Proposed Budget - Fiscal Year 2025
On January 10, California Governor Gavin Newsom introduced his budget proposal for fiscal 2025. The budget calls for total state expenditures (excluding federal funds) of $291.5 billion, including $208.7 billion in general fund spending for fiscal 2025. This represents a 9.6 percent general fund decrease compared to spending levels in fiscal 2024. This decrease reflects a series of strategies proposed by the governor to close the state’s budget gap. This gap results from the impacts of a weak stock market performance in 2022 on state revenues coupled with significant and unprecedented delays in state income tax collections due to postponed federal tax deadlines related to disaster declarations, which delayed the state from taking corrective budgetary action sooner. The fiscal 2025 budget is based on total general fund resources for fiscal 2025 of $222.7 billion, including an $8.0 billion beginning balance and $214.7 billion in annual revenue after a $12.0 billion transfer from the state’s rainy day fund (also known as the Budget Stabilization Account or BSA). General fund revenues, prior to transfers, are forecasted to increase 2.2 percent in fiscal 2025 compared to current estimates for fiscal 2024. The recommended budget projects reserve balances at the end of fiscal 2025 of $11.1 billion in the BSA and $3.9 billion in the Public School System Stabilization Account (PSSSA). Additionally, the general fund ending balance is expected to be $14.0 billion, including a $10.6 billion Reserve for Liquidation of Encumbrances and $3.4 billion in the Special Fund for Economic Uncertainties (SFEU) (the state’s operating reserve). This amounts to combined budgetary reserves (BSA, PSSA, and SFEU) of $18.4 billion (8.8 percent of recommended general fund expenditures for fiscal 2025), and a total balance of $29.0 billion.