'California is under assault:' Newsom blames 'Trump slump' for $12B budget deficit
Governor Newsom announces state faces $12B budget deficit
Governor Gavin Newsom announced the state is facing a $12 billion budget deficit, and released his plans on how to close the gap.
SACRAMENTO, Calif. - Gov. Gavin Newsom announced on Wednesday that California is facing a $12 billion budget deficit as he placed part of the blame on President Donald Trump.
He made the announcement during his May budget revision and said economic uncertainty fueled by the President’s tariff policy and a volatile stock market is estimated to cost the state $16 billion in revenue. He coined it the "Trump slump."
"California is under assault," Newsom said. "We have a president that’s been reckless in terms of assaulting those growth engines, and has created a climate of deep uncertainty and certainly has California in his sights."
It’s a departure from January projections that saw the state’s budget ‘mostly balanced.’
The budget impacted by the trade war, the destructive Los Angeles wildfires and rising Medicare costs.
Newsom proposed a $322 billion budget to the Legislature that includes shifts and cuts in funding, including to one of his signature policies.
"Our approach was not to kick people off, and not to roll back the expansion," said Newsom. "But to level set, on what we can do and what we can’t do."
Newsom is proposing a freeze on enrollment in a state-funded healthcare program for low-income adult immigrants without legal status.
He also wants to charge a $100 monthly premium for undocumented adults in the program starting in 2027.
State Republicans quickly criticized the Governor’s budget proposals. Assembly Republican Leader James Gallagher fired back at Newsom placing blame on the President.
"Newsom’s finger-pointing on the budget shortfall is the biggest load of crap I’ve ever seen from a politician, and he shovels out a lot of it," Gallagher said. "We’re in this mess because of his reckless spending, false promises, and failed leadership.
Newsom is also proposing other healthcare changes, including an $85-million cut to state coverage for weight-loss medications.
Newsom also wants to stop using revenues from a tobacco tax to pay for dental, family planning and women’s health providers.
The revenues from the tax have declined close to 40% between 2017 and 2024 and can no longer make those payments without using the general fund, a state Department of Finance spokesperson said. The proposal would save at least $500 million a year.
But that would also cut California Planned Parenthood’s budget by a third, the organization said.
The group is heavily critical of the proposed cut.
What the figures in Newsom’s proposal don’t include, is the potential for cuts to federal funding for California, which could raise more questions.
"We will be tasked with making decisions in a very challenging and vexing time, perhaps the most challenging and vexing we’ve had in some time," said Newsom.