Governor Newsom’s May Revise: Chronic Overspending and Misguided Priorities

By Assemblymember Diane Dixon

On May 14th, Governor Newsom released his revised state budget proposal to the legislature. The out-of-touch and misguided policy priorities within the proposal set the total state spending at $349.4 billion – $500 million higher than the first budget he submitted in January. Absent substantive changes to address the real concerns of Californians, the May Revise highlights the consistent and systemic failings that have led to the state’s economic problems.

According to the Legislative Analyst’s Office (LAO), “The state’s current fiscal situation is genuinely unprecedented. Despite booming revenues, the budget position is overextended, reflecting: a structurally higher spending base, diminished reserves, an already accumulated wall of debt and an operating deficit”.

As I have said before, California doesn’t have a revenue problem; it has a Governor with a spending problem. Upon signing his first budget in 2019, Governor Newsom stated, “The driving idea behind this budget – and my first year in office – is to combat the cost crisis and maintain fiscal discipline”. Fiscal discipline? Total spending has jumped 72% from $203 billion–in six years under Newsom’s leadership.

A giant hole in the budget is the estimated $180 billion lost to fraud in California, yet there is no funding allocation for fraud prevention or detection in social benefit programs, which are budgeted at $334.2 billion (more than double the total health and human services costs seven years ago), including Medi-Cal, hospice, in-home supportive services, CalWORKs, and childcare programs. With little or no oversight and control, these social programs are especially susceptible to unscrupulous behavior and exploitation. There is also no funding for fraud detection for financial aid at California Community Colleges, despite over $10 million in fraudulent benefits having been distributed in 2025.

Additionally, the Governor allocates approximately $11 billion each year to provide full-scope Medi-Cal benefits for undocumented immigrants and $20 million to support

services to help non-residents who are facing immigration court proceedings. Apparently not concerned with the astronomical price tag for the High Speed Rail (estimated at more than $230 billion), the Governor has directed $1 billion annually for the High-Speed

Rail Authority to continue building this train to nowhere. There is more — the Governor’s budget does not:

• Provide any direction for the California Air Resources Board or California Energy Commission to reduce the cost of gas and electricity for
• Provide any additional funds for surface water storage projects (reservoirs) or water conveyance improvements, which were approved by taxpayers in 2012 and have still not been built. The budget simultaneously reduces funding for the Safe & Affordable Drinking Water Program from $92 million to $68 million.
• Prioritize Prop 36 funding, despite the overwhelming support from the California public, in effect failing to implement the will of nearly 70 percent of the voters.
• Provide any funding for county-level pretrial release programs or funding for mental health or drug treatment programs required for individuals charged with a treatment-mandated felony.
• Provide any new funding for statewide housing, except for a $100 million Disaster Rebuilding Fund to rebuild Los Angeles.
• Provide adequate support for wildfire prevention, reducing funding from $141 million to $105 million.

On the face of it, the Governor appears to have accomplished his goal of balancing the state’s budget and will leave office with a smaller operating deficit. How? By proposing more taxes on business with a $3.7 billion business tax increase, suspending $7 billion of constitutionally required deposits into the state’s Rainy Day Fund and shifting $9.7 billion of unanticipated revenue from 2026-27 to the next fiscal year to make it look good for the next Governor. Why bother with voter-approved mandates or pesky constitutional requirements — spend, spend, spend and don’t look back.

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