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California Gov. Newsom proposes some housing and climate cuts to balance $38 billion budget deficit

The Associated Press
California Gov. Newsom proposes some housing and climate cuts to balance $38 billion budget deficit

SACRAMENTO, CA. – California Gov. Gavin Newsom released details Wednesday of a new $291 billion state spending plan for the 2024-25 budget year that accounts for an estimated $37.9 billion deficit.

Newsom, a Democrat, proposed covering the shortfall by tapping $13 billion from reserves, trimming $8.5 billion from programs, deferring some spending to the future and spreading it out over more years.

He’ll spend the next six months negotiating a final plan with the Legislature, which is also controlled by his party. The budget year begins July 1.

Here’s a look at his proposed spending in key areas:


Newsom, whose second and final term ends in January 2027, has made curbing homelessness and increasing housing key priorities. But his proposal contains more than $1.2 billion in cuts from housing programs.

Those include $300 million from regional planning grants, $250 million less for building and preserving multifamily housing and another $250 million from a program to acquire and rehabilitate properties at risk of foreclosure.

Newsom also wants to delay $260 million in grants to cities and counties for efforts to tackle homelessness, pushing the spending from the current budget to 2025-26. Further, he would cut $100 million from administration of the homelessness prevention grant program.


The proposal maintains spending on expanded mental health services, another Newsom priority, and includes funds for wellness coaches for children and youth.

It largely keeps intact a $1.5 billion program to help counties find housing for homeless people with serious mental illness and substance use disorders, but it delays $235 million in spending to 2025-26.


Newsom proposes to cut $2.9 billion in climate change spending, including $40 million from a program that helps local and regional governments fight the impacts of extreme heat and $23.5 million for a pilot program to deploy zero-emission trucks that transport goods from ports.

He also plans to postpone until 2027-28 some $600 million in spending for programs to help motorists replace gas vehicles with hybrid and zero-emission ones. He’s keeping a $1.4 billion plan to conserve 30% of the state’s lands and coastal waters but delays $200 million until 2026-28 on rebates to homeowners who install solar panels.


Last year Newsom signed legislation to gradually boost health care workers’ pay to a minimum of $25 an hour with raises set to start June 1. He’s now asking lawmakers to add a requirement that those be subject to how much state money is available.

The proposal would also delay more than $300 million of a $975 million program to increase the numbers of people entering behavioral health and social work professions.


Under state law, California allocates about the same share of the budget each year for education. Newsom’s proposal includes $126.8 billion for K-12 programs, compared with $129.2 billion last year.

That includes $375 million for school construction, down from the $875 million previously planned. Additionally, $550 million for grants to school districts to update preschool, kindergarten and pre-K facilities would be delayed to 2025-26.

The proposal keeps $500 million in spending for zero-emission school buses.

Newsom proposes $44.8 billion for higher education and financial aid.


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