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
Video: Cassidy Loses Primary After Drawing Trump’s Ire
new video loaded: Cassidy Loses Primary After Drawing Trump’s Ire
transcript
transcript
Cassidy Loses Primary After Drawing Trump’s Ire
Republican Senator Bill Cassidy lost his Louisiana primary on Saturday after President Trump targeted him for voting to impeach him in 2021. The two-term senator took veiled swipes at the president in his concession speech.
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Thank you, Louisiana! I want to say thank you to a very special man who you all know, the best president this country has ever had, President Donald Trump. I’ve been able to participate in democracy. And when you participate in democracy, sometimes it doesn’t turn out the way you want it to. But you don’t pout. You don’t whine. You don’t claim the election was stolen. Our country is not about one individual. It is about the welfare of all Americans, and it is about our Constitution. And if someone doesn’t understand that and attempts to control others through using the levers of power, they are about serving themselves. They’re not about serving us.”
By Cynthia Silva
May 17, 2026
Politics
Trump warns Iran’s ‘clock is ticking’: Move ‘fast’ or ‘there won’t be anything left’
Drone strikes generator at nuclear power plant in UAE
Chief foreign correspondent Trey Yingst reports on a drone attack against a nuclear power plant in the UAE as President Donald Trump is set to speak with Israeli Prime Minister Benjamin Netanyahu amid stalled negotiations with Iran.
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President Donald Trump renewed his stern warnings for Iran to come to peace and end its nuclear weapons aspirations Sunday.
“For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them,” Trump wrote in a Truth Social post.
“TIME IS OF THE ESSENCE!”
Trump, fresh off his trek to meet China’s Xi Jinping face to face, is weighing restarting military action on Iran, Fox News Digital reported earlier Sunday.
TRUMP WARNS IRAN’S ‘CLOCK IS TICKING’: MOVE ‘FAST’ OR ‘THERE WON’T BE ANYTHING LEFT’
President Donald Trump is renewing threats for Iran to come to peace and commit to giving up its nuclear weapons aspirations. (AP Photo/Jacquelyn Martin)
The president also had a call with Israeli Prime Minister Benjamin Netanyahu on Sunday.
“Our eyes are also open regarding Iran,” Netanyahu said Sunday morning, as translated from Hebrew. “I will speak today, as I do every few days, with our friend President Trump.
“I will certainly hear impressions from his trip to China, and perhaps other matters as well. There are certainly many possibilities, and we are prepared for every scenario.”
TRUMP MEETS NETANYAHU, SAYS HE WANTS IRAN DEAL BUT REMINDS TEHRAN OF ‘MIDNIGHT HAMMER’ OPERATION
Trump remains at the White House on Sunday, but no public or press appearances were on his schedule.
The call with Netanyahu came amid regional intelligence assessments on Iran that restarting of military strikes might be coming because of Trump’s frustration with Iran’s tactics amid the closing of the Strait of Hormuz and the rejection of his demand to give up nuclear weapons aspirations.
“The prevailing assessment inside Iran is that President Trump may resort to restarting military action, and Tehran is now deliberately pursuing a strategy of ‘deception and delay’ with the hopes that buying time will complicate any potential return to war,” two regional intelligence officials told Fox News.
EXPERTS WARN IRAN’S NUCLEAR DOUBLE-TALK DESIGNED TO BUY TIME, UNDERMINE US PRESSURE
Intelligence officials believe that the Iranian regime thinks it can delay developments and stretch the crisis out for at least two more weeks, so that the situation could become more difficult for Trump to restart the military campaign, both politically and operationally.
These sources say Iranian officials are looking at the World Cup and America’s 250th anniversary as a backstop that could work in their favor.
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The impact of the U.S.-led blockade is becoming increasingly visible inside Iran, according to a senior Israeli official, early signs of a developing fuel crisis emerging over the weekend – including long lines at gas stations and growing public discontent over fuel shortages and distribution problems.
“It’s getting exponentially worse,” the official added.
Fox News’ Trey Yingst and Yonat Friling contributed to this report.
Politics
Commentary: Californians on a confounding race for governor: ‘I haven’t … a clue who I’m going to vote for’
Eddie Martinez can’t stand Donald Trump. So when Eric Swalwell entered the race for California governor, Martinez had his candidate.
“I liked the way he took Trump on, the impeachment thing in Congress,” Martinez said of the former Bay Area congressman, a Trump nemesis who served as one of the House prosecutors in 2021 when Democrats held the wayward president to account for the second time.
Then, suddenly, Swalwell’s campaign collapsed under the weight of allegations of abuse, including charges he sexually assaulted a former aide. With Martinez’s choice out of the running, the Democrat turned to the candidate who’d been his second pick all along, Xavier Becerra.
Martinez has been familiar with Becerra for decades, going back to when the former congressman, state attorney general and Biden Cabinet member was in the state Assembly. To his credit, said the 65-year-old retired public relations strategist, Becerra has largely kept clear of controversy and there’s never been a whiff of personal scandal — an important consideration after Swalwell’s spectacular self-destruction.
On top of all that, Martinez said as he prepared to drop his mail ballot at a post office in Alhambra, it would be nice for California to elect its first Latino governor in modern times. It’s been, Martinez observed, more than 150 years.
With the gubernatorial primary entering its final two weeks, a contest that had been stubbornly formless has finally gained coherence. Becerra, who’d been widely given up for dead as he foundered near the bottom of polls, has unexpectedly emerged as the Democrat to beat.
“He has the most experience,” said Ruben Avita, a 57-year-old actor who leans Democratic and is tilting toward Becerra over hedge-fund billionaire Tom Steyer. “At this point,” Avita said as he waited to catch a double feature at a cineplex in Monterey Park, “I want someone with a proven track record.”
Among the Republicans running, Trump’s pick — conservative commentator Steve Hilton — seems firmly ensconced atop the GOP field.
“He’s got a lot more common-sense approach than any of these other idiots,” said Wayne The Flame — yes, he explained, that’s his legal name —which, while not exactly a ringing endorsement, still counts as a vote.
The Claremont independent, retired at 73 after a career selling motorcycles and hot rods, described Riverside County Sheriff Chad Bianco, the other major GOP contestant, as a racist and dismissed the entire Democratic field with a string of epithets. “Dumb—,” he said of the voters who keep putting the likes of them in power.
Peaches, a chihuahua/boxer rescue, stands alongside her owner, Wayne The Flame
If not terribly enthused, at least The Flame has made up his mind. Many voters remain undecided — or, at least, not entirely wed to a candidate.
Some are holding on to their ballots longer than usual, awaiting any last-minute developments and weighing the election odds as though wagering in a high-stakes game of poker.
Like many Democrats, Bryce Dwyer’s concern is that Hilton and Bianco will seize both spots in June’s top-two primary, advancing to a November runoff and giving California its first Republican governor in 16 years.
A 40-year-old project manager at the Getty Research Institute, Dwyer held his 2-year-old daughter as his son, 6, romped on a pleasant afternoon in Sierra Madre’s Memorial Park. Across the street, the bells of Christ Church chimed the hour.
“None of the Democrats are putting forth anything that is making me excited,” said Dwyer, who’s ruled out Becerra (he doesn’t see much there) and is deciding between Steyer and former Orange County Rep. Katie Porter. He’s trying to cast his ballot strategically, the East Pasadena resident said, and “it’s the first time in a while I haven’t really had a clue who I’m going to vote for so close to election day.”
Democrat Priscilla Vega of Monrovia has yet to settle on her candidate for governor
This is a deeply unsettled season in California, with precious little hope the next governor — whoever he or she turns out to be — will make things better anytime soon. That mix of discouragement and discontent surfaced repeatedly, like a dull ache, in conversations with dozens of voters across the San Gabriel Valley.
The region’s ethnic and economic diversity — from the working-class neighborhoods of Pomona through the Asian-majority suburbs to the mountainside mansions of San Dimas and Pasadena — make the valley a prime battleground in the race for governor.
Alana H., who asked not to use her last name, said she wasn’t even bothering to vote.
She ticked off some reasons: The soaring price of gas and rising cost of, essentially, everything else. The fear her college-age daughter will never be able to buy a home in California. Worse, is her loss of faith. She no longer believes in the promise, once taken for granted, that each generation will improve its lot over the last. And, Alana said, she’s not alone: “Anyone who’s an average person is in the same boat, we’re all just trying to stay afloat.” Standing in front of the post office in Alhambra, the 52-year-old paddled her arms as though to keep from sinking.
Jaunenito Pavon, in his Glendora wine and chocolate bar, would like California to elect a governor who could unify the state. He’s still deciding on a candidate
The politicians in both parties are “so out of touch,” she said, “all they’re doing is fighting over this and that, when everyone I know doesn’t care what party you’re in. They just want to put food on their table. They want their kids to have a better life.”
Shelby Moore has some of the same concerns. Forget about ever buying a home, said the 30-year-old California native, a Democratic-leaning independent. It’s no small feat scraping up money for rent. “I’ve lost almost every single friend that I went to high school or college with,” Moore said between waiting tables at a Mediterranean restaurant in Glendora. “They’ve all moved out of state.”
Shelby Moore, 30, a waitress in Glendora, said all her friends from high school and college have left California because it’s so expensive.
She’ll definitely vote, Moore said, though she doesn’t know for whom. One of the Democrats. Someone who’ll work to make California more affordable and keep people like her friends from being priced out.
In Claremont, Eric Hurley was another undecided Democrat. He attended last month’s gubernatorial debate at Pomona College, where the 56-year-old professor teaches psychological science and Africana studies. Otherwise, he’s been too busy to pay much attention to the race.
But it’s important, Hurley said, that whoever wins “keep fighting the good fight and standing by our liberal principles. I would hate to see someone in the governor’s office start capitulating to what the current administration is asking.”
Democrat Eric Hurley is undecided in the governor’s race. But he wants someone who’ll stand up to the Trump administration.
Others seconded that notion, that California needs to stand as a bulwark against Trump and his excesses, such as the draconian crackdown that has terrorized the state’s large immigrant population.
But there’s not a great appetite for the sort of performative pushback that’s won the current governor a wide audience on social media and boosted Gavin Newsom’s political stock as he positions himself ahead of the 2028 presidential campaign.
Jennifer Harris, 56, is a single mom in Monrovia who oversees payroll at a food manufacturing company. She has to stretch each of her dollars to make ends meet; soon she’ll be shelling out $30,000 a year for her daughter to go to college. Buying a home, Harris said, is out of the question.
She confessed to chuckling at the governor’s memes — an over-the-top oeuvre that includes Newsom as super hero, Newsom as religious beacon, Newsom as romance-novel hunk — and his other cheeky jabs at the president. “But that’s not an adult way to handle it,” Harris said between errands in Monrovia’s quaint shopping district. “It’s not solving any problems.”
Better, she said, for the next governor — she hasn’t decided whom she’ll support — to focus on practicalities: improving the economy, making housing and healthcare more affordable, dealing with homelessness and the underlying mental health issues.
Jennifer Harris said Gov. Newsom’s over-the-top social media presence is amusing. But she wants the next governor to focus on more practical things.
Britnee Foreman echoed that sentiment.
The 41-year-old, who lives in Azusa and works in the music business, was meeting a friend, Priscilla Vega, 43, for lunch in Monrovia. Along with a meal, the two Democrats shared their concerns about inflation and income inequality.
“Memes are great for publicity,” said Foreman, who’s deciding between Becerra and Porter, based on their policy experience. (Vega, a lifestyle marketer, has yet to narrow down her choice.)
Britnee Foreman says the next governor needs policies “with teeth,” not an active social media presence.
“But I prefer policy,” Foreman went on. “I don’t want them just to be the popular person out there on social media. It’s great if they’re tweeting and have a cute little Insta-story. But I need their policies to have teeth and actively move us forward. And not just look like it’s moving forward.”
After nearly eight years, amid widespread unease, California seems ready to put the Newsom era in the past. It’s just not clear what path voters will choose, or which candidate they’ll prefer to steer the state toward, hopefully, a better place.
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