Governor Gavin Newsom's revised budget for 2025-26 increases California's projected deficit by $12 billion, mainly due to economic impacts from President Trump's tariffs. Initially, the budget had an $11 billion gap which Newsom filled with various fiscal maneuvers. However, downward revisions of revenue forecasts prompted by trade policies have compounded financial stress, prompting necessary cuts in health program Medi-Cal. Newsom's budget outlines maintaining overall spending while targeting reductions in specific areas to stabilize the economy and ensure operational resilience for critical programs.
Gov. Newsom highlighted the impact of President Trump's tariffs, attributing a $12 billion increase in California's deficit to economic instability and unforeseen tax revenue declines.
The governor's revised budget shows California facing an estimated $12 billion shortfall due to slowing tax receipts linked to Trump's trade policies and rising Medi-Cal costs.
With reduced general fund expenditures, Newsom aims for budget resilience by proposing cuts in health program spending while maintaining overall spending stability at $322 billion.
Newsom's administration must now make tough decisions to balance the budget sustainably, focusing on ongoing expenditure cuts and prudent reserve allocations.
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