The $298 billion budget is proposed for both the 2024-25 fiscal year and the 2025-26 fiscal years, a maneuver the governor in May called a "budget year, plus one" proposal that he said would help bring spending in line with revenue projections over the next two years.
Newsom hailed the agreement, saying it “sets the state on a path for long-term fiscal stability - addressing the current shortfall and strengthening budget resilience down the road." The governor added that the agreement would help preserve programs that serve millions of Californians, including key funding for education, health care, expanded behavioral health services, and combatting homelessness.
The gap was closed with a combination of $16 billion in cuts and other financial tricks, such as more than 13-and-a-half billion in additional revenue sources and internal borrowing from special funds.
It also shifts around six billion dollars in spending, delays or defers more than $5 billion in payments, and draws about $12 billion over the next two fiscal years from the state's Budget Stabilization Account known as the rainy-day fund.
The cuts include more than a billion dollars to various affordable housing programs and half-billion dollars from the California Student Housing Revolving Loan Program, which was established in 2022 and gives zero-interest loans to universities and colleges to build affordable housing.
