2024-25 State Budget Proposal Protects Core Priorities and Ensures Fiscal Stability

January budget proposal closes a $37.86 billion shortfall while protecting key investments in education, public safety, addressing homelessness, mental health care reform, and climate action

Historic reserves and responsible budgeting over past budget cycles enable the state to maintain fiscal stability amid fluctuation in revenues

SACRAMENTO – Governor Gavin Newsom today introduced his 2024-25 state budget proposal, a balanced funding plan that maintains the state’s fiscal stability while preserving key investments for education, public safety, addressing homelessness, mental health care reform, climate action, and other priorities. Using some of the unprecedented budget reserves built up over the years and other tools, this budget responsibly closes a projected $37.86 billion shortfall.

Recognizing increased uncertainty due to a decline in the stock market and federal tax deadline delays, the 2023-24 state budget passed in June set aside record reserves of close to $38 billion to prepare for a potential shortfall.

Despite the downward revision, 2022-23 revenues are estimated to still be 23 percent higher than pre-pandemic levels. California’s GDP remained strong in 2023, and the state’s big three revenues are projected to return to levels consistent with a normal revenue growth trajectory.

Even after the proposed withdrawals, this budget plan reflects $18.4 billion in total budgetary reserves, including $11.1 billion in the Rainy Day Fund.

In addition to addressing the budget shortfall through a balanced package of solutions that avoids deep program cuts, the January budget proposal maintains investments in several priority issues, including:

TACKLING HOMELESSNESS. Governor Newsom has advanced a multi-year $15.3 billion plan to address homelessness – more than ever before in state history. This budget proposal maintains billions of dollars for an all-of-the-above approach including $400 million for encampment resolution grants and $1 billion for Homeless Housing, Assistance and Prevention program grants.

KEEPING CALIFORNIANS SAFE. The budget invests $1.1 billion over four years to increase the safety and security of our communities, including $373.5 million to combat organized retail theft; over $230 million for opioid and fentanyl interdiction and enforcement, naloxone distribution, recovery and support services and more; $302 million to enhance community public safety through nonprofit security grants, officer training and more; and $197 million to tackle gun violence.

TRANSFORMING EDUCATION. The budget maintains investments that are critical to improving supports for students, including funding for community schools, universal school meals, expanded learning opportunities, education workforce, and continued implementation of universal transitional kindergarten. Proposition 98 funding for K-12 schools and community colleges is estimated to be $109.1 billion in 2024-25 and per-pupil funding totals $23,519 per pupil when accounting for all funding sources.

MENTAL HEALTH REFORM. California has advanced a major transformation of the state’s behavioral health services system. This budget includes funding to make wellness coaches available to support children and youth behavioral health and maintains $7.6 billion from various funds to implement the Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT) demonstration.

CALIFORNIA’S CLIMATE COMMITMENT. California is advancing a $48.3 billion multi-year commitment, alongside over $10 billion from the Biden-Harris Administration in federal climate funding, to implement its nation-leading initiatives to slash pollution and achieve carbon neutrality by 2045, protect communities from harmful climate impacts, deliver 90% clean electricity by 2035, hold big oil accountable, and more.

Additional details on the January budget proposal can be found at www.ebudget.ca.gov.