Here’s how Gov. Newsom wants to spend (and cut) next year

Gavin Newsom holds his hands out while speaking at a lectern
California Gov. Gavin Newsom discusses his proposed state budget in Sacramento on Wednesday.
(Rich Pedroncelli / Associated Press)

Good morning. It’s Thursday, Jan. 11. Here’s what you need to know to start your day.

Here’s how Gov. Newsom wants to spend (and cut) next year

As Gov. Gavin Newsom walked through his 2024-2025 state budget proposal Wednesday, he framed his plan as a return to “normalization after a period of a tremendous amount of distortion.”

And while he outlined his priorities for how the state will spend the money it has, the money California won’t have became a focal point during his presentation.


Officials are bracing for a roughly $37.9-billion deficit. To close that gap, Newsom announced that he plans to pull from the state’s rainy-day reserves. To do that, he’d need to declare a budget emergency this summer.

That alone wouldn’t cover the shortfall. Newsom also proposed spending cuts and other “belt-tightening,” like freezing new contracts; forgoing new cars, phones and other equipment; and conducting audits that could impact how much the state funds housing initiatives, public transit, health services and more.

In total, Newsom’s proposal would give the state nearly $20 billion fewer dollars to spend compared with the budget adopted last June for our current fiscal year.

Why the shortfall?

That can be chalked up to “a confluence of weaker-than-expected state revenues, delayed tax deadlines and overspending based on inaccurate budget projections,” Times reporter Taryn Luna explained, noting that this would mark the second straight year of a deficit after a massive $100-billion budget surplus during the COVID-19 pandemic.

Newsom said the state basically “had a blindfold on” as it tried to estimate incoming tax revenue. He blamed volatile capital gains revenue plus the devastating storms last winter that led the IRS to significantly delay deadlines for the vast majority of California taxpayers. Without actually seeing how much tax revenue was coming in, officials could only guess.


“The deficit deepens state government’s economic challenges and could pose political problems for Newsom this year as he grapples with lawmakers and interest groups to cut $8.5 billion in planned spending, including from housing and climate programs,” Taryn reported this week.

How does Newsom want California to spend next fiscal year?

The governor’s proposal allots $291.5 billion in spending, including:

  • More than $15.3 billion to address the homelessness crisis
  • $8.7 billion for mental health efforts, with more than half of that allotted for youth behavioral health. Newsom said the goal is “treating brain health earlier before we punish it later.”
  • $1.1 billion over four years for public safety, including $347 million in response to organized retail theft and $88 million to address the opioid and fentanyl crisis
  • $126.8 billion for K-12 education and $44.8 billion for higher education
  • $48.3 billion to address the climate crisis, plus over $10 billion in funding from the Biden administration. Newsom said California is peerless among U.S. states in its efforts, noting the historic Klamath Dam removal project as an example of work to restore and protect a major river ecosystem
  • $41 billion on infrastructure projects for 2024
A pie chart shows proposed state spending for the 2024-25 fiscal year.
(State of California)

Newsom’s plan also notes spending cuts and delays to a number of departments and programs. That includes nearly $300 million in cuts and billions more in delayed funding for transportation programs, along with education, housing and climate-related programs.

Newsom downplayed the cuts to climate change efforts as “modest,” pointing to a notable boost in federal funding.

He also signaled that he might seek to restrict funding for a law he signed last year that increases the minimum wage for healthcare workers to $25 per hour. That could delay those workers’ pay hike if state revenue doesn’t hit a certain threshold.


His plan would also maintain funding for many of his expensive policy promises, Taryn noted, like expanding Medi-Cal eligibility to all immigrants regardless of legal status. While that policy has drawn criticism, his plan to dip into reserve funds “sounds a new alarm for the Golden State,” she explained.

“His plan to spend $13.1 billion of the reserves means less funding will be available to backfill spending if revenues continue to decrease, possibly forcing more painful and drastic cuts in the years ahead.”

This starts the budgetary process, but Newsom said the “prime-time” event would come in May when his office revises its proposal after lengthy negotiations with the state legislature.

If you are bored, brave or interested enough, you can explore Newsom’s full budget proposal here.

Today’s top stories

Placer County sheriff vehicles are parked near the ski lift at Palisades Tahoe where an avalanche occurred Jan. 10.
Placer County sheriff vehicles are parked near the ski lift at Palisades Tahoe where an avalanche occurred Jan. 10.
(Andy Barron / Associated Press)

Lake Tahoe avalanche

Climate and environment



More big stories


Get unlimited access to the Los Angeles Times. Subscribe here.

Commentary and opinions

Today’s great reads

Performers in colorful outfits
(Mirja Vogel / For De Los)

The muxe, Mexico’s ‘third gender,’ are part of a worldwide LGBTQ+ movement. The muxe — Indigenous Zapotec people in Mexico — view themselves as neither man nor woman. They embrace a distinct ‘third gender,’ part of a burgeoning LGBTQ+ movement worldwide.

Other great reads

How can we make this newsletter more useful? Send comments to


For your downtime

Three interiors of stores in Ojai selling clothing and home goods
(Photos by Lisa Boone / Los Angeles Times)

Going out

Staying in

And finally ... from our archives

A woman poses for photos wearing a leather helmet
American aviatrix Amelia Earhart poses for photos as she arrives on June 26, 1928, in Southampton, England, after a transatlantic flight.
(Associated Press)

On Jan. 11, 1935, Amelia Earhart, one of the world’s most celebrated aviators, made the first successful solo flight from Hawaii to California. Two years after her history-making flight, Earhart disappeared over the Pacific Ocean while embarking on a circumnavigational flight of the globe.

In 2018, The Times’ Steve Padilla wrote about her bones being found, and why the discovery was great for science but sad news for mystery buffs.

Have a great day, from the Essential California team


Ryan Fonseca, reporter
Elvia Limón, multiplatform editor
Kevinisha Walker, multiplatform editor
Laura Blasey, assistant editor

Check our top stories, topics and the latest articles on