Politics
Despite revenue increase, Newsom plans to pull from California's rainy day reserves
Gov. Gavin Newsom touted higher than expected tax revenues and a “modest surplus” in an unconventional preview of his $322.2 billion spending proposal for the upcoming fiscal year, but his office said he still plans to pull money from the state’s rainy day reserves to pay for policy priorities.
The Democratic governor delivered a selective presentation of his initial 2025-26 budget at Cal State Stanislaus on Monday that largely praised the state’s economic position under his leadership and made it difficult to understand the full scope of his spending plan. Newsom said details would be forthcoming at the end of the week.
The early, yet incomplete look at his proposal shows that Newsom’s annual spending plan has grown by $24 billion compared to the current budget enacted in July. The governor announced a projection of an extra $16.5 billion in tax revenue above his administration’s prior estimates, which the Department of Finance said is spread over three years.
“The top lines include a balanced budget, no deficits,” Newsom said.
The proposal kicks off the annual six-month process in which the governor and lawmakers negotiate a final spending plan to be approved in late June. Newsom’s presentation at a college campus in the Central Valley town of Turlock was an unusual twist on the ritual, driven by Newsom’s decision to travel to Washington, D.C., later this week for the funeral of former President Carter.
Because he presented the budget a few days earlier than initially planned, Monday’s rollout did not include the detailed budget document that typically accompanies the governor’s presentation.
Newsom described his proposal as making “significant commitments to accountability, transparency and results” and “maintaining fiscal discipline in a time of deep uncertainty.”
Despite the revenue increase, the cost of providing Medi-Cal coverage to seniors and more undocumented immigrants, offering pre-kindergarten to all 4-year-olds, creating a new $420-million tax break for Hollywood film studios and funding other signature Newsom policies leaves California with a spending problem.
Newsom’s office said he plans to withdraw another $7.1 billion from California’s rainy day reserves in the upcoming budget year, after declaring a fiscal emergency last year to take out $5.1 billion to balance the current budget and another $900 million from a safety-net reserve.
The decision to dip into the state’s savings account was part of an agreement made last year with lawmakers to also delay programs, cut spending and rely on the occasional accounting gimmick to solve a $46.8 billion deficit. California leaders were forced to reconcile a $31.7 billion deficit the prior year.
Senate President Pro Tem Mike McGuire (D-Healdsburg) said those tough decisions put California in a better financial position today.
“We look forward to taking a close look at the governor’s full proposal later this week,” McGuire said in a statement. “The major work will happen in the months ahead, when we’ll get down to brass tacks and craft a responsible and balanced budget which will help make California more livable and affordable.”
Assemblymember Carl DeMaio, a Republican elected in November to represent inland San Diego County, called the governor’s proposal “negligent” before Newsom even delivered his presentation.
“Gavin Newsom is in over his head and hopes that no one notices — but no amount of Enron-style accounting will change the alarming reality that Gavin Newsom has created a fiscal crisis,” DeMaio said in a statement, calling on his fellow lawmakers to reject the governor’s proposal.
Analysts warn that the financial outlook will worsen in the future with the potential for even greater economic upheaval under the incoming Trump administration.
The California Legislative Analyst’s Office in November predicted a largely balanced budget in 2025-26 with a shortage of $2 billion, while anticipating a deficit of about $20 billion in 2026-27 and an even higher shortfall by 2028-29 of about $30 billion.
The LAO reported that the California economy has been in a gradual slowdown over the last two years, with about 25% more unemployed workers overall and declining trends in consumer spending.
Newsom did not offer a deficit projection for future years and said he will share more when he presents his revised budget proposal in May.
Corrin Rankin, vice chair of the California Republican Party, criticized the governor for not doing enough to help regular Californians.
“Handing out tax breaks to Hollywood and spending on AI is great for the state’s billionaires,” Rankin said in response to Newsom’s presentation. “However, the rest of us feel like we’re drowning in growing costs and our lives haven’t been improved.”
Assembly Speaker Robert Rivas (D-Hollister) agreed that the state needs to tackle cost-of-living issues.
“We also need to prepare for challenges ahead and must show restraint with spending,” Rivas said in a statement. “I am committed to working with the governor and my colleagues on a budget that protects essential services and makes life more affordable.”
The Newsom administration has said President-elect Trump’s plan for international tariffs, uncertainty around federal Medi-Cal funding and threats to withhold disaster funding increase the likelihood of even greater budget uncertainty in the years ahead.
“We really have to see what fire and fury comes from Trump in the next few weeks and really get a sense,” Newsom said.
The governor is expected to leave for the Carter funeral after he spends time with President Biden Tuesday in California to celebrate the new Chuckwalla National Monument near Joshua Tree and the Sáttítla National Monument near the Oregon border.
Joe Stephenshaw, director of the California Department of Finance, will formally present the budget to the Legislature and answer questions on Friday.
Newsom plans to leave the state Saturday for a vacation with his family.
Politics
Video: Protests Against ICE in Minneapolis Continue Into Friday Night
new video loaded: Protests Against ICE in Minneapolis Continue Into Friday Night
transcript
transcript
Protests Against ICE in Minneapolis Continue Into Friday Night
Hundreds of protesters marched through downtown Minneapolis on Friday night. They stopped at several hotels along the way to blast music, bang drums and play instruments to try to disrupt the sleep of immigration agents who might be staying there. Mayor Jacob Frey of Minneapolis said there were 29 arrests but that it was mostly a “peaceful protest.”
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The vast majority of people have done this right. We are so deeply appreciative of them. But we have seen a few incidents last night. Those incidents are being reviewed, but we wanted to again give the overarching theme of what we’re seeing, which is peaceful protest. And we wanted to say when that doesn’t happen, of course, there are consequences. We are a safe city. We will not counter Donald Trump’s chaos with our own brand of chaos here. We in Minneapolis are going to do this right.
By McKinnon de Kuyper
January 10, 2026
Politics
Trump says Venezuela has begun releasing political prisoners ‘in a BIG WAY’
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President Donald Trump said Saturday that Venezuela has begun releasing political prisoners “in a BIG WAY,” crediting U.S. intervention for the move following last week’s American military operation in the country.
“Venezuela has started the process, in a BIG WAY, of releasing their political prisoners,” Trump wrote on Truth Social. “Thank you! I hope those prisoners will remember how lucky they got that the USA came along and did what had to be done.”
He added a warning directed at those being released: “I HOPE THEY NEVER FORGET! If they do, it will not be good for them.”
The president’s comments come one week after the United States launched Operation Absolute Resolve, a strike on Venezuela and capture of dictator Nicolás Maduro as well as his wife Cilia Flores, transporting them to the United States to face federal drug trafficking charges.
US WARNS AMERICANS TO LEAVE VENEZUELA IMMEDIATELY AS ARMED MILITIAS SET UP ROADBLOCKS
Government supporters in Venezuela rally in Caracas. (AP Photo)
Following the military operation, Trump said the U.S. intends to temporarily oversee Venezuela’s transition of power, asserting American involvement “until such time as a safe, proper and judicious transition” can take place and warning that U.S. forces stand ready to escalate if necessary.
At least 18 political prisoners were reported freed as of Saturday and there is no comprehensive public list of all expected releases, Reuters reported.
Maduro and Flores were transported to New York after their capture to face charges in U.S. federal court. The Pentagon has said that Operation Absolute Resolve involved more than 150 aircraft and months of planning.
TRUMP ADMIN SAYS MADURO CAPTURE REINFORCES ALIEN ENEMIES ACT REMOVALS
A demonstrator holding a Venezuelan flag sprays graffiti during a march in Mexico City on Santurday. (Alfredo Estrella / AFP via Getty Images)
Trump has said the U.S. intends to remain actively involved in Venezuela’s security, political transition and reconstruction of its oil infrastructure.
The White House did not immediately respond to Fox News Digital’s request for comment.
President Donald Trump said Saturday that Venezuela has begun releasing political prisoners. (Mark Schiefelbein/AP Photo)
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Fox News Digital’s Morgan Phillips and Greg Norman-Diamond contributed to this reporting.
Politics
Secretary of Defense Pete Hegseth tours Long Beach rocket factory
Secretary of Defense Pete Hegseth, who is taking a tour of U.S. defense contractors, on Friday visited a Long Beach rocket maker, where he told workers they are key to President Trump’s vision of military supremacy.
Hegseth stopped by a manufacturing plant operated by Rocket Lab, an emerging company that builds satellites and provides small-satellite launch services for commercial and government customers.
Last month, the company was awarded an $805-million military contract, its largest to date, to build satellites for a network being developed for communications and detection of new threats, such as hypersonic missles.
“This company, you right here, are front and center, as part of ensuring that we build an arsenal of freedom that America needs,” Hegseth told several hundred cheering workers. “The future of the battlefield starts right here with dominance of space.”
Founded in 2006 in New Zealand, the company makes a small rocket called Electron — which lay on its side near Hegseth — and is developing a larger one called Neutron. It moved to the U.S. a decade ago and opened its Long Beach headquaters in 2020.
Rocket Lab is among a new wave of companies that have revitalized Southern California’s aerospace and defense industry, which shed hundreds of thousands of jobs in the 1990s after the end of the Cold War. Large defense contractors such as Northrop Grumman and Lockheed Martin moved their headquarters to the East Coast.
Many of the new companies were founded by former employees of SpaceX, which was started by Elon Musk in 2002 and was based in the South Bay before moving to Texas in 2024. However, it retains major operations in Hawthorne.
Hegseth kicked off his tour Monday with a visit to a Newport News, Va., shipyard. The tour is described as “a call to action to revitalize America’s manufacturing might and re-energize the nation’s workforce.”
Long Beach Mayor Rex Richardson, a Democrat who said he was not told of the event, said Hegseth’s visit shows how the city has flourished despite such setbacks as the closure of Boeing’s C-17 Globemaster III transport plant.
“Rocket Lab has really been a superstar in terms of our fast, growing and emerging space economy in Long Beach,” Richardson said. “This emergence of space is really the next stage of almost a century of innovation that’s really taking place here.”
Prior stops in the region included visits to Divergent, an advanced manufacturing company in aerospace and other industries, and Castelion, a hypersonic missile startup founded by former SpaceX employees. Both are based in Torrance.
The tour follows an overhaul of the Department of Defense’s procurement policy Hegseth announced in November. The policy seeks to speed up weapons development and acquisition by first finding capabilities in the commercial market before the government attempts to develop new systems.
Trump also issued an executive order Wednesday that aims to limit shareholder profits of defense contractors that do not meet production and budget goals by restricting stock buybacks and dividends.
Hegseth told the workers that the administration is trying to prod old-line defense contractors to be more innovative and spend more on development — touting Rocket Lab as the kind of company that will succeed, adding it had one of the “coolest factory floors” he had ever seen.
“I just want the best, and I want to ensure that the competition that exists is fair,” he said.
Hegseth’s visit comes as Trump has flexed the nation’s military muscles with the Jan. 3 abduction of Venezuelan President Nicolás Maduro, who is now facing drug trafficking charges to which he has pleaded not guilty.
Hegseth in his speech cited Maduro’s capture as an example of the country’s newfound “deterrence in action.” Though Trump’s allies supported the action, legal experts and other critics have argued that the operation violated international and U.S. law.
Trump this week said he wants to radically boost U.S. military spending to $1.5 trillion in 2027 from $900 billion this year so he can build the “Dream Military.”
Hegseth told the workers it would be a “historic investment” that would ensure the U.S. is never challenged militarily.
Trump also posted on social media this week that executive salaries of defense companies should be capped at $5 million unless they speed up development and production of advanced weapons — in a dig at existing prime contractors.
However, the text of his Wednesday order caps salaries at current levels and ties future executive incentive compensation to delivery and production metrics.
Anduril Industries in Costa Mesa is one of the leading new defense companies in Southern California. The privately held maker of autonomous weapons systems closed a $2.5-billion funding round last year.
Founder Palmer Luckey told Bloomberg News he supported Trump’s moves to limit executive compensation in the defense sector, saying, “I pay myself $100,000 a year.” However, Luckey has a stake in Anduril, last valued by investors at $30.5 billion.
Peter Beck, the founder and chief executive of Rocket Lab, took a base salary of $575,000 in 2024 but with bonus and stock awards his total compensation reached $20.1 million, according to a securities filing. He also has a stake in the company, which has a market capitalization of about $45 billion.
Beck introduced Hegseth saying he was seeking to “reinvigorate the national industrial base and create a leaner, more effective Department of War, one that goes faster and leans on commercial companies just like ours.”
Rocket Lab boasts that its Electron rocket, which first launched in 2017, is the world’s leading small rocket and the second most frequently launched U.S. rocket behind SpaceX.
It has carried payloads for NASA, the U.S. Space Force and the National Reconnaissance Office, aside from commercial customers.
The company employs 2,500 people across facilities in New Zealand, Canada and the U.S., including in Virginia, Colorado and Mississippi.
Rocket Lab shares closed at $84.84 on Friday, up 2%.
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