Newsom, Lawmakers Reach California Budget Pact with No Deficit

SACRAMENTO, Calif. — Governor Gavin Newsom and legislative leaders announced a three-party agreement on California’s 2026–27 state budget, delivering a balanced spending plan with zero deficit for both the current fiscal year and the next.

Pleasanton, in the Tri-Valley region of Alameda County about 40 miles east of San Francisco, has roughly 80,000 residents and is home to the headquarters of Workday and the Clorox Company.

The agreement sets aside more than $6 billion in anticipated revenues in a holding account to ensure fiscal stability. It funds small business tax cuts, free school meals, universal pre-school, childcare slots, and what leaders described as a historic investment in students with disabilities.

“A balanced budget isn’t an end in itself — it’s how we deliver for Californians,” Governor Newsom said. “This budget demonstrates responsible choices that protect our fiscal strength while continuing to invest in what matters most.”

Senate President pro Tempore Monique Limón said the agreement reflects the Legislature’s commitment to protect core programs despite continued federal funding cuts. Assembly Speaker Robert Rivas added that the budget “has working families’ backs,” pointing to investments in housing, healthcare, and food programs.

The budget package includes two major pillars: a Veterans and Affordable Housing Bond Act to fund housing construction and preservation, and a constitutional amendment to strengthen the state’s Rainy Day Fund while reducing unemployment insurance liabilities.

The agreement also limits large corporate tax breaks for the state’s biggest corporations, reforms housing finance to accelerate affordable construction, maintains climate resilience and wildfire preparedness funding, and includes new investments to safeguard elections through voter outreach and combating misinformation.

Since Newsom took office, California has built the largest state budget reserves in its history and paid down billions in long-term liabilities. The Governor, Senate, and Assembly will continue working through the constitutional budget process in the coming days.

Source: https://www.gov.ca.gov/2026/06/26/finalbudget/