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Newsom called it a 'gimmick.' Now he’s using the trick to lower California’s massive deficit

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Newsom called it a 'gimmick.' Now he’s using the trick to lower California’s massive deficit

With a windfall of cash five years ago, Gov. Newsom said he was doing away with a state budget “gimmick” one of his predecessors relied on to shave about $800 million off a deficit during the Great Recession.

The accounting trick, adopted in 2009, delayed state worker payroll from the end of one fiscal year on June 30 to the start of the next on July 1. A decade later Newsom spent nearly $1 billion to end the subterfuge, with one caveat.

“If I use it in six years, in a recession, forgive me,” Newsom said.

At his urging, Newsom and lawmakers have agreed to use the budget gimmick next year even though California isn’t in a recession.

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The tactic is one of several maneuvers Democrats are relying on to reduce a historic budget deficit of at least $37.9 billion by pushing their spending problem forward to another year.

Of the $17.3 billion in budget reductions Newsom and Democrats have agreed to so far, only $3.6 billion are actual cuts.

Lawmakers made the first of those cuts Thursday and passed a budget trailer bill that lowers unspent funding allocations in 2022-23 and 2023-24 by $1.6 billion. Though Newsom touted the changes as part of an “early action” deal to shrink the deficit in April, many of the reductions won’t be reflected in legislation until June or later.

At least so far, Newsom and lawmakers are largely relying on mechanisms other than cuts to shrink the deficit: borrowing $5.2 billion, delaying and deferring $5.2 billion in funding for state-sponsored programs to subsequent years and tapping into $3.4 billion from separate state funds. Democrats also agreed to draw down at least another $12.2 billion from the rainy day fund to cover their spending.

Budget watchers and Republican lawmakers criticized the strategy, saying that resorting to clever accounting now and dipping into California’s savings account while the economy remains strong will make the state more vulnerable to drastic cuts if a recession hits in the years ahead and revenue declines.

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Newsom’s critics blame the governor and Democrats for overspending and causing the deficit. The “gimmick” is an example of what his critics view as Democrats failing to make the kind of tough choices that California households are forced to weigh when they spend more money than they bring in.

“They are doing things that you normally do in a recession and there is no recession here,” said David Crane, president of Govern for California, a nonprofit that seeks to oppose the influence of labor unions on state government. “You shouldn’t have to be dipping into reserves to meet a budget deficit if your revenues are 50% higher than they were when you came into office.”

General fund revenues, which the state uses to pay for most public services, were $140 billion when Newsom took office in in 2018-19. The governor’s January budget assumes revenues of more than $214 billion, an increase of 53%, for the upcoming fiscal year when Democrats plan to cut the rainy day fund in half.

According to the UCLA Anderson Forecast in March, California’s economy is growing faster than the rest of the nation and the possibility of a U.S. recession is fading. Newsom regularly trumpets the strength of the state economy.

“While there are still challenges ahead — notably, state and local government finance, homelessness and out-migration — the forces driving California’s economy remain robust,” UCLA economists wrote.

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H.D. Palmer, a spokesperson for the governor’s Department of Finance, said the cuts Democrats have agreed to so far are part, but not all of the solution to the budget woes with more decisions coming in June. He also pointed to the fact that more than 70% of the general fund is spent on K-12 education, healthcare and human services.

“If you don’t agree with these solutions, that’s fine. What specific proposals would you offer up to offset that in terms of programmatic reductions?” he asked of budget critics.

Assembly Republican leader James Gallagher of Yuba City said he would start by funding the fundamentals, such as education, infrastructure and public safety, and then deciding what else the state has resources for.

Newsom often promotes all the one-time funding in his prior budgets, which he said would be easy to stop if the state swung from surplus to shortfall. But he has continued to support many of his expensive political priorities, such as the expansion of Medi-Cal to all eligible low-income immigrants, regardless of their legal status. A state audit also found that California has failed to monitor the effectiveness of its costly homelessness programs, which Newsom and lawmakers have spent $20 billion on over the last five years.

“A $73-billion deficit is no joke,” Gallagher said. “It’s a serious problem we’ve got to address. It makes me think that the governor just wants to ride this out until the end of his term and just leave this problem to somebody else.”

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A combination of delayed tax deadlines and overspending based on inaccurate budget projections created the budget shortfall, which happens when spending exceeds projected revenues.

Newsom and lawmakers expected revenues to fall below projections because of a declining stock market, high interest rates and increased inflation, but the deficit is much worse than the state accounted for last June. The Newsom administration last pegged the deficit at $37.9 billion in January, though a more recent estimate from the Legislative Analyst’s Office suggests it could be up to $73 billion by the time the governor unveils his revised budget proposal in mid-May.

The state budget in California is largely dependent on income taxes paid by its highest earners. Revenues are prone to volatility, hinging on capital gains from investments, bonuses to executives and windfalls from new stock offerings, and notoriously difficult for the state to predict.

The governor repeatedly blames the shortfall problem on a decision by the federal government to delay the deadline to file 2022 income tax returns from April to November of last year due to winter storms.

In a typical budget year, state government has tax receipts in hand before the governor unveils a revised budget proposal in mid-May and before he reaches a final spending agreement with lawmakers in June. The tax delay forced lawmakers and the governor to enact the current budget in July based on estimates of how much money the state would collect in tax revenues by the November deadline. Those estimates were wildly off.

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The legislation approved Thursday goes back and reduces unspent funding in the prior and current budget years. The changes include cutting $45 million for protecting communities from wildfire, $88 million for watershed resilience and reduces funding to expand broadband internet access by $34 million, among other trims.

The bill was part of the “early action” lawmakers and the governor announced that they would take in April to lower the deficit by $17.3 billion before the May revise. But only $3.3 billion of the reductions he claimed they would make can be adopted in law now, and the majority will be included in the final budget agreement, along with other reductions, approved this summer.

“We put forward this early action plan to protect our progress and safeguard core programs so that we could spend time and energy on the more challenging decisions to close the remaining budget gap responsibly,” said Senate President Pro Tem Mike McGuire (D-Healdsburg) during floor debates in the Senate on Thursday. “And we’re gonna do just that.”

Democrats are attempting to offset the budget crisis before May, when an updated estimate might show an even deeper shortfall. Democrats also took an unusual step of requiring the state finance department to subtract the $17.3 billion from the estimated deficit before the budget is revised in May, making the shortfall appear smaller before many of the changes are reflected in law.

“This budget is nothing but smoke and mirrors, backroom deals done by the party in control,” said Sen. Brian Dahle (R-Bieber).

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Delaying payroll from June 30, 2025 to July 1, 2025 is among the changes that Democrats agreed to, but will not vote on until this summer.

While Crane, a political donor of Assembly Speaker Robert Rivas and dozens of other lawmakers, opposes Newsom’s decision to use the budget gimmick again, he said the “biggest sin” is the decision to dip into the state’s reserves in the absence of a recession. Newsom will have to declare a budget emergency in order to do so under state law.

“My one hope is that by the time the May revise comes around, he’s able to say I’m no longer going to have to dive into reserves,” Crane said.

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Video: Walz Drops Re-Election Bid as Minnesota Fraud Scandal Grows

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Video: Walz Drops Re-Election Bid as Minnesota Fraud Scandal Grows

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Walz Drops Re-Election Bid as Minnesota Fraud Scandal Grows

Governor Tim Walz of Minnesota abandoned his re-election bid to focus on handling a scandal over fraud in social service programs that grew under his administration.

“I’ve decided to step out of this race, and I’ll let others worry about the election while I focus on the work that’s in front of me for the next year.” “All right, so this is Quality Learing Center — meant to say Quality ‘Learning’ Center.” “Right now we have around 56 kids enrolled. If the children are not here, we mark absence.”

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Governor Tim Walz of Minnesota abandoned his re-election bid to focus on handling a scandal over fraud in social service programs that grew under his administration.

By Shawn Paik

January 6, 2026

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Pelosi heir-apparent calls Trump’s Venezuela move a ‘lawless coup,’ urges impeachment, slams Netanyahu

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Pelosi heir-apparent calls Trump’s Venezuela move a ‘lawless coup,’ urges impeachment, slams Netanyahu

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A San Francisco Democrat demanded the impeachment of President Donald Trump, accusing him of carrying out a “coup” against Venezuelan strongman Nicolás Maduro.

California state Sen. Scott Wiener, seen as the likely congressional successor to Rep. Nancy Pelosi, also took a swipe at Israeli Prime Minister Benjamin Netanyahu.

Wiener has frequently drawn national attention for his progressive positions, including his legislation signed by Gov. Gavin Newsom designating California as a “refuge” for transgender children and remarks at a San Francisco Pride Month event referring to California children as “our kids.”

In a lengthy public statement following the Trump administration’s arrest and extradition of Maduro to New York, Wiener said the move shows the president only cares about “enriching his public donors” and “cares nothing for the human or economic cost of conquering another country.”

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KAMALA HARRIS BLASTS TRUMP ADMINISTRATION’S CAPTURE OF VENEZUELA’S MADURO AS ‘UNLAWFUL AND UNWISE’

California State Sen. Scott Wiener, D-San Francisco, speaks at a rally. (John Sciulli/Getty Images)

“This lawless coup is an invitation for China to invade Taiwan, for Russia to escalate its conquest in Ukraine, and for Netanyahu to expand the destruction of Gaza and annex the West Bank,” said Wiener, who originally hails from South Jersey.

He suggested that the Maduro operation was meant to distract from purportedly slumping poll numbers, the release of Jeffrey Epstein-related documents, and to essentially seize another country’s oil reserves.

“Trump is a total failure,” Wiener said. “By engaging in this reckless act, Trump is also making the entire world less safe … Trump is making clear yet again that, under this regime, there are no rules, there are no laws, there are no norms – there is only whatever Trump thinks is best for himself and his cronies at a given moment in time.”

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GREENE HITS TRUMP OVER VENEZUELA STRIKES, ARGUES ACTION ‘DOESN’T SERVE THE AMERICAN PEOPLE’

In response, the White House said the administration’s actions against Maduro were “lawfully executed” and included a federal arrest warrant.”

“While Democrats take twisted stands in support of indicted drug smugglers, President Trump will always stand with victims and families who can finally receive closure thanks to this historic action,” White House spokeswoman Anna Kelly said.

Supporters of the operation have pushed back on claims of “regime change” – an accusation Wiener also made – pointing to actions by Maduro-aligned courts that barred top opposition leader María Corina Machado from running, even as publicly reported results indicated her proxy, Edmundo González Urrutia, won the vote.

“Trump’s illegal invasion of Venezuela isn’t about drugs, and it isn’t about helping the people of Venezuela or restoring Venezuelan democracy,” Wiener added. “Yes, Maduro is awful, but that’s not what the invasion is about. It’s all about oil and Trump’s collapsing support at home.”

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EX-ESPN STAR KEITH OLBERMANN CALLS FOR IMPEACHMENT OF TRUMP OVER VENEZUELA STRIKES THAT CAPTURED MADURO

Around the country, a handful of other Democrats referenced impeachment or impeachable offenses, but did not go as far as Wiener in demanding such proceedings.

Rep. April McClain-Delaney, D-Md., who represents otherwise conservative “Mountain Maryland” in the state’s panhandle, said Monday that Democrats should “imminently consider impeachment proceedings,” according to TIME.

McClain-Delaney said Trump acted without constitutionally-prescribed congressional authorization and wrongly voiced “intention to ‘run’ the country.”

SCHUMER BLASTED TRUMP FOR FAILING TO OUST MADURO — NOW WARNS ARREST COULD LEAD TO ‘ENDLESS WAR’

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One frequent Trump foil, Rep. Maxine Waters, D-Calif., cited in a statement that she has called for Trump’s impeachment in the past; blaming Republicans for letting the president “escape accountability.”

“Today, many Democrats have understandably questioned whether impeachment is possible again under the current political reality. I am reconsidering that view,” Waters said. 

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“What we are witnessing is an unprecedented escalation of an unlawful invasion, the detention of foreign leaders, and a president openly asserting power far beyond what the Constitution allows,” she said, while appearing to agree with Trump that Maduro was involved in drug trafficking and “collaborat[ion] with… terrorists.”

Wiener’s upcoming primary is considered the deciding election in the D+36 district, while a handful of other lesser-known candidates have reportedly either filed FEC paperwork or declared their candidacy, including San Francisco Councilwoman Connie Chan.

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California Congressman Doug LaMalfa dies, further narrowing GOP margin in Congress

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California Congressman Doug LaMalfa dies, further narrowing GOP margin in Congress

California Rep. Doug LaMalfa (R-Richvale) has died, GOP leadership and President Trump confirmed Tuesday morning.

“Jacquie and I are devastated about the sudden loss of our friend, Congressman Doug LaMalfa. Doug was a loving father and husband, and staunch advocate for his constituents and rural America,” said Rep. Tom Emmer (R-Minn.), the House majority whip, in a post on X. “Our prayers are with Doug’s wife, Jill, and their children.”

LaMalfa, 65, was a fourth-generation rice farmer from Oroville and staunch Trump supporter who had represented his Northern California district for the past 12 years. His seat was one of several that was in jeopardy under the state’s redrawn districts approved by voters with Proposition 50.

Emergency personnel responded to a 911 call from LaMalfa’s residence at 6:50 p.m. Monday, according to the Butte County Sheriff’s Office. The congressman was taken to the Enloe Medical Center in Chico, where he died while undergoing emergency surgery, authorities said.

An autopsy to determine the cause of death is planned, according to the sheriff’s office.

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LaMalfa’s district — which stretches from the northern outskirts of Sacramento, through Redding at the northern end of the Central Valley and Alturas in the state’s northeast corner — is largely rural, and constituents have long said they felt underrepresented in liberal California.

LaMalfa put much of his focus on boosting federal water supplies to farmers, and seeking to reduce environmental restrictions on logging and extraction of other natural resources.

One LaMalfa’s final acts in the U.S. House was to successfully push for the reauthorization of the Secure Rural Schools Act, a long-standing financial aid program for schools surrounded by untaxed federal forest land, whose budgets could not depend upon property taxes, as most public schools do. Despite broad bipartisan support, Congress let it lapse in 2023.

In an interview with The Times as he was walking onto the House floor in mid-December, LaMalfa said he was frustrated with Congress’s inability to pass even a popular bill like that reauthorization.

The Secure Rural Schools Act, he said, was a victim of a Congress in which “it’s still an eternal fight over anything fiscal.” It is “annoying,” LaMalfa said, “how hard it is to get basic things done around here.”

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In a statement posted on X, California Democratic Sen. Adam Schiff said he considered LaMalfa “a friend and partner” and that the congressman was “deeply committed to his community and constituents, working to make life better for those he represented.”

“Doug’s life was one of great service and he will be deeply missed,” Schiff wrote.

Democratic Gov. Gavin Newsom in a statement called LaMalfa a “devoted public servant who deeply loved his country, his state, and the communities he represented.”

“While we often approached issues from different perspectives, he fought every day for the people of California with conviction and care,” Newsom said.

Flags at the California State Capitol in Sacramento will be flown at half-staff in honor of the congressman, according to the governor.

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Before his death, LaMalfa was facing a difficult reelection bid to hold his seat. After voters approved Proposition 50 in November — aimed at giving California Democrats more seats in Congress — LaMalfa was drawn into a new district that heavily favored his likely opponent, State Sen. Mike McGuire, a Democrat who represents the state’s northwest coast.

LaMalfa’s death puts the Republican majority in Congress in further jeopardy, with a margin of just two votes to secure passage of any bill along party lines after the resignation of Georgia Rep. Marjorie Taylor Greene on Monday evening.

Adding to the party’s troubles, Rep. Jim Baird, a Republican from Indiana, was hospitalized on Tuesday for a car crash described by the White House as serious. While Baird is said to be stable, the Republican House speaker, Mike Johnson from Louisiana, will not be able to rely on his attendance. And he has one additional caucus member – Thomas Massie of Kentucky – who has made a habit of voting against the president, bringing their margin for error down effectively to zero.

President Trump, addressing a gathering of GOP House members at the Kennedy Center, addressed the news at the start of his remarks, expressing “tremendous sorrow at the loss of a great member” and stating his speech would be made in LaMalfa’s honor.

“He was the leader of the Western caucus – a fierce champion on California water issues. He was great on water. ‘Release the water!’ he’d scream out. And a true defender of American children.”

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“You know, he voted with me 100% of the time,” Trump added.

A native of Oroville, LaMalfa attended Butte College and then earned an ag-business degree from Cal Poly San Luis Obispo. He served in the California Assembly from 2002 to 2008 and the California State Senate from 2010 to 2012. Staunchly conservative, he was an early supporter of Proposition 209, which ended affirmative action in California, and he also pushed for passage of the Protection of Marriage Act, Proposition 22, which banned same-sex marriage in California.

While representing California’s 1st District, LaMalfa focused largely on issues affecting rural California and other western states. In 2025, Congressman he was elected as Chairman of the Congressional Western Caucus, which focuses on legislation affected rural areas.

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