Gavin Newsom dubs Trump and Bessent ‘dumb and dumber’ in unveiling $350 billion state budget

(SeaPRwire) –   On Thursday, California Governor Gavin Newsom put forward an updated, deficit-free revised budget for the final year of his current term and the following year, rolling out a $350 billion spending framework that includes minimal new expenditures while also steering clear of large-scale cuts.

Newsom is keen to protect the programs that have shaped his time leading the country’s most populated state, which also ranks as one of the largest economies globally. As he prepares for a potential 2028 presidential campaign, the Democratic governor is framing the budget as fiscally prudent, noting that it upholds California’s priorities while also growing the state’s emergency reserve funds — a sharp pushback against critics who claim the state operates beyond its financial means.

Per legislative budget analysts, the state’s total spending has increased by over $100 billion since 2020.

“We’re cutting deficits. But we’re not cutting corners,” Newsom said.

Newsom is ineligible to run for a third term as governor and will depart office next January.

State revenues, fueled primarily by the surging stock market and the artificial intelligence sector, are $16.5 billion above the projections released back in January. His office stated that this surplus will allow the state to dodge the $2.9 billion deficit that was forecast in January, ensure there is no budget gap next year, and slash the projected shortfall for the year after that by 50%. Newsom is also proposing to put $9.7 billion into a reserve account to help balance budgets in coming years.

California dealt with budget deficits totaling tens of billions of dollars for multiple consecutive years, which forced harsh spending cuts last year including walking back a pledge to offer free health care to low-income undocumented immigrants. Nonpartisan budget analysts had previously forecast that the state would face annual budget gaps of more than $20 billion over the next several years. Newsom’s projections and those of the analysts do not always align.

Even so, Democrats are preparing for cuts to federal healthcare funding, as well as the knock-on effects of elevated costs for all goods from gasoline to energy stemming from the conflict in Iran. State officials have stated on multiple occasions that California does not have the resources to replace all lost federal funding.

Republican legislators argue that Newsom’s proposal does not do enough to resolve long-term budget issues. Republicans are mostly shut out of budget talks, as Democrats hold supermajorities in both houses of the state legislature.

“Governor Newsom appears to define fiscal success narrowly: if the budget doesn’t collapse on his watch, it’s a balanced one,” Assemblymember David Tangipa said in a statement.

Newsom also criticized President Donald Trump and his administration’s policies, incorporating a photo into his budget presentation that shows the president and Treasury Secretary Scott Bessent as the lead characters from the film “Dumb and Dumber.” Trump “doesn’t particularly give a damn about the financial situation of the average American,” Newsom said.

The release of the budget proposal will formally launch the final phase of negotiations between Newsom and legislative Democrats, who are required to approve a budget by the end of June.

This year, state legislators are weighing multiple proposals to raise corporate tax rates to help mitigate budget challenges. Newsom has largely refrained from raising taxes to increase revenues during his previous years in office. His current proposal would cut fees for newly established small businesses, cap certain tax credits beginning in 2027, and apply a sales tax to select digital software and cloud services.

Per the governor’s estimates, the two proposed tax policies could bring in more than $1 billion in their first year of enactment. Newsom opposes a ballot measure that would impose a one-time tax on billionaires, which is likely to appear on the state’s November ballot for voters to decide.

He has also put forward a plan to raise monthly premiums for undocumented adult enrollees in the state-run healthcare program from $30 to $50. These premiums were included in last year’s budget and are scheduled to go into effect this July for adults younger than 60. Senate Democrats have already indicated they will push back against this proposal.

California operates under a progressive tax structure that is heavily dependent on high-income earners, with roughly half of all state revenues coming from just the top 1% of the population. During periods of strong economic performance, high earners pay more in taxes, leading to rapid revenue growth. During economic downturns, their tax payments fall, and revenues can decline just as sharply.

The state may also get a revenue lift from the anticipated upcoming initial public offerings of several leading artificial intelligence firms, which are projected to be the biggest IPOs in history. However, legislative budget experts have warned that a possible AI bubble could put further strain on the state’s financial situation.

Newsom’s Thursday proposal also features a $300 million plan to cover part of the lost government-funded health subsidies, a $5 billion education grant for teacher professional development, and $100 million in assistance for homeowners in the Los Angeles area to rebuild following the destructive wildfires that hit the region last year.