The governor’s 2025-26 budget proposal breaks the cycle of deficits past with a cautiously optimistic projection of a $322.2 million surplus. The source of this modest surplus, which comes as a great surprise to many still reeling from the $37.9 billion shortfall initially projected this time last year, is allegedly in part due to a successful implementation of the governor’s two-year budget framework approach. This surplus differs from the projections released by the Legislative Analyst’s Office (LAO), who estimated a deficit of $2.2 billion, which the governor claims to have accounted for in adjustments to Proposition 98 and the Special Fund for Economic Uncertainties (SFEU). In other words, California has purportedly balanced their budget so successfully that the expected deficit has not only been closed but has been replaced with a small surplus.
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