Politics
What to know about Gov. Newsom’s plan to offset California’s $45-billion deficit
Faced with a $44.9-billion budget deficit, Gov. Gavin Newsom described a plan to shrink the size of state government and slow his progressive policy agenda by eliminating 10,000 vacant state jobs and pausing an expansion of subsidized childcare, among dozens of other cuts.
Newsom’s revised $288 billion budget proposal, announced Friday, projected California’s deficit to be $7 billion more than the shortfall his administration projected in January. The grim forecast was driven by lower than expected state revenues, continuing a pendulum swing from the fiscal boom of the COVID-19 pandemic.
“These are things we worked closely with the Legislature to advance,” Newsom said of the cuts. “None of this is the kind of work you enjoy doing, but you’ve got to do it. We have to be responsible. We have to be accountable.”
Newsom’s plan to close the deficit relies on $17.3 billion in savings from budget cuts he and lawmakers agreed to in April and using $4.2 billion from the state’s rainy day fund and budget reserves for the upcoming fiscal year. The proposed spending reductions Newsom touched on Friday also reverse and slash an additional $8.2 billion in funding, including money he had set aside for some of his marquee progressive policies in 2024-25.
The governor’s revised budget proposal, which includes updated revenue projections after the state income tax filing deadline, typically jump-starts negotiations with Democratic leaders in the Senate and Assembly over a final fiscal plan for the upcoming year. The state Constitution requires lawmakers to approve the state budget by June 15.
An ‘incomplete’ plan
The governor’s budget plan released Friday was incomplete compared to prior years. The administration provided only a 50-page summary of his proposal, a truncated proposal compared to the detailed, 260-page spending plan Newsom released in January.
Newsom’s budget news conference was originally scheduled for next Tuesday, the deadline for the governor to share his revised budget with the state Legislature. But Newsom is flying to Rome to speak at a climate conference at the Vatican that day and bumped his presentation up to Friday.
The change left the state Department of Finance, the fiscal arm of his administration, short on time to finalize a full budget summary, and additional documents, said H.D. Palmer, a spokesperson for the Finance Department. More information, his aides said, will be made available when additional documents are made public on Tuesday.
“The only difference this year is that the governor moved up the press conference,” Palmer said. “It is his May revision. It is his press conference. He gets to do it when he wants to and we will do what needs to be done to prepare for that press conference.”
How bad is the budget problem?
Newsom cast California’s current financial situation as a return to normal after the federal government provided trillions of dollars in funding to individuals, families, businesses and state governments during the COVID-19 pandemic, payouts that resulted in a historic surplus in California.
But those flush times did not last, and poor revenue forecasts in recent years have also deepened the state’s fiscal troubles.
Newsom’s estimate of a $100-billion surplus two years ago ended up far too rosy, and revenue in subsequent years also fell short of projections. A decision by the federal government to delay the 2022 federal income tax deadline from April to November due to winter storms complicated California’s ability to project revenues last year.
Newsom said his plan not only solves the budget deficit for the current and upcoming years, but also begins to make a dent in potential shortfalls through the end of his second term as governor in 2027. The administration proposed additional cuts, reductions and delays to solve an estimated $28.4 billion deficit in 2025-2026.
The governor said his strategy relies on delaying, diverting and cutting funding for new programs that haven’t started. He said he was careful to avoid taking away funding from existing programs already serving residents.
But that doesn’t mean his plan won’t affect millions of Californians who rely on government safety-net programs, as well as state workers.
Why does the deficit number keep changing?
In January, the Newsom administration predicted that California would have a $37.9-billion deficit to reckon with in the budget that lawmakers adopt in June.
Newsom and leaders of the Senate and Assembly reached an early agreement in April on $17.3 billion in reductions though most of those changes will not be passed into law until next month. Lawmakers passed a budget trailer bill that lowers unspent funding allocations in 2022-23 and 2023-24 by $1.6 billion last month.
The deficit number Newsom presented Friday subtracts the $17.3 billion in cuts agreed to earlier from the $37.9-billion deficit estimate from January.
Revenues have fallen short of expectations since January, deepening the budget problem by $7 billion
Newsom is projecting a shortfall of $27.6 billion in 2024-25, but California is making cuts and reductions to solve a total budget deficit of $44.9 billion this year.
What does Newsom want to cut?
The April agreement between lawmakers and the governor included $762 million in savings by pausing hiring for vacant state jobs. Newsom’s updated proposal permanently deletes 10,000 open positions, which unions viewed as a potentially better option than furloughs or delaying planned salary increases to save money.
Newsom’s proposal includes savings from the deactivation of 46 housing at 13 state prisons, which would save $80.6 million. This comes as California’s prison population has declined by nearly 25 percent since 2019 and as the state prepares for the closure of its third prison, which Newsom said is now planned to close as early as November, five months ahead of schedule.
Under Proposition 98, California has a minimum funding guarantee for schools and community colleges. Newsom is proposing an unusual maneuver to go back and lower the funding requirement for 2022-23 to reflect the lower-than-expected state revenues that came in late last year. The change could ultimately reduce funding for schools by tens of billions of dollars in future years and launch a monumental fight over education funding at the state Capitol.
Newsom’s plan proposes cuts that could be felt by California’s college and preschool students. He wants to reduce the Middle Class Scholarship program by $510 million and cut $550 million from a program that helps build and upgrade facilities for children in preschool and transitional kindergarten over the next two budget years.
Newsom called a decision to pause $1.4 billion planned to expand child care availability over two years “difficult,” but a necessary trade off in order to pay child care workers higher wages.
Sacramento Bureau Chief Laurel Rosenhall contributed to this report.
Politics
Socialism goes west as DSA-backed challenger ousts longtime Democrat
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Rep. Diana DeGette, D-Colo., a 30-year incumbent, lost to a Democratic Socialists of America (DSA)-backed challenger in a high-profile primary on Tuesday evening.
Melat Kiros, a 29-year-old socialist, defeated DeGette in a Democratic primary for a deep-blue House seat anchored in Denver, according to The Associated Press, scoring a major victory for the socialist left on Tuesday evening.
The DSA had been aiming to cast DeGette’s loss as evidence of its growing momentum after a slate of socialist candidates won Democratic primaries in New York City last week.
“Today, the East Coast, next week the Mountain West,” the DSA wrote in a social media post last week.
Rep. Diana DeGette speaks during a press conference outside the U.S. Capitol building in Washington, D.C., on Jan. 10, 2024. (Samuel Corum/Getty Images)
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If elected in November, Kiros, who was born in Ethiopia, will likely join the ranks of the far-left group known as the Squad and become one of a handful of the House chamber’s outspoken socialists.
The millennial challenger was endorsed by Sen. Bernie Sanders, I-Vt., Rep. Alexandria Ocasio-Cortez, D-N.Y., and the anti-incumbent leftist organization Justice Democrats. Controversial socialist streamer Hasan Piker, who has said Hamas is “a thousand times better” than Israel and praised the Chinese Communist Party, also backed Kiros’ insurgent primary run.
DeGette, a member of the Congressional Progressive Caucus who supports abolishing Immigration and Customs Enforcement (ICE), sought to win a 16th House term by flexing her leftist bona fides. She argued her seniority on an influential House committee would allow her to push for Medicare-for-All legislation — a longtime priority of the party’s far-left flank.
DeGette, who was endorsed by former CPC Chairwoman Pramila Jayapal, D-Wash., also spotlighted her experience as an impeachment manager during Trump’s second impeachment trial in 2021.
Though DeGette and Kiros shared few policy disagreements, they diverged sharply over Israel and antisemitism. Kiros also sharply criticized DeGette for accepting corporate PAC contributions.
Kiros, a PhD student and lawyer, was fired from a New York firm in 2023 after publishing an open letter, arguing that pro-Palestinian student protesters calling for the elimination of Israel were not antisemitic and appearing to defend Hamas.
Melat Kiros participated in a League of Women Voters Congressional District 1 candidate forum at Montview Presbyterian Church in Denver on May 28, 2026. (RJ Sangosti/MediaNews Group/The Denver Post)
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She has also described the Oct. 7, 2023, attacks against the Jewish state as the “inevitable consequence of apartheid” and declined to characterize the deadly firebombing of protesters in Boulder last year who were urging the release of hostages held by Hamas in Gaza as antisemitic.
“I don’t know what was in the heart of the perpetrator,” Kiros told Colorado’s 9News in a recent television interview. “All I know is that he went and attacked innocent people because of what they might have believed.”
A June 2025 bipartisan resolution condemning the attack as part of a “rise in ideologically motivated attacks on Jewish individuals” won every present lawmaker’s support, except for Reps. Rashida Tlaib, D-Mich., and Thomas Massie, R-Ky., who voted present.
Kiros has also suggested the United States deserved 9/11.
“Inevitable in the sense that we destabilized a lot of the Middle East that forced people to believe that another act of violence was the only response,” Kiros told 9News when asked if she thought the terror attack was “the inevitable consequence of American foreign policy.”
“And again, just like I said before, our responsibility is to get rid of those conditions that lead to violence in the first place,” Kiros continued.
DeGette argued that Kiros’ embrace of Piker and her comments about antisemitism and 9/11 were disqualifying.
“I’m shocked and disgusted that Kiros is doubling down on excusing terrorism and the murder of innocent people,” the 30-year incumbent wrote on Facebook earlier this month.
Streamer and creator Hasan Piker speaks at a press conference during day two of Web Summit Vancouver at the Vancouver Convention Centre in Vancouver, Canada, on May 13, 2026. (Sam Barnes/Web Summit via Sportsfile via Getty Images)
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Colorado’s 1st Congressional District is the most liberal seat in the state and voted for former Vice President Kamala Harris by 56 points in 2024.
The primary fight was further scrambled by University of Colorado Regent Wanda James, also running for DeGette’s seat. Though James did not pose the same threat as Kiros, her vote share could ultimately have swayed the contest.
Politics
Newsom signs off on 100% California tax for money from Trump’s $1.8-billion ‘slush fund’
Gov. Gavin Newsom has signed off on a 100% state tax on money any Californians receive from Trump’s $1.8-billion “anti-weaponization” fund for his political allies.
Newsom unveiled his proposal in May, after Trump’s Justice Department said it would create a fund to compensate Trump’s allies who claim they have “suffered weaponization and lawfare” under Biden’s Justice Department.
The settlement fund was criticized by politicians on both sides of the aisle, including Sen. Mitch McConnell (R-Ky.), who described it as a “slush fund to pay people who assault cops.”
The fund remains in legal limbo. Earlier this month, a federal judge in Virginia extended a court-ordered block on the plan, which critics warned could be used to pay pardoned Jan. 6 rioters.
Fast-tracked into law as part of Senate Bill 122, Newsom’s plan imposes “a tax on any settlement fund payment from the federal Anti-Weaponization Fund, or any subsequent fund, settlement, or agreement, as provided, at a rate of 100%,” according to the bill text. The tax applies to all tax years between 2026 and 2030.
Newsom signed the bill Tuesday. In a statement, his office said the tax is meant to ensure that, should Trump’s fund proceed, California recipients won’t “receive favorable state treatment on those payments.”
“We believe democracy is worth defending, the rule of law matters, and public dollars should support victims—not those who attacked the very institutions that protect our freedoms,” Newsom said in the statement.
University of Southern California law professor Ariel Jurow Kleiman, an expert on tax law and policy, said that while Newsom’s tax is a “novel legal strategy,” she believes there is “no categorical legal restriction” preventing California from implementing it.
States have a “wide degree of discretion” to design their tax systems — including how they define income — so long as they do not violate their constitutions, Jurow Kleiman said.
If a California resident wanted to challenge the tax in court, they would need to show they were harmed by it to have standing to sue, according to Jurow Kleiman. That would mean receiving a payment from Trump’s settlement fund and then paying the 100% California tax. Unless the settlement fund is established and distributes payments, that scenario is unlikely.
While there have been proposals to levy a 100% tax on income above certain thresholds — Sen. Bernie Sanders (I-Vt.) in 2023 said he supports a 100% tax on income exceeding $1 billion — Jurow Kleiman said she is not aware of any governments that have adopted such a policy.
Politics
Congress eyes rare bipartisan housing win with or without Trump’s help
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The House has officially shipped a colossal bipartisan housing package to President Donald Trump, and lawmakers are hoping that, at the very least, he doesn’t veto it.
Trump was supposed to sign the 21st Century ROAD to Housing Act last week, but his last-minute decision to ghost the signing ceremony with House Speaker Mike Johnson, R-La., and Senate Majority Leader John Thune, R-S.D., put into question whether the bill was dead.
His refusal to sign the bill, which passed with overwhelmingly bipartisan support in both chambers, was to leverage the Safeguarding American Voter Eligibility (SAVE) America Act, which doesn’t currently have the votes to succeed in the Senate.
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Trump has refused to sign the 21st Century ROAD to Housing Act. (Shawn Thew/EPA/Bloomberg via Getty Images)
Trump appears to be in no hurry to sign the bill, despite Republicans who are hungry for a win in the affordability fight ahead of the midterm elections.
“It’s so unimportant … compared to the SAVE America Act,” Trump told reporters in the Oval Office on Monday. “I think the SAVE America Act is exactly what it says. It’s saving America from crooked elections.”
“Here’s what I would like to sign, much more than a bill that — big deal, it’s a yawn,” he continued. “Some people say it’s wonderful. To me, compared to the SAVE America Act, just about everything is a big yawn.”
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It’s legislation that is loaded with nearly 60 provisions from both sides of the aisle in both chambers that’s designed to make it easier for homes to be built and for younger Americans to buy their first home. It also includes a ban on hedge funds buying up housing stock that Trump pushed Congress to include during the State of the Union earlier this year.
Sen. Elizabeth Warren, D-Mass., one of the architects behind the bill in the upper chamber alongside Sen. Tim Scott, R-S.C., charged that Congress handed the bill to Trump “on a silver platter.”
“When you ask me what happens next, if he cared about the American people, he’d have already signed the damned thing, and we’d be underway,” Warren said on WCVB’s “On the Record” on Sunday.
But Trump doesn’t have to put his signature on the bill for it to become law.
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The Senate advanced a massive, Trump-backed housing package geared toward lowering the costs of homes and supercharging the housing supply. Sen. Elizabeth Warren, D-Mass., pitched it as legislation to prevent America from becoming a “nation of renters.” (Jemal Countess/Getty Images for Protect Borrowers; Anna Moneymaker/Getty Images)
The Constitution grants presidents the ability to veto a bill within 10 days of it being transferred over to the White House. In that scenario, Congress could override a veto of the housing package.
It’s happened before under the Trump administration. In early 2021, Congress overrode Trump’s veto of the annual National Defense Authorization Act — a massive Pentagon funding authorization package that some House Republicans are trying to use as a vehicle to pass the SAVE America Act.
But during that 10-day period, if Trump doesn’t sign the bill, it would automatically become law. That’s unless Congress completely adjourns, in which case a “pocket veto” could happen. The Senate is currently in recess and the House is scheduled to leave town by week’s end, but neither count as a full adjournment.
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Johnson, who spent the last few days meeting with Trump at the White House about the housing bill and the SAVE America Act, said: “I hope he does sign it.”
“If he doesn’t, it’s still law,” Johnson said. “We’ll still celebrate it, but he’s trying to make a point, and I think he’s making it very effectively. And the fact that you all ask me every three steps down the hallway illustrates that he has achieved the desired objective, and that is to make SAVE America the number one thing, because if we don’t get that right, everybody’s concerned about what happens next.”
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