was originally published by \<a href="https://calmatters.org/"\>CalMatters\</a\>. \<a href="https://calmatters.org/subscribe-to-calmatters/"\>Sign up\</a\> for their newsletters.\</p\> \<p\>Nine months into the 2025-26 fiscal year, state tax revenues are running several billion dollars ahead of projections in \<a href="https://ebudget.ca.gov/publication/e/2025-26/BudgetSummary"\>the budget \</a\>that Gov. Gavin Newsom signed last June.\</p\> \<p\>That’s a bit of good news, because the \<a href="https://calmatters.org/tag/california-budget/" type="link"\>budget had a hefty gap\</a\> between projected general fund income and outgo, a continuation of what budget officials call a “\<a href="https://calmatters.org/commentary/2026/02/newsom-spending-california-chronic-deficit/"\>structural deficit\</a\>” that has plagued recent budgets.\</p\> \<p\>Spending has \<a href="https://calmatters.org/commentary/2026/02/newsom-spending-california-chronic-deficit/" type="link"\>persistently outstripped revenues\</a\>, with the difference bridged by a variety of on- and off-book loans, accounting gimmicks and raids on emergency reserves \<a href="https://lao.ca.gov/reports/2026/5101/2026-27\_Budget\_Overview\_011226.pdf"\>totaling \$125 billion so far\</a\>, according to Gabe Petek, the Legislature’s budget analyst.\</p\> \<p\>Newsom’s \<a href="https://ebudget.ca.gov/budget/p/2026-27/BudgetSummary"\>proposed budget for the 2026-27 fiscal year\</a\> contains a \$21 billion general fund shortfall that he would shrink to \$3 billion by employing an array of the same stopgap measures.\</p\> \<p\>Newsom has promised that when the budget is revised in May, it will not only close its latest gap but end the deficit cycle that otherwise would continue indefinitely, according to Petek and Newsom’s budget writers.\</p\> \<p\>The recent uptick in revenues, cited in a \<a href="https://lao.ca.gov/LAOEconTax/Article/Detail/777"\>report from Petek’s office\</a\>, slightly improves the income/outgo imbalance but falls way short of closing it, unless it becomes a major windfall, as Jason Sisney, a budget advisor to legislative leaders, believes it could.\</p\> \<p\>“No one counsels humility about revenue projections more than me, but I think the odds are that general fund revenues for the budget window will be somewhere between \$15 billion and \$40 billion above the governor’s January 9 projections,” Sisney says in a recent email.\</p\> \<p\>The sharp differences over revenues hinge on expectations of whether the stock market continues its mostly positive recent performance, buoyed by artificial intelligence companies, or if it falters. California’s budget is inordinately dependent on taxes on wealthy taxpayers’ investment profits and therefore is highly sensitive to stock market gyrations.\</p\> \<p\>With the April 15 deadline for income tax returns nearing, everyone associated with the budget awaits new revenue data. Meanwhile, the administration and legislators are besieged with pleas from those with stakes in the budget, seeking more money than Newsom’s proposed budget offers.\</p\> \<p\>On Wednesday, mayors of the state’s largest cities warned that Newsom’s budget — which would slash the traditional \$1 billion allocation for programs to battle homelessness to \$500 million — would “reverse the progress cities have made in reducing unsheltered homelessness.”\</p\> \<p\>The mayors don't just want a return to \$1 billion; they seek a multi-year commitment with annual adjustments for inflation, the latest chapter in a long-running dispute. Newsom has chided cities for not spending money effectively to reduce the number of homeless people on the streets, while mayors complain that without multi-year aid, they cannot make long-term programmatic commitments.\</p\> \<p\>Meanwhile county officials, citing \$6 billion to \$9.5 billion in reduced federal aid in President Donald Trump’s “one big beautiful bill,” this week \<a href="https://www.counties.org/wp-content/uploads/2026/03/HR-1-Mullti-Year-Budget-Request-Summary\_-FINAL.pdf"\>asked Newsom and legislators for \$6.4 billion\</a\> over two years to offset the losses, “in order to prevent our safety net from crumbling.”\</p\> \<p\>Filling the financial holes from Trump’s reductions in federal aid is also a high priority for groups representing California’s poor families, with the state’s Medi-Cal program a major concern. They have not only sought backfill from a state budget already leaking red ink but proposed tax increases for ongoing financing, including a tax on the wealth of California’s billionaires that may be on the November ballot.\</p\> \<p\>What we have, therefore, is a budget with chronic, multibillion-dollar deficits that’s under additional pressure due to federal aid reductions, and it must be finalized in less than three months by a governor now in the last year of his reign who is contemplating a campaign for the White House.\</p\> \<p\>It should be interesting.\</p\> \<p\>This article was \<a href="https://calmatters.org/commentary/2026/03/california-budget-red-trump-cuts/"\>originally published on CalMatters\</a\> and was republished under the \<a href="https://creativecommons.org/licenses/by-nc-nd/4.0/"\>Creative Commons Attribution-NonCommercial-NoDerivatives\</a\> license.\</p\> Copy HTML [](https://calmatters.org/) - [Bluesky](https://bsky.app/profile/calmatters.org) - [Instagram](https://www.instagram.com/calmatters/) - [Facebook](https://www.facebook.com/calmatters/) - [X](https://x.com/CalMatters) - [TikTok](https://www.tiktok.com/@calmatters) - [LinkedIn](https://www.linkedin.com/company/calmatters/) - [YouTube](https://www.youtube.com/calmatters) ## About - [Overview](https://calmatters.org/about/) - [Impact](https://calmatters.org/about/impact/) - [Funding](https://calmatters.org/about/funding/) - [News and Awards](https://calmatters.org/about/news-and-awards/) - [Policies](https://calmatters.org/about/policies-and-standards/) - [Programs](https://calmatters.org/about/programs/) - [Sponsorships](https://calmatters.org/about/advertise/) - [Our Team](https://calmatters.org/about/team/) - [Jobs](https://calmatters.org/about/jobs/) - [Contact Us](https://calmatters.org/about/contact-us/) ## Topics - [Politics](https://calmatters.org/category/politics/) - [Justice](https://calmatters.org/category/justice/) - [Economy](https://calmatters.org/category/economy/) - [Education](https://calmatters.org/category/education/) - [Environment](https://calmatters.org/category/environment/) - [Housing](https://calmatters.org/category/housing/) - [Health](https://calmatters.org/category/health/) - [Commentary](https://calmatters.org/category/commentary/) - [Inequality](https://calmatters.org/category/california-divide/) ## More - [Donate](https://give.calmatters.org/campaign/564470/donate?c_src=website&c_src2=footer) - [Manage donation](https://calmatters.org/about/contact-us/#manage-your-donation) - [Newsletters](https://calmatters.org/subscribe-to-calmatters/) - [CalMatters en Español](https://calmatters.org/category/calmatters-en-espanol/) - [Inside the Newsroom](https://calmatters.org/category/inside-the-newsroom/) - [Digital Democracy](https://calmatters.digitaldemocracy.org/) ## General Inquiries [info@calmatters.org](mailto:info@calmatters.org) ## Membership Inquiries [membership@calmatters.org](mailto:membership@calmatters.org) 1. Protect your nonprofit state news. 1. Become a CalMatters member with a tax-deductible donation today to stay informed, bolster our journalism and expand how many people we reach across California. [Donate](https://give.calmatters.org/campaign/564470/donate?c_src=website&c_src2=footer) - [Terms & Conditions](https://calmatters.org/about/policies-and-standards/#j-terms-and-conditions) - [Privacy Policy](https://calmatters.org/about/policies-and-standards/#j-privacy-policy) - [Sitemap](https://calmatters.org/sitemap/) © 2026 CalMatters [Powered by Newspack](https://newspack.com/) [Privacy Policy](https://calmatters.org/privacy-policy/) ## Gift this article Close Link Copy link

 A reporter holds a copy of Gov. Gavin Newsom’s budget summary at the Capitol Annex Swing Space in Sacramento on Jan. 9, 2026. Photo by Fred Greaves for CalMatters Nine months into the 2025-26 fiscal year, state tax revenues are running several billion dollars ahead of projections in [the budget](https://ebudget.ca.gov/publication/e/2025-26/BudgetSummary) that Gov. Gavin Newsom signed last June. That’s a bit of good news, because the [budget had a hefty gap](https://calmatters.org/tag/california-budget/) between projected general fund income and outgo, a continuation of what budget officials call a “[structural deficit](https://calmatters.org/commentary/2026/02/newsom-spending-california-chronic-deficit/)” that has plagued recent budgets. Spending has [persistently outstripped revenues](https://calmatters.org/commentary/2026/02/newsom-spending-california-chronic-deficit/), with the difference bridged by a variety of on- and off-book loans, accounting gimmicks and raids on emergency reserves [totaling \$125 billion so far](https://lao.ca.gov/reports/2026/5101/2026-27_Budget_Overview_011226.pdf), according to Gabe Petek, the Legislature’s budget analyst. Newsom’s [proposed budget for the 2026-27 fiscal year](https://ebudget.ca.gov/budget/p/2026-27/BudgetSummary) contains a \$21 billion general fund shortfall that he would shrink to \$3 billion by employing an array of the same stopgap measures. Newsom has promised that when the budget is revised in May, it will not only close its latest gap but end the deficit cycle that otherwise would continue indefinitely, according to Petek and Newsom’s budget writers. The recent uptick in revenues, cited in a [report from Petek’s office](https://lao.ca.gov/LAOEconTax/Article/Detail/777), slightly improves the income/outgo imbalance but falls way short of closing it, unless it becomes a major windfall, as Jason Sisney, a budget advisor to legislative leaders, believes it could. “No one counsels humility about revenue projections more than me, but I think the odds are that general fund revenues for the budget window will be somewhere between \$15 billion and \$40 billion above the governor’s January 9 projections,” Sisney says in a recent email. The sharp differences over revenues hinge on expectations of whether the stock market continues its mostly positive recent performance, buoyed by artificial intelligence companies, or if it falters. California’s budget is inordinately dependent on taxes on wealthy taxpayers’ investment profits and therefore is highly sensitive to stock market gyrations. With the April 15 deadline for income tax returns nearing, everyone associated with the budget awaits new revenue data. Meanwhile, the administration and legislators are besieged with pleas from those with stakes in the budget, seeking more money than Newsom’s proposed budget offers. ## READ NEXT On Wednesday, mayors of the state’s largest cities warned that Newsom’s budget — which would slash the traditional \$1 billion allocation for programs to battle homelessness to \$500 million — would “reverse the progress cities have made in reducing unsheltered homelessness.” The mayors don’t just want a return to \$1 billion; they seek a multi-year commitment with annual adjustments for inflation, the latest chapter in a long-running dispute. Newsom has chided cities for not spending money effectively to reduce the number of homeless people on the streets, while mayors complain that without multi-year aid, they cannot make long-term programmatic commitments. Meanwhile county officials, citing \$6 billion to \$9.5 billion in reduced federal aid in President Donald Trump’s “one big beautiful bill,” this week [asked Newsom and legislators for \$6.4 billion](https://www.counties.org/wp-content/uploads/2026/03/HR-1-Mullti-Year-Budget-Request-Summary_-FINAL.pdf) over two years to offset the losses, “in order to prevent our safety net from crumbling.” Filling the financial holes from Trump’s reductions in federal aid is also a high priority for groups representing California’s poor families, with the state’s Medi-Cal program a major concern. They have not only sought backfill from a state budget already leaking red ink but proposed tax increases for ongoing financing, including a tax on the wealth of California’s billionaires that may be on the November ballot. What we have, therefore, is a budget with chronic, multibillion-dollar deficits that’s under additional pressure due to federal aid reductions, and it must be finalized in less than three months by a governor now in the last year of his reign who is contemplating a campaign for the White House. It should be interesting. ## READ NEXT [](https://calmatters.org/author/dan-walters/) Dan Walters is one of most decorated and widely syndicated columnists in California history, authoring a column four times a week that offers his view and analysis of the state’s political, economic,... [More by Dan Walters](https://calmatters.org/author/dan-walters/)