Legislature, Governor Reach Budget Agreement

State leaders on Tuesday reached an agreement on the budget bill passed earlier this month, ironing out a tentative $321.1 billion spending package.

Lawmakers pushed back on Gov. Gavin Newsom’s May Revision, which sought to reduce a $12 billion deficit through programmatic and spending reductions. The new tentative agreement pushes pause on some of the governor’s belt-tightening, relying instead on shifted funds and increased borrowing to circumvent or delay more painful reductions.

The agreement, according to the Los Angeles Times, hinges on lawmakers passing a housing reform proposal. One of the more controversial portions of Newsom’s proposed budget was reductions for Medi-Cal spending for undocumented populations, to which lawmakers agreed (if not reluctantly).

The California Department of Technology (CDT) is on positive financial footing, according to budget numbers outlined in the governor’s May Revision. In January, the department was looking at a $797.2 million operating budget, a significant drop from the previous fiscal year’s $3.17 billion budget. In May, that 2025-26 budget climbed slightly to $798.8 million.

California’s swings between huge surpluses and staggering deficits are nothing out of the ordinary. In 2022, the budget surplus topped a record-setting $97.5 billion, quickly descending to a $55 billion deficit just two years later in the 2024-25 fiscal year.

Lawmakers are constitutionally required to pass a budget bill by June 15 or face salary penalties until a bill is passed. The negotiations over that package often extend into late June, just ahead of the start of the budget cycle (July 1).

Deep Dive Resources
California Department of Technology Budget Report
May Revision Ebudget
2025-26 May Revision Budget Summary V2
GovOps Agency Budget Report