Enacted Budget – Fiscal Year 2025
Governor Gavin Newsom signed the state’s fiscal 2025 budget into law on June 29. The budget provides for total state expenditures (excluding federal funds) of $297.9 billion for fiscal 2025. This includes $211.5 billion in general fund spending, a 5.2 percent decline from fiscal 2024. The budget is based on forecasted general fund revenues of $207.2 billion before rainy day fund transfers, representing an 8.9 percent annual increase. The budget also provides for a revenue transfer from the state’s Budget Stabilization Account (rainy day fund) to the general fund as well as a withdrawal from the Safety Net Reserve to zero out that fund balance. After transfers, the enacted budget projects a $22.2 billion balance (10.5 percent of general fund expenditures) in the state’s rainy day fund accounts (including the Budget Stabilization Account, Public School System Stabilization Account, and Special Fund for Economic Uncertainties) in addition to $10.6 billion in the Reserve for Liquidation of Encumbrances, for a total balance of $32.8 billion.Â
The fiscal 2025 budget includes a package of strategies to close the state’s projected $46.8 billion budget gap, including $16.0 billion in spending reductions; $13.6 billion in additional revenue sources and internal borrowing; $6.0 billion in reserve withdrawals (as mentioned above); and a series of fund shifts, delayed and paused spending, and payment deferrals. Spending cuts include a statewide reduction in ongoing operations funding for nearly all department budgets by an estimated 7.95 percent in fiscal 2025, as well as additional targeted reductions and savings from reducing budgets for vacant positions. Revenue-raising measures in the budget include suspending Net Operating Loss and limiting business tax credits, as well as increasing the Managed Care Organization (MCO) tax. At the same time, the budget maintains funding for programs serving vulnerable populations, including meeting the minimum guarantee for state funding of Pre-K-12 schools and community colleges under Proposition 98; maintaining Medi-Cal expanded services such as covering all residents regardless of immigration status (including in-home supportive services); preserving behavioral health program funding; maintaining base grant levels for several public assistance programs; and preserving funding for Middle Mile and Last Mile Broadband Initiative projects. In addition, the budget continues investments in homelessness programs, encampment resolution grants, nonprofit security grants, food assistance to students over the summer, updated foster care rates, and other key priorities.