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Stephenshaw Delivers 2025-26 California Budget Amid Wildfire Crisis
The Governor’s budget proposal projects a surplus of $363 million, alongside $17 billion in reserves, including $10.9 billion in the Rainy-Day Fund and an additional $4.5 billion in the Special Fund for Economic Uncertainties. However, the Legislative Analyst’s Office (LAO) has expressed a more cautious outlook, estimating a $2 billion deficit.
By Joe W. Bowers Jr, California Black Media
California Department of Finance Director Joe Stephenshaw, standing in for Gov. Gavin Newsom, presented the state’s $322.3 billion proposed budget for the 2025-26 fiscal year at a press briefing on Jan. 10.
The presentation, held at the Media Briefing Room of the Swing Space Building in Sacramento, began with Stephenshaw addressing the devastating wildfires sweeping through Southern California. He affirmed the state’s commitment to enhancing wildfire preparedness and resilience, emphasizing ongoing efforts to protect communities and natural resources.
“The budget I present to you today reflects a balanced approach, one that avoids new cuts to core programs while continuing investments in critical areas like wildfire preparedness, education, and economic resilience,” Stephenshaw stated.
Stephenshaw highlighted the administration’s progress in fiscal management, noting, “Thanks to the budget framework that the Governor proposed last May to not only balance the budget for the upcoming fiscal year but also ensure that our special fund for economic uncertainty was balanced for the next fiscal year.
The Governor’s budget proposal projects a surplus of $363 million, alongside $17 billion in reserves, including $10.9 billion in the Rainy-Day Fund and an additional $4.5 billion in the Special Fund for Economic Uncertainties. However, the Legislative Analyst’s Office (LAO) has expressed a more cautious outlook, estimating a $2 billion deficit.
The proposed budget includes savings from the elimination of 6,500 vacant government positions, generating $1.2 billion over two years. Additional operational efficiencies, such as reduced state travel budgets and IT system modernization, are expected to save $3.5 billion.
The budget introduces stricter accountability measures for homelessness funding, including enhanced oversight of the Homeless Housing, Assistance, and Prevention program. Frequent reporting of expenditures and outcomes will be required to ensure effective use of funds. Investments also target affordable housing development, including funding for low-income housing tax credits and $100 million for encampment resolution efforts.
The proposed budget includes programs like the California Competes program and workforce development initiatives that continue to support small businesses, including Black businesses, and promote economic growth. The budget also maintains $1.6 billion in public safety funding, including $283.6 million in 2025-26 to enhance enforcement, prosecution, and accountability.
Dr. Akilah Weber Pierson (D-San Diego), Chair of the California Legislative Black Caucus (CLBC), stated, “We thank the Governor and Department of Finance staff for their work on this initial budget proposal. While the governor’s spending plan seeks to achieve fiscal responsibility, there is much to do in the way of addressing the economic inequality faced by our most vulnerable populations.” She added that the CLBC is committed to collaborating with legislative colleagues and the administration to safeguard and expand investments in underserved communities.
Assembly Minority Leader James Gallagher (R – Yuba City) offered a sharp critique on the budget, particularly targeting Newsom’s economic policies. “Newsom is doubling down on the same failed programs that stuck Californians with record homelessness, soaring energy and housing costs, and one of the highest unemployment rates in the nation,” Gallagher stated.
The proposed budget now heads to the Legislature for deliberation and potential adjustments before Newsom revises it in May. By law, the process must be completed, and the balanced budget signed by the end of June when the fiscal year ends.
