Proposed Budget - Fiscal Year 2026
On January 10, California Governor Gavin Newsom introduced his budget proposal for fiscal 2026. The budget calls for total state expenditures (excluding federal funds) of $322.3 billion, including $228.9 billion in general fund spending for fiscal 2026. This represents a 1.4 percent general fund decrease compared to spending levels in fiscal 2025. The proposal builds on the multi-year framework of strategies that was passed last year to resolve the state’s projected shortfall for fiscal 2025 and fiscal 2026. The fiscal 2026 budget is based on total general fund resources for fiscal 2026 of $251.4 billion, including a $26.3 billion beginning balance and $225.1 billion in annual revenue after a $7.1 billion transfer from the state’s rainy day fund (also known as the Budget Stabilization Account or BSA). General fund revenues, prior to the BSA transfer, are forecasted to increase 0.2 percent in fiscal 2026 compared to current estimates for fiscal 2025. The recommended budget projects reserve balances at the end of fiscal 2026 of $10.9 billion in the BSA and $1.5 billion in the Public School System Stabilization Account (PSSSA). Additionally, the general fund ending balance is expected to be $22.5 billion, including an $18.0 billion Reserve for Liquidation of Encumbrances and $4.5 billion in the Special Fund for Economic Uncertainties (SFEU) (the state’s operating reserve). This amounts to combined budgetary reserves (BSA, PSSA, and SFEU) of $17.0 billion (7.4 percent of recommended general fund expenditures for fiscal 2026).