Gavin Newsom proposes $350B California budget and delays federal loan repayment

Gov. Gavin Newsom proposed a record $350 billion California budget that boosts spending on education and other programs; the plan does not allocate funds to repay the COVID-era federal unemployment loan principal, leaving employers responsible for related costs.

California Gov. Gavin Newsom unveiled a record-high $350 billion state budget that increases spending on education and other programs while counting a reported $43 billion market-linked windfall. The proposal reduces the governor's estimated shortfall to roughly $3 billion but does not include payments toward the principal of a COVID-era federal unemployment loan. Officials and legislators offered differing reactions to that decision. Lawmakers and the governor will continue negotiating and refine the proposal ahead of a May revision. Key points: - The governor proposed a $350 billion state budget that incorporates a reported $43 billion windfall and shows an estimated $3 billion deficit on the governor's side. - The proposal increases funding for education and other ongoing programs, and the administration highlighted record-per-student spending and system allocations in its briefing. - The budget includes mandatory interest payments on the federal COVID-era unemployment loan but does not allocate funds for principal repayment, leaving employers to carry related costs under federal rules. - Lawmakers and analysts reacted with mixed statements, and the budget will be refined toward a May revision and a final proposal in May. Summary: The governor's budget sustains higher program spending while deferring repayment of a federal loan, a choice that officials say shifts costs onto employers and future budgets. Projections from the governor and legislative analysts differ on the size of future deficits, and discussions will continue as lawmakers work toward the May revision.