


The California state budget has grown significantly under Gov. Gavin Newsom. In 2018-19, the state general fund budget spent $143 billion. Now, the governor is calling for over $226 billion in general fund spending even in the face of anticipated economic challenges.
The governor’s May Revise anticipates an economic slowdown in the coming year, including reduced growth in the national Gross Domestic Product, greater unemployment and a downgrading of wage and salary growth.
“Washington’s imposition of tariffs has driven a downgrade in both the economic and revenue forecasts,” Newsom’s May Revise explains. “Combined with increased expenditure growth above the Governor’s Budget—most notably in Medi-Cal—the state must now close an estimated shortfall of $12 billion to balance the budget and provide for a prudent discretionary reserve. This will require difficult but necessary decisions to reduce ongoing expenditure growth to maintain budget resilience and stability for critical state programs.”
While macroeconomic trends and the actions of the president are indeed out of Newsom’s hands, a plain reading of that explanation understates Newsom’s culpability for this budget shortfall.
Consider, for example, his reference to Medi-Cal. Newsom acts like it’s somehow a surprise that his expansion of Medi-Cal to undocumented immigrants comes at great cost. Of course it would.
As noted by Sen. Steven Choi, R-Irvine, “Medi-Cal has soared from $17.1 billion in 2014-15 to $37.6 billion this year and is projected to hit $44.6 billion next year, driven largely by full-scope coverage of illegal immigrants, $86.5 million in 2025-26, exploding to $3.3 billion a year by 2028-29. Taxpayers paying rising premiums are left wondering why they’re subsidizing benefits for those who broke federal law to be here.”
Now, Newsom is going to take political heat from his left-flank to try to paper over this mistake by halting undocumented adults from enrolling in the program and requiring undocumented adults in the program to begin pitching in.
For more on that, we recommend reading California Policy Center fellow Marc Joffe’s commentary.
But in addition to this, part of the reason the state budget bubble is at risk of bursting is the fact that Newsom has been, more than anything, a major booster of government employment.
Opined Govern for California’s David Crane, “Newsom has been the most public-employee-union-friendly governor since Gray Davis, adding 45,000 positions to the Executive Branch to reach a current total of 255,000. I don’t know what all those people do — the state itself is not much of a service provider but rather more a vehicle for passing funds to other service providers such as schools, colleges, universities, counties, cities and hospitals — but I do know that public employee unions are Newsom’s largest financial supporters.”
So, yes, if the economy slides it won’t be entirely Newsom’s fault. But the trajectory of the budget certainly has been. If Newsom spent less time dreaming up a path to the White House and more time putting the state on a sustainable fiscal trajectory, budget season wouldn’t be such a rollercoaster.