Governor Releases Revised Budget Plan for 2025–26

This week, Governor Gavin Newsom released his May revision plan for the 2025–26 state budget, including adjustments for a new shortfall estimated at $12 billion.

He described the projected budget deficit as largely resulting from actions taken at the federal level and proposed curtailing what he called “unsustainable spending” while still investing in housing, education and infrastructure.

CalChamber Statement

In response to the Governor’s revised state budget, CalChamber President and CEO Jennifer Barrera issued the following statement:

“The revised budget plan addresses a number of key challenges that lie ahead for California and the nation. In these uncertain economic times, CalChamber believes the Governor has laid out a reasonable path forward, carefully balancing the need to invest in programs that support the state’s economy with prudent spending reductions that address the gap between revenues and expenditures.

“The Governor has made it clear that state officials should roll up their sleeves and prioritize all housing and critical infrastructure programs, such as water, by streamlining processes that will strengthen our economy and help us meet our climate goals.

“Entrepreneurs and consumers alike are focused on making California a more affordable place to live and work. [The] budget announcement reflects those goals by carefully managing available resources and rejecting tax increases that would negatively impact the state’s economy.”

Water Infrastructure

The news release announcing the Governor’s revised plan noted plans to fast-track modernization of the State Water Project with an emphasis on streamlining processes related to the Delta Conveyance Project.

The Sacramento-San Joaquin Delta watershed is the central hub of California’s two largest surface delivery projects — the State Water Project and the federal Central Valley Project. Together, these projects provide water to more than 27 million Californians in the Bay Area, Central Valley and Southern California.

Housing

The Governor’s revised budget includes a legislative package to reduce government delays, streamline Coastal Commission approvals to align with those of other agencies, and prioritize infill and transit-oriented housing.

Also part of the proposal, according to the Governor’s news release, is support for incorporating pending legislation to reform the California Environmental Quality Act (CEQA) for infill housing and other development projects, along with a housing and infrastructure bond “to build more homes, faster.”

CalChamber supports these efforts to improve the CEQA process.

Details of the May revision proposal are available at ebudget.ca.gov.