What Newsom plans to do for the budget deficit of 2025

When the Governor Gavin Newsom released his preliminary $ 322 billion state budget plan in JanuaryHe predicts a “modest surplus”. But many things have changed since then: a total economic slowdown in the US economy; an approximate decline in income tax revenue due to the fall of the stock market from President Donald Trump’s rates; and unprecedented Medi-Cal budget shortage Let’s name a few.

Now – like Newsom on Wednesday revealed its updated budget plan – California is facing a A budget deficit of $ 12 billionwrites Calmatters’ Alexey KossefS

Newsom’s budget proposal draws an economic perspective, which, in the best case, is unclear and, in the least case, is gloomy. For example, Trump’s continuing tariff policies (which Newsom has described in the plan As “remarkably inconsistent”) could have “widespread impacts” on almost all the import of the state and can worsen inflation in California. The growth of jobs in the country is expected to slow down in 2026.

In the light of current and upcoming challenges, Newsom plans to close the difference in several ways. It still needs legislative approval.

• Shift the restraint and trade funds: The main program for restricting and trading of California – which allows companies to buy and trade loans for the climate – provided billions of dollars for projects aimed at combating climate change and other environmental problems for more than a decade. NEWSOM wants to displace some of this money to pay CAL fire trucks, as well as at least $ 1 billion a year to finance the high -speed rail project.

By a Calmatters Home Reporter Ben Christopher:

For all Optimistic legislation., rubber and state lawsuits The fact that the state was intended to strengthen the construction of desperately necessary homes, the California Housing Market persistently refused to cooperate.

As part of the processed budget of the governor, the administration noted that housing permits are a decade. Less than 100,000 new units were allowed in 2024 – a decrease of 10% of the previous year. So far, 2025 numbers are even smaller than expected.

The future does not seem much different. By blaming high interest rates, tariffs and strict labor markets for construction workers, the Newsom Winks budget predicted low permits in the mid -2027.

The numbers were dragged from a collapse in the specifically proposed apartment projects. This is despite many of the previous accounts aimed at promoting dense urban development.

Will they make two more accounts? Newsom relies on this. In the presentation on Wednesday He approved two of this year Most controversial bills (Senate Bill 607 and Assembly Bill 609) This would release most urban housing projects from the Ecological Signature Act.

Read more hereS

Talking about housing, Ben also examines a bill that seeks to make homes more affordable by putting A perennial pause to build standards – The critics of the proposal say he is misled.

If adopted, the bill will not cancel any of the current construction standards that dictate water supply, safety functions, electrical wiring of the building and others. More recently the measure would be Freeze the rules in place From June 1 to at least 2031, this means that the California code 2025, which is due in January 2026, will not come into force.

The bill has slipped through the Assembly, probably because its co -author is the speaker of the installation Robert Rivas Salinas. Proponents say that the measure will reduce construction costs: the main updates to the construction standard in the last 15 years have added $ 117,000 to construction costs for each single -family home, according to the California Association of the Construction Industry.

But Bill’s opponents, who include environmental defenders, construction unions and code employees, claim that the approach is too dramatic to deviate from the way the state usually regulates buildings and that construction codes are not the main cause of high housing costs.

Read more hereS