Republican lawmakers say the numbers highlighted in the State of the State address deserve closer scrutiny.
SACRAMENTO, Calif. — Gov. Gavin Newsom struck an optimistic tone about California’s finances during his last State of the State address, delivered one day before he is expected to release his proposed budget.
Newsom previewed a General Fund budget of $248.3 billion for the fiscal year and pointed to stronger-than-expected revenue.
“It’ll be a General Fund budget of $248.3 billion,” Newsom said.
The governor said state revenues are coming in far above earlier projections.
“It includes revenues that are $42.3 billion higher than we forecasted,” Newsom said.
The optimistic outlook stands in contrast to warnings issued just weeks earlier. In November, the nonpartisan Legislative Analyst’s Office projected the state could be facing a nearly $18 billion deficit. At the time, the Department of Finance acknowledged significant challenges ahead.
“The legislative analyst has highlighted a number of the challenges that we and the governor have underscored throughout 2025,” said H.D. Palmer, deputy director of External Affairs at the California Department of Finance.
Palmer declined to speak with ABC10 ahead of the governor’s formal budget proposal, which is expected to be released Friday.
Republican lawmakers say the numbers highlighted in the State of the State address deserve closer scrutiny. Sen. Roger Niello (R-Fair Oaks) said the speech was misleading.
“This speech is about things he said and didn’t say,” Niello said.
Niello argued the $42.3 billion revenue figure is not clear, saying it reflects revenue accumulated over several years rather than new money currently available to the state.
“What he was referring to was a cumulative excess in revenue over a few years,” Niello said.
The Legislative Analyst’s Office fall projections found state revenues have increased due to taxes from high-income earners and stock market growth. Analysts cautioned, however, that those gains still fall short of covering the state’s spending commitments.
Niello called the governor’s characterization of the revenue a misrepresentation.
“That is a significant misrepresentation. It’ll be cleaned up tomorrow,” he said.
Newsom is expected to formally present his budget proposal Friday, which lawmakers say will provide a clearer picture of whether the state’s optimistic outlook holds or if difficult budget decisions lie ahead.
California Republicans Respond to Gavin Newsom’s Final State of the State
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