The governor’s full proposed budget for FY 2025-26, which will be explained in detail Friday in a presentation by the Department of Finance (DOF), includes a $228.9 billion General Fund and $16.9 billion in so-called rainy-day reserves.
The next step will be consideration of the May Revision, in which Newsom and state budget leaders will offer more granular details about the state’s spending blueprint. The Legislature will then adopt the budget in June.
“Last year,” Newsom said, “we endeavored to make this year’s budget a non-event. Last year, we endeavored to solve the problems this year and did something we haven’t done in the past: We took a two-year prism” with the goal of addressing last year’s budget deficit as well as plugging any leaks in this year’s.
State budget experts are pointing to an unexpected increase of about $16.5 billion in state revenues above the previous year, which Newsom said was good news — but for which he offered the caveat that the state is in the middle of its fiscal year; those figures are among multiple estimates that may change between now and the May Revision.
In an effort to make the state workforce leaner, Newsom said, government has trimmed 6,500 jobs, yielding a savings of $1.2 billion.
Specifically speaking on technology, Newsom drew a parallel with the incoming Trump administration’s creation of a Department of Government Efficiency (DOGE).
“Our DOGE is spelled ODI,” he said, referring to the state Office of Data and Innovation, an arm of the Government Operations Agency that has served for several years as the tip of the spear in California’s technological evolution. He noted that office has “been focused on a myriad of reforms over the course of many, many years.”
“We didn’t wake up to this reality on modernizing our IT systems, on renegotiating contracts, travel, printing, goods and services, state building consolidation. … We have new technology, new artificial intelligence,” Newsom said, citing gains in:
- Technology and firefighting
- Public-private partnerships
- Post-pandemic fraud protection, a problem that plagued the Employment Development Department
- Civil service reform
- “Digital-first” principles
He noted that since the adoption of RFI2, the length of procurement transactions has been trimmed 22 percent. That’s welcome news to many in the vendor community, who for years have sought a faster and more efficient process when selling to the state. Newsom said there are still "too many RFIs, RFPs, RFQs,” but he said this is a big step forward.
Another tech bright spot that Newsom touted was the progress by the Department of Motor Vehicles, which has made significant gains in recent years in offering more online services.
“Again, always a work in progress when it comes to DMV,” he said.
The governor also noted California’s dominant role in the development of AI, citing a litany of stats and noting that the state has entered into six new partnerships with companies working on AI advancements that may solve some of the state’s challenges.
“We’re leading the country in this space,” he said, “and we’re doing it not to labor — with labor.”
Newsom’s address in its entirety can be viewed online.
Industry Insider — California will follow up next week with details about DOF’s presentation on Friday.
This story first appeared in Industry Insider — California, part of e.Republic, Government Technology's parent company.
