Gov. Newsom’s May Revision
Gov. Gavin Newsom released his revised 2025 budget proposal on May 14, 2025. The May Revision proposes spending $321.9 billion – consisting of approximately $226.4 billion from the General Fund, $89 billion from special funds, and $6.5 billion from bond funds. The revision also includes $12 billion in cuts to address the deficit and to build up the state’s discretionary reserve.
While the January proposal projected a minor surplus, the total spending in the May Revision is only slightly lower than the original $322.3 billion proposed in January. However, the current budget reflects increased economic uncertainty as California navigates federal policy changes, which include Trump’s tariffs. In fact, Newsom is correlating the negative fiscal outlook directly to what he calls a “Trump Slump.”
Most of the cuts are in the health care sector – which total $5 billion. The Medi-Cal program was hit particularly hard with cuts, specifically targeted at undocumented individuals and their participation in the program, where Newsom proposed enrollment freezes and enacted $100 monthly premiums.
The Legislature has until June 15 to negotiate and finalize the budget with the governor before the fiscal year begins on July 1. However, the Legislature is understanding of the economic uncertainty the state is facing and will probably work with Newsom to address this shortfall – meaning there will likely be no new expenditures, and the cuts will be maintained. Additionally, there are multiple budget trailer bills that will be negotiated until the end of the legislative session, as the uncertainty of the federal cuts continue.
More information on the May Revision can be found here.
Mayor Bass’ 2025 Proposed Budget
Los Angeles Mayor Karen Bass proposed a $13.95 billion budget to address a nearly $1 billion deficit. The shortfall stems from rising personnel costs, legal payouts and the economic impacts of the January wildfires – which also lowered overall tax revenue due to property loss. To close the gap, the proposed budget included over 2,700 job eliminations – 1,647 of which are layoffs – impacting nearly every city department.
Departments hit hardest included:
- Department of Transportation – facing more than 400 position cuts.
- Los Angeles Police Department – with over 400 civilian job reductions.
- Departments of Sanitation, Street Services and Animal Services – with major cuts to funding.
In contrast, the Los Angeles Fire Department received funding for 227 new positions, largely to support emergency response and homelessness efforts. The proposal also merged departments – consolidating Aging, Youth Development and Economic Development into a new Community and Investment Department, and eliminated several advisory commissions.
In response to union pushback and public concern, city council finalized a revised $14 billion version of the budget on May 30 and saved 1,000 jobs by identifying alternative savings pathways. Key aspects of the revised plan include funding for 240 new police officers, down from the 480 originally proposed by the mayor, and 58 new employees for the fire department – a reduction from the 277 originally proposed by Bass.
Mayor Bass has until June 6 to act on the budget, before the start of the next fiscal year on July 1.
