Gov. Gavin Newsom signed the 2024-25 budget into law on June 29, solidifying $16 billion in cuts and other moves that closed a $46.8 billion deficit.
The budget is $297.5 billion, with $211.5 billion committed from the general fund. It maintains $22.5 billion in reserve funds and cuts just less than 8% from each department.
The budget is also proposed for the next fiscal year, something the governor called a “budget year, plus one” proposal that would help the state maintain stability over a longer period.
“This is a responsible budget that prepares for the future while investing in foundational programs that benefit millions of Californians every day,” Newsom said in a statement following the signing.
“Thanks to careful stewardship of the budget over the past few years, we’re able to meet this moment while protecting our progress on housing, homelessness, education, health care and other priorities that matter deeply to Californians,” he said.
The gap was closed with a combination of $16 billion in cuts and other financial tricks, such as $13.6 billion in additional revenue sources and internal borrowing from special funds. It shifts around $6 billion in spending, delays or defers over $5 billion in payments, and draws over $12 billion over the next two fiscal years from the state’s Budget Stabilization Account known as the rainy-day fund.
The cuts include $1.1 billion to various affordable housing programs and $500 million from the California Student Housing Revolving Loan Program, which was established in 2022 and gives zero-interest loans to universities and colleges to build affordable housing.
About $2.2 billion is saved by the 7.95% cut to every department’s budget. An additional $1.5 billion was reduced from departments’ budget to fill vacancies.
Some of the new revenue sources in the agreement include limiting the business tax credit to $5 million in each of the next three tax years, which would raise about $15 billion over the next three fiscal years.
State Senate President pro Tempore Mike McGuire, D-Marin, said this year’s gap required tough choices, but the state avoided an even worse projection made in May.
“Thanks to hard work, tough decisions, and early actions, we’ve been able to shrink the shortfall, protect our progress, and maintain responsible reserves,” McGuire said after the final agreement on the budget was reached last week.
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