Politics
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.
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.
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.
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.”
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.
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).
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.
Politics
Marjorie Taylor Greene criticizes Trump’s meetings with Zelenskyy, Netanyahu: ‘Can we just do America?’
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Rep. Marjorie Taylor Greene, R-Ga., on Sunday called for President Trump to only focus on America’s needs as the president meets with Ukrainian President Volodymyr Zelenskyy and Israeli Prime Minister Benjamin Netanyahu.
The president has been heavily involved in the Russia-Ukraine and Israel-Hamas conflicts since returning to the White House.
Trump met with Zelenskyy on Sunday at Mar-a-Lago to discuss a peace plan aimed at ending the Russia-Ukraine war that began with an invasion by Moscow in February 2022.
Netanyahu arrived in Florida on Sunday ahead of their scheduled meeting on Monday at Trump’s estate to address Israel’s conflicts in the Middle East. It will be the sixth meeting of the year between the two leaders.
TRUMP ZELENSKYY SAY UKRAINE PEACE DEAL CLOSE BUT ‘THORNY ISSUES’ REMAIN AFTER FLORIDA TALKS
Rep. Marjorie Taylor Greene criticized President Donald Trump’s meetings with Ukrainian President Volodymyr Zelenskyy and Israeli Prime Minister Benjamin Netanyahu. (Anna Moneymaker/Getty Images)
Greene, responding to Trump’s meeting with Zelenskyy and Netanyahu, said that the Trump administration should address the needs of Americans rather than becoming further involved in global conflicts.
“Zelensky today. Netanyahu tomorrow,” she wrote on X.
President Donald Trump welcomes Ukrainian President Volodymyr Zelenskyy at his Mar-a-Lago residence in Palm Beach, Florida. (Jim WATSON / AFP via Getty Images)
“Can we just do America?” the congresswoman continued.
The congresswoman has been a vocal critic of supplying U.S. military aid to foreign countries amid the conflicts in Europe and the Middle East.
She has also referred to Zelenskyy as “a dictator who canceled elections” and labeled Israel’s military campaign in Gaza as a genocide and humanitarian crisis.
ZELENSKYY READY TO PRESENT NEW PEACE PROPOSALS TO US AND RUSSIA AFTER WORKING WITH EUROPEAN TALKS
Rep. Marjorie Taylor Greene and President Donald Trump had a public feud in recent months. (Getty Images)
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This comes after Taylor Greene, who is set to resign from the House in January, had a public spat with Trump over the past few months as Trump took issue with the Georgia Republican’s push to release documents related to the investigations into deceased sex predator Jeffrey Epstein.
Trump had withdrawn his endorsement of Greene and called her a “traitor” over the public feud.
Is there a dumpster somewhere to torch and bury this year of bedlam, 2025?
We near its end with equal amounts relief and trepidation. Surely we can’t be expected to endure another such tumultuous turn around the sun?
It was only January that Donald Trump moved back into the White House, apparently toting trunkloads of gilt for the walls. Within weeks, he’d declared an emergency at the border; set in motion plans to dismantle government agencies; fired masses of federal workers; and tariffs, tariffs, tariffs.
Demonstrators at a No Kings rally in Washington, protesting actions by President Trump and Elon Musk.
(Jose Luis Magana / Associated Press)
By spring, the administration was attacking Harvard as a test case for strong-arming higher education. By June, Trump’s grotesquely misnamed Big Beautiful Bill had become law, giving $1 trillion in tax cuts to billionaires and funding a deportation effort (and armed force) that has fundamentally reshaped American immigration law and ended any pretense about targeting “the worst of the worst.”
Fall and winter have brought questionable bombings of boats in the Caribbean, a further backing away from Ukraine, a crackdown on opposition to Trump by classifying it as leftist terrorism and congressional inaction on healthcare that will leave many struggling to stay insured.
That’s the short list.
It was a year when America tried something new, and while adherents of the MAGA movement may celebrate much of it, our columnists Anita Chabria and Mark Z. Barabak have a different perspective.
Here, they renew their annual tradition of looking at the year past and offering some thoughts on what the new year may bring.
Chabria: Welp, that was something. I can’t say 2025 was a stellar year for the American experiment, but it certainly will make the history books.
Before we dive into pure politics, I’ll start with something positive. I met a married couple at a No Kings rally in Sacramento who were dressed up as dinosaurs, inspired by the Portland Frog, an activist who wears an inflatable amphibian suit.
When I asked why, the husband told me, “If you don’t do something soon, you will have democracy be extinct.”
Crowds participate in No Kings Day in downtown Los Angeles in October.
(Genaro Molina / Los Angeles Times)
I loved that so many Americans were doing something by turning out to not just protest policies that hit personally, but to rally in support of democracy writ large. For many, it was their first time taking this kind of action, and they were doing it in a way that expressed optimism and possibility rather than giving in to anger or despair. Where there is humor, there is hope.
Barabak: As in, it only hurts when I laugh?
In 2024, a plurality of Americans voted to reinstall Trump in the White House — warts, felony conviction and all — mainly in the hope he would bring down the cost of living and make eggs and gasoline affordable again.
While eggs and gas are no longer exorbitant, the cost of just about everything else continues to climb. Or, in the case of beef, utility bills and insurance, skyrocket.
The John F. Kennedy Memorial Center for the Performing Arts is another of the long-standing institutions Trump has smeared his name across.
(Jacquelyn Martin / Associated Press)
Meantime, the president seems less concerned with improving voters’ lives than smearing his name on every object he lays his eyes on, one of the latest examples being the John F. Kennedy Center for the Performing Arts.
(The only place Trump doesn’t want to see his name is in those voluminous Epstein files.)
I wonder: Why stop there? Why not brand these the United States of Trump-erica, then boast we live in the “hottest” country on Planet Trump?
Chabria: Stop giving him ideas!
You and I agree that it’s been a difficult year full of absurdity, but we’ve disagreed on how seriously to take Trump as a threat to democracy. As the year closes, I am more concerned than ever.
It’s not the ugly antics of ego that alarm me, but the devastating policies that will be hard to undo — if we get the chance to undo them.
The race-based witch hunt of deportations is obviously at the top of that list, but the demolition of both K-12 and higher education; the dismantling of federal agencies, thereby cutting our scientific power as a nation; the increasing oligarchy of tech industrialists; the quiet placement of election deniers in key election posts — these are all hammers bashing away at our democracy.
Now, we are seeing overt antisemitism and racism on the MAGA right, with alarming acceptance from many. The far right has championed a debate as dumb as it is frightening, about “heritage” Americans being somehow a higher class of citizens than nonwhites.
Vice President JD Vance speaks at the University of Mississippi in Oxford.
(Gerald Herbert / Associated Press)
Recently, Vice President JD Vance gave a speech in which he announced, “In the United States of America, you don’t have to apologize for being white anymore,” and Trump has said he wants to start taking away citizenship from legal immigrants. Both men claim America is a Christian nation, and eschew diversity as a value.
Do you still think American democracy is secure, and this political moment will pass without lasting damage to our democratic norms?
Barabak: I’ll start with some differentiation.
I agree that Trump is sowing seeds or, more specifically, enacting policies and programs, that will germinate and do damage for many years to come.
Alienating our allies, terrorizing communities with his prejudicial anti-immigrant policies — which go far beyond a reasonable tightening of border security — starving science and other research programs. The list is a long and depressing one, as you suggest.
But I do believe — cue the trumpets and cherubs — there is nothing beyond the power of voters to fix.
To quote, well, me, there is no organism on the planet more sensitive to heat and light than a politician. We’ve already seen an anti-Trump backlash in a series of elections held this year, in red and blue state alike. A strong repudiation in the 2026 midterm election will do more than all the editorial tut-tutting and protest marches combined. (Not that either are bad things.)
A stressed-out seeming poll worker in a polling station at Los Angeles’ Union Station.
(Eric Thayer / Los Angeles Times)
The best way to preserve our democracy and uphold America’s values is for unhappy citizens to register their dissent via the ballot box. And to address at least one of your concerns, I’m not too worried about Trump somehow nullifying the results, given legal checks and the decentralization of our election system.
Installing lawmakers in Congress with a mandate to hold Trump to account would be a good start toward repairing at least some of the damage he’s wrought. And if it turns into a Republican rout, it’ll be quite something to watch the president’s onetime allies run for the hills as fast as their weak knees allow.
Chabria: OMG! It’s a holiday miracle. We agree!
I think the midterms will be messy, but I don’t think this will be an election where Trump, or anyone, outright tries to undo overall results.
Although I do think the groundwork will be laid to sow further doubt in our election integrity ahead of 2028, and we will see bogus claims of fraud and lawsuits.
So the midterms very well could be a reset if Democrats take control of something, anything. We would likely not see past damage repaired, but may see enough opposition to slow the pace of whatever is happening now, and offer transparency and oversight.
But the 2026 election only matters if people vote, which historically is not something a great number of people do in midterms. At this point, there are few people out there who haven’t heard about the stakes in November, but that still doesn’t translate to folks — lazy, busy, distracted — weighing in.
If proposed restrictions on mail-in ballots or voter identification take effect, even just in some states, that will also change the outcomes.
But there is hope, always hope.
Barabak: On that note, let’s recognize a few of the many good things that happened in 2025.
MacKenzie Scott donated $700 million to more than a dozen historically Black colleges and universities, showing that not all tech billionaires are selfish and venal.
The Dodgers won their second championship and, while this San Francisco Giants fan was not pleased, their seven-game thriller against the Toronto Blue Jays was a World Series for the ages.
And the strength and resilience shown by survivors of January’s SoCal firestorm has been something to behold.
Any others, beside your demonstrating dinos, who deserve commendation?
Pope Leo XIV waves after delivering the Christmas Day blessing from the main balcony of St. Peter’s Basilica at the Vatican.
(Gregorio Borgia / Associated Press)
Chabria: Though I’m not Catholic, I have been surprisingly inspired by Pope Leo XIV.
So I’ll leave us with a bit of his advice for the future: “Be agents of communion, capable of breaking down the logic of division and polarization, of individualism and egocentrism.”
Many of us are tired, and suffering from Trump fatigue. Regardless, to put it in nonpapal terms, it may be a dumpster — but we’re all in it together.
Barabak: I’d like to end, as we do each year, with a thank you to our readers.
Anita and I wouldn’t be here — which would greatly please some folks — but for you. (And a special nod to the paid subscribers out there. You help keep the lights on.)
Here’s wishing each and all a happy, healthy and prosperous new year.
We’ll see you again in 2026.
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2025 didn’t just expose Democratic divisions — it created a short list of political losers whose missteps are already shaping the battlefield for 2026. From establishment leaders squeezed by a restless progressive base to national figures who burned precious time, this past year has left behind a series of cautionary tales for a party out of power.
MODERATE DEMOCRATS PUSH BACK AS PROGRESSIVES MOVE TO OUST JEFFRIES, CLARK OVER TRUMP STRATEGY
Senate Minority Leader Chuck Schumer, D-N.Y., right, and House Minority Leader Hakeem Jeffries, D-N.Y., walk speak to members of the media outside the West Wing at the White House in Washington, Monday, Sept. 29, 2025, in Washington. (AP Photo/Evan Vucci)
Establishment and old-school Democrats
The loudest, most visible Democratic figures haven’t just voiced opposition to the Trump administration — they’ve also made it clear they expect a new version of the party to emerge going forward. From Mayor-elect Zohran Mamdani in New York City promising expansive government program increases to Rep. Alexandria Ocasio-Cortez’s hint that she could beat Vice President J.D. Vance in a bid for the presidency, progressives can easily say they had some of the most visible momentum in 2025.
And that’s bad news for old-school Democrats.
As recently as last month, both House Minority Leader Hakeem Jeffries, D-N.Y., and House Whip Katherine Clark, D-Mass., faced primary challenges from their progressive base. These challengers cited dissatisfaction with their resistance against the administration. It’s unclear if those calls are disproportionately loud in a moment where Democrats find themselves out of power. But many moderate Democrats told Fox News Digital they don’t think it’s helping win over the electorate’s political middle.
Should progressives continue to crowd out the picture in 2026, more establishment Democrats may find it increasingly difficult to ignore pressure from their far-left flank as the nation heads into the midterms.
GOP SEIZES ON DEM CIVIL WAR AS PROGRESSIVES JUMP INTO KEY 2026 SENATE RACES: ‘THEY’RE IN SHAMBLES’
California Gov. Gavin Newsom speaks during a campaign event in support of Proposition 50 in San Francisco, Monday, Nov. 3, 2025. (Gabrielle Lurie/San Francisco Chronicle via Getty Images)
Gavin Newsom
California Gov. Gavin Newsom is running out of time to prove why he could be something more than a party messaging figure. In the past year, he’s pigeonholed himself into exactly that role.
In 2025, Newsom cemented himself as one of the key Democratic foils to Trump’s agenda. And on that front, there’s little question he capitalized on the attention.
Most notably, Newsom pushed through a redistricting effort meant to squeeze five Republicans out of office after Texas advanced a similar plan earlier this year. While the plan received mixed reviews — even from Democrats in the state who were wary of fighting fire with fire — it has certainly advanced Newsom’s national status.
But like every would-be Trump foil, Newsom finds himself somewhat reliant on Trump for his next move. Should Newsom begin to position himself for a 2028 bid for the White House, he won’t have that luxury around forever, and he only has one more year as California’s governor.
Newsom burned precious time in 2025 to show voters in California and across the country what kind of executive he could be.
DEMOCRATIC HEAVYWEIGHTS HARRIS, NEWSOM TURN HEADS, FUEL 2028 SPECULATION
Former President Joe Biden talks to reporters on the South Lawn of the White House, Monday, Sept. 2, 2024, in Washington, D.C. (AP Photo/Mark Schiefelbein)
Joe Biden
On several key issues, former President Joe Biden’s legacy has already grown old in 2025.
It took just weeks for the Trump administration to dismantle the claim that Biden was doing everything he could to stop illegal border crossings from pouring into the United States. With a few key executive orders, Trump brought the country to one of its lowest levels of border encounters ever.
And while that’s the most notable entry, the list of double-takes doesn’t end there.
An autopen investigation in the House of Representatives revealed Biden had delegated an unprecedented amount of authority to his aides. Moreover, a book put out by Jake Tapper and Alex Thompson took a deep look at just how hard his inner circle had worked to maintain the president’s image amid concerns about his age and cognitive ability.
Taken together, Biden’s administration just one year removed has plunged Democrats into questions of where to go next and provided Republicans with a wealth of evidence to make the case Democrats weren’t as transparent about the country’s problems as they could have been.
‘ROCK STAR’ NEWSOM STEALS THE SHOW AT DNC SUMMIT AS DEMOCRATS HUNT FOR 2028 CONTENDER TO TAKE ON TRUMP
Senate Majority Leader Chuck Schumer gives a thumbs up as he walks out of the Senate Chamber after speaking on the floor of the Senate on Dec. 20, 2024. (Kent Nishimura/Getty Images)
Chuck Schumer
Few political figures have had as politically damaging a year in 2025 as the Senate minority leader, Chuck Schumer, D-N.Y.
He received most of the blame for a disastrous 43-day government shutdown that largely left Democrats empty-handed. While Schumer himself didn’t vote with the eight Democrats who eventually supported a Republican plan to end the shutdown, he received calls to step aside in the aftermath for failing to keep Senate Democrats on the same page.
According to many Republicans, the political calculus for Schumer during the shutdown was more about putting up a good enough fight to appease the progressive side of the Democratic base.
But Schumer also failed to do that too.
During the shutdown, the New York City mayoral race had come to its final stretch with little word from the Senate Minority Leader. When it became clear the self-proclaimed socialist Zohran Mamdani would capture the party’s nomination, Schumer tried to dodge questions about whether he would support his bid. That reluctance never went away and questions about the relationship between the two Democrats only intensified.
Just days removed from the election, Schumer continued to give non-answers about Mamdani.
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Now at the close of 2025, Schumer has left questions unanswered about whether he can still effectively lead the party and whether he represents the party’s future.
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