{"id":366,"date":"2026-05-14T19:30:15","date_gmt":"2026-05-14T19:30:15","guid":{"rendered":"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/14\/newsoms-last-budget-cut-california-spending-now-save-for-the-ai-bubble-to-burst\/"},"modified":"2026-05-14T19:30:15","modified_gmt":"2026-05-14T19:30:15","slug":"newsoms-last-budget-cut-california-spending-now-save-for-the-ai-bubble-to-burst","status":"publish","type":"post","link":"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/14\/newsoms-last-budget-cut-california-spending-now-save-for-the-ai-bubble-to-burst\/","title":{"rendered":"Newsom\u2019s last budget: Cut California spending now, save for the AI bubble to burst"},"content":{"rendered":"<div>\n<article>\n<div>\n<p>Gov. Gavin Newsom is proposing further budget cuts and expanding the state\u2019s reserves despite a recent surge in tax revenue \u2014 an attempt to balance the books in anticipation of a looming long-term deficit in the coming years, he said.<\/p>\n<p>Read more <a href=\"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/14\/former-newsom-chief-of-staff-pleads-guilty-to-scheme-that-bled-money-from-becerras-account\/\">Former Newsom chief of staff pleads guilty to scheme that bled money from Becerra\u2019s account<\/a><\/p>\n<p>In a presentation riddled with criticism of the Trump administration and featuring memes including an image of President Donald Trump and Treasury Secretary Scott Bessent as \u201cDumb and Dumber,\u201d Newsom released his last budget plan as governor on Thursday.\u00a0<\/p>\n<p>He proposed a $350 billion spending plan that would zero out the state\u2019s budget deficit for two years and cut longer-term budget gaps in half. Newsom had pledged not to leave his successor with a giant structural deficit.<\/p>\n<p>\u201cI\u2019m not trying to get out of Dodge,\u201d Newsom said. \u201cThis is a balanced budget structurally for the next 18 months after I\u2019m gone.\u201d<\/p>\n<p>He proposed slashing general fund spending by $1.8 billion, primarily by further cutting Medi-Cal, including by raising monthly premiums on undocumented immigrant adults by $20 and reinstating Medi-Cal asset tests.\u00a0<\/p>\n<p>While Newsom wants the state to continue withdrawing $7 billion from the state\u2019s reserves this year, his proposal would also shore up the rainy day fund by transferring $3.6 billion to the account and setting aside nearly $10 billion more for fiscal year 2027-28.<\/p>\n<p>The governor\u2019s presentation is an updated outlook at the state\u2019s finances since January, when Newsom\u2019s administration projected a \u201cmodest shortfall\u201d of $2.9 billion that would grow to a $22 billion deficit in fiscal year 2027-28.\u00a0<\/p>\n<p>Read more <a href=\"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/14\/california-governor-frontrunner-xavier-becerras-playbook-never-say-youre-sorry\/\">California governor frontrunner Xavier Becerra\u2019s playbook: Never say you\u2019re sorry<\/a><\/p>\n<p>Since then, the state\u2019s tax revenue has grown faster than anticipated, thanks to a robust stock market and California\u2019s robust AI-driven technology sector. Newsom projects that the state will see $16.5 billion more in revenue over a three-year budgeting window than expected in January.<\/p>\n<p>But Newsom said the state\u2019s financial outlook remains ominous, attributing much of the uncertainty to Trump\u2019s policies, including a spending plan the president calls his \u201cone, big beautiful bill.\u201d It could strip 2 million low-income Californians of health insurance coverage, and the war in Iran, which has sent gas prices skyrocketing nationwide.<\/p>\n<p>\u201cWe have a president who \u2026 doesn\u2019t particularly give a damn about the financial situation of the average American,\u201d Newsom said.\u00a0<\/p>\n<p>It\u2019s unclear how long California\u2019s revenue boon would last. The recent spike in tax collection suggests that the stock market is reaching \u201cbubble territory\u201d and could head toward an \u201ceventual bust,\u201d said the nonpartisan Legislative Analyst\u2019s Office, which advises the state Legislature. \u201cThe state should be prepared for revenues to be tens of billions lower within one or two years.\u201d<\/p>\n<p>California\u2019s spending has continued to outpace revenue growth. Since fiscal year 2019-20, spending has grown by more than $100 billion, primarily from maintaining and expanding K-14 education, according to the LAO.\u00a0<\/p>\n<p>\u201cWe need to tighten our belt, and we need to focus on the outcomes,\u201d he said.<br \/>But Newsom is proposing new spending in some areas, including $300 million to subsidize private healthcare for low-income and middle-class Californians as well as money to offer paid pregnancy leave for TK-12 and community college employees and to cut filing fees for roughly 250,000 new businesses in half.<\/p>\n<p>Read more <a href=\"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/14\/endangered-salmon-returned-to-californias-far-north-then-the-money-dried-up-2\/\">Endangered salmon returned to California\u2019s far north \u2014 then the money dried up<\/a><\/p>\n<\/div>\n<p><!-- .entry-content --><br \/>\n<!-- .entry-footer --><br \/>\n<!-- .author-bio --><br \/>\n<\/article>\n<p><!-- #post-${ID} -->\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Gov. Gavin Newsom is proposing budget cuts and boosting California\u2019s reserves. He&#8217;s bracing for an AI stock bubble burst and more Trump cuts<\/p>\n","protected":false},"author":1,"featured_media":365,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[90,11,19,91],"class_list":["post-366","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics","tag-california-budget","tag-california-legislature","tag-gavin-newsom","tag-medi-cal"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Newsom\u2019s last budget: Cut California spending now, save for the AI bubble to burst - California Relocation Guide<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/californiamovingreport.com\/index.php\/2026\/05\/14\/newsoms-last-budget-cut-california-spending-now-save-for-the-ai-bubble-to-burst\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Newsom\u2019s last budget: Cut California spending now, save for the AI bubble to burst - California Relocation Guide\" \/>\n<meta property=\"og:description\" content=\"Gov. 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