13 Jan Stephenshaw Delivers 2026 California Budget Amid Wildfire Crisis

California Dept. of Finance Director Joe Stephenshaw, left, and Chief Deputy Director Erika Li presented Gov. Gavin Newsom’s $322 billion state budget proposal at the State Capitol Annex Swing Space on Jan. 10. (CBM photo by Antonio Ray Harvey)

Joe W. Bowers Jr | California Black Media

California Department of Finance Director Joe Stephenshaw, standing in for Gov. Gavin Newsom, presented the state’s $322.3 billion proposed budget for the 2025-26 fiscal year at a press briefing on Jan. 10.

The presentation, held at the Media Briefing Room of the Swing Space Building in Sacramento, began with Stephenshaw addressing the devastating wildfires sweeping through Southern California. He affirmed the state’s commitment to enhancing wildfire preparedness and resilience, emphasizing ongoing efforts to protect communities and natural resources.

“The budget I present to you today reflects a balanced approach, one that avoids new cuts to core programs while continuing investments in critical areas like wildfire preparedness, education, and economic resilience,” Stephenshaw stated.

Stephenshaw highlighted the administration’s progress in fiscal management, noting, “Thanks to the budget framework that the governor proposed last May to not only balance the budget for the upcoming fiscal year but also ensure that our special fund for economic uncertainty was balanced for the next fiscal year, we really went a long way in moving California back onto some stable fiscal footing.”

Newsom officially sent the proposed budget to the Legislature, describing it as a balanced plan designed to maintain fiscal stability while continuing critical investments.

The governor’s budget proposal projects a surplus of $363 million, alongside $17 billion in reserves, including $10.9 billion in the Rainy-Day Fund and an additional $4.5 billion in the Special Fund for Economic Uncertainties. However, the Legislative Analyst’s Office has expressed a more cautious outlook, estimating a $2 billion deficit, citing revenue volatility tied to capital gains and economic uncertainties.

The proposed budget includes savings from the elimination of 6,500 vacant government positions, generating $1.2 billion over two years. Additional operational efficiencies, such as reduced state travel budgets and IT system modernization, are expected to save $3.5 billion.

Proposition 98, which guarantees a minimum level of funding for TK-12 education and community colleges, is set at $118.9 billion for the 2025-26 fiscal year. Overall, TK-12 education funding totals $137.1 billion, including $83.3 billion from the General Fund. This translates to per-pupil funding of $18,918 from Prop 98 and $24,764 when accounting for all funding sources.

The education budget includes a 2.43% cost-of-living adjustment for Local Educational Agencies to address rising costs. It allocates $2.4 billion in ongoing funding for supporting the full implementation of Universal Transitional Kindergarten, along with $1.5 billion to reduce student-to-adult ratios. Additionally, $8.5 billion is earmarked for school facility modernization, safety upgrades, and universal school meals.

Marshall Tuck, CEO of EdVoice, expressed optimism about the budget’s educational initiatives. “EdVoice is pleased to see the deep focus on literacy instruction and instructional materials in the governor’s proposed budget, as reading is the most essential skill for future learning and opportunity,” Tuck said. “We must also ensure that teacher training in evidence-based literacy instruction is required for elementary school teachers.”

Higher education will receive $45.1 billion, with investments in equity-focused initiatives at UC, CSU, and community colleges. The proposal includes expanded financial aid through the Middle-Class Scholarship and $150 million to support teacher recruitment incentives, aimed at addressing persistent staffing shortages in public schools.

The budget introduces stricter accountability measures for homelessness funding, including enhanced oversight of the Homeless Housing, Assistance, and Prevention program. Frequent reporting of expenditures and outcomes will be required to ensure effective use of funds. Investments also target affordable housing development, including funding for low-income housing tax credits and $100 million for encampment resolution efforts.

California’s persistent wildfire threat, underscored by the fires currently sweeping through Southern California, is addressed with $2.5 billion in prior wildfire funding and an additional $1.5 billion from the Climate Bond. These funds will support critical initiatives such as enhancing CAL FIRE’s capacity, deploying advanced firefighting technology, and implementing preparedness programs that utilize advanced detection and mapping tools to protect vulnerable communities. Additionally, the budget dedicates $200 million annually through 2028-29 for forest and fire prevention programs, including prescribed fire and fuel reduction projects, aimed at mitigating future wildfire risks.

The proposed budget includes programs like the California Competes program and workforce development initiatives that continue to support small businesses including Black Businesses and promote economic growth. The budget also maintains $1.6 billion in public safety funding, including $283.6 million in 2025-26 to enhance enforcement, prosecution, and accountability.

Stephenshaw explained that the budget aims to create opportunities and provide resources to help all Californians succeed, while focusing on the state’s commitment to equity and addressing critical needs. He pointed out challenges like possible Medicaid cuts and changes to immigration policies and emphasized working closely with the Legislature to refine the budget and tackle financial issues.

Dr. Akilah Weber Pierson (D-San Diego), chair of the California Legislative Black Caucus, stated, “We thank the governor and Department of Finance staff for their work on this initial budget proposal. While the governor’s spending plan seeks to achieve fiscal responsibility, there is much to do in the way of addressing the economic inequality faced by our most vulnerable populations.” She added that the CLBC is committed to collaborating with legislative colleagues and the administration to safeguard and expand investments in underserved communities.

Assembly Minority Leader James Gallagher (R-Yuba City) offered a sharp critique on the budget, particularly targeting Newsom’s economic policies. “Newsom is doubling down on the same failed programs that stuck Californians with record homelessness, soaring energy and housing costs, and one of the highest unemployment rates in the nation,” Gallagher stated. “The only new thing in this budget is a giveaway to the governor’s Hollywood donors and even higher taxes on small businesses.”

The proposed budget now heads to the Legislature for deliberation and potential adjustments before Newsom revises it in May. By law, the process must be completed, and the balanced budget signed by the end of June when the fiscal year ends.