Late last week, the state’s nonpartisan Legislative Analyst’s Office issued its annual “California Spending Plan” report on the state budget. As you would expect, with a big-spending governor and a Legislature that wishes it could spend even more, things aren’t looking so hot for the Golden State’s finances.
“For the third year in a row, the state faced a budget problem, or deficit,” the report explains of the current fiscal budget. “Although the budget problem this year was smaller than in recent years ($15 billion this year compared to $55 billion in 2024‑25 and $27 billion in 2023‑24), addressing this year’s budget problem required the state to adopt more ongoing solutions.”
While some of these solutions came in the form of spending reductions, most of them came in the form of borrowing and shifting funds. Budget shell games, in other words.
Budget-watchers may recall that Gov. Jerry Brown made a point of taking down the “Wall of Debt” accrued by the state amid the Great Recession. Well, his successor hasn’t been so diligent about ensuring the state spends within its means. Indeed, the state’s “New Wall of Debt,” as the LAO calls it, stands at $21.6 billion.
Indeed, as noted by Govern For California’s David Crane, “The state budget went from no deficit and adding to reserves in Jerry Brown’s last year as governor (2018-19) to a deficit and taking from reserves in Newsom’s most recent budget (2025-26).”
And deficits are going to be with state government for years to come. “Based on the administration’s June 2025 projections and assumptions, budget deficits are expected to persist despite the ongoing solutions included in the 2025‑26 spending plan,” the LAO notes. “Specifically, the administration projects annual operating deficits ranging from roughly $15 billion to $25 billion” through the 2028-2029 fiscal year.
Gov. Newsom has rarely particularly concerned himself with fiscal discipline, except in spurts when the Legislature gets ahead of itself. And now approaching its final year, whatever mess state leaders make will be the responsibility of whoever succeeds him.
“The bottom line is that if revenues don’t increase quickly and sharply, Newsom and legislators will face the same chronic deficit, plus added pressure to offset cuts in federal funds for education, social and medical services that Trump and Congress are making,” noted CalMatters columnist Dan Walters. “What they do, or don’t do, will accompany Newsom as he plunges into national politics.”
And that pressure to look vaguely serious might indeed be the one thing that nudges Newsom toward fixing up some of the bad fiscal practices he’s piled up.
Or so we hope.