SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom’s office said the state faces a $2.9 billion budget deficit this year, an amount significantly lower than what legislative budget analysts projected.
The deficit, though small, could still require cuts and means the Democratic governor doesn’t have money to advance new programs during his last year in office.
It’s the fourth year in a row that the nation’s most populous state faces a multibillion-dollar budget deficit. This year's shortfall comes despite growing revenues fueled by stock market gains and investments in artificial intelligence.
Newsom's office outlined a behemoth $349 billion budget, though his proposal for how to spend all of that money is far from final. Lawmakers and the Democratic governor will spend the next several months fighting and negotiating over priorities — and cuts. Last year Democrats had to roll back their ambitious program to provide free health care to immigrants without legal status in the face of a $12 billion deficit.
“This budget really is about an eye towards ensuring that we have a sustainable fiscal plan going forward,” Finance Director Joe Stephenshaw said during a Friday briefing.
This year, they will also face a $1.4 billion loss in federal funding after new federal policy changes to health care and food assistance programs for low-income people. Lawmakers have said repeatedly California is in no position to backfill that money. The budget doesn't fully address the federal funding loss.
Newsom will try to safeguard some of the progressive policies that have defined his tenure as he considers a presidential run. But lawmakers have to consider the looming structural deficit that could climb to $22 billion the following year. Newsom can't seek a third term and will leave office in January.
The nonpartisan Legislative Analyst’s Office in November projected California to face a $18 billion shortfall this year. Their estimate and Newsom's sometimes differ.
Newsom's administration said some of the deficit was offset recently after the state racked in billion of dollars more in revenues than expected.
Still, State Controller Malia Cohen this week warned lawmakers that the state is already spending nearly $6 billion more than expected six months into the fiscal year. She urged them to take “a disciplined approach.”
Republican lawmakers said the problem is nothing new. They have little say in the budget process because Democrats hold supermajorities in both chambers.
“California families have to balance their budgets and make tough choices. The state government should be held to the same standards,” Republican state Sen. Tony Strickland said.
Democratic lawmakers said they're committed to addressing deficits.
"During these times of uncertainty, we must craft a responsible budget that prioritizes the safety and fiscal stability of California families,” state Senate President Pro Tempore Monique Limón said in a statement.
Newsom on Thursday during his State of the State address said his budget will include “the most significant investments” in public education.
He plans to fully fund transitional kindergarten programs for all students, spend more than $27,000 per student next year and provide $1 billion to high-need schools. Based on a complex set of formulas, roughly 40% of the state's budget is required by California law to go to schools every year.
Newsom also proposed to move the Department of Education into the executive branch. The state superintendent of public instruction is an elected position, and it's not immediately clear whether Newsom will ask voters to approve the change.
He doesn't propose any new funding to local governments to address homelessness. Last year, Newsom and lawmakers agreed to set aside $500 million for the local programs but it's not guaranteed.
County officials worry the lack of new funding will hurt efforts to reduce homelessness. The programs are working, California State Association of Counties CEO Graham Knaus said, pointing to a 9% drop in unsheltered homelessness that Newsom touted earlier this week.
“It would make no sense to then stop the most successful program that is doing that,” he said Friday.
Newsom also calls for the state to rebuild its reserves after withdrawing roughly $12 billion in the last two years to solve budget problems.
He wants to deposit roughly $3 billion into the state’s rainy day fund, $4.5 billion into a special fund for economic emergencies and $4.1 billion in schools' reserve funds.
He also wants the state to use $3 billion to pay down debt.
The budget proposal includes $200 million to create a rebate program to make buying an electric car more affordable.
The money comes from revenues generated by the state’s cap-and-trade program and an air pollution regulation fund. The goal is to backfill federal tax incentives for electric vehicles that were slashed by Trump’s massive tax and spending cut bill.
Newsom also wants to give more money to the state's Department of Justice to help the state fight the Trump administration's agenda. California has sued the administration more than 50 times since last year.
Associated Press writer Sophie Austin contributed to this report.
Gov. Gavin Newsom gives his State of the State address at the State Capitol on Thursday, Jan. 8, 2026, in Sacramento, Calif. (Hector Amezcua/The Sacramento Bee via AP, Pool)
MINNEAPOLIS (AP) — Hennepin County Attorney Mary Moriarty on Friday called on members of the public to send any video or other evidence in the fatal shooting of Renee Good directly to her office, challenging the Trump administration's decision to leave the investigation solely to the FBI.
Moriarty said that although her office has collaborated effectively with the FBI in past cases, she is concerned by the Trump administration's decision to bar state and local agencies from playing any role in the investigation into Wednesday's killing of Good by an Immigration and Customs Enforcement officer in Minneapolis.
She also said the officer who shot Good in the head does not have complete legal immunity, as Vice President JD Vance declared.
“We do have jurisdiction to make this decision with what happened in this case,” Moriarty said at a news conference. “It does not matter that it was a federal law enforcement agent.”
Moriarty said her office would post a link for the public to submit footage of the shooting, even though she acknowledged that she wasn't sure what legal outcome submissions might produce.
The prosecutor's announcement came on a third day of Minneapolis protests over Good's killing and a day after federal immigration officers shot and wounded two people in Portland, Oregon.
Good's wife, Becca Good, released a statement to Minnesota Public Radio on Friday saying, “kindness radiated out of her.”
"On Wednesday, January 7th, we stopped to support our neighbors. We had whistles. They had guns," Becca Good said.
“I am now left to raise our son and to continue teaching him, as Renee believed, that there are people building a better world for him,” she wrote. “That the people who did this had fear and anger in their hearts, and we need to show them a better way.”
The reaction to the Good's shooting was immediate in the city where police killed George Floyd in 2020, with hundreds of protesters converging on the shooting scene and the school district canceling classes for the rest of the week as a precaution and offering an online option through Feb. 12.
On Thursday night, hundreds marched in freezing rain down one of Minneapolis’ major thoroughfares, chanting “ICE out now!” and holding signs saying, “Killer ice off our streets." And on Friday, protesters were outside a federal facility that is serving as a hub for the immigration crackdown that began Tuesday in the Twin Cities of Minneapolis and St. Paul. Authorities erected barricades outside the facility, and a small group of counter-demonstrators also showed up.
City workers, meanwhile, removed makeshift barricades made of Christmas trees and other debris that had been blocking the streets near the scene of Good's shooting. Officials said they would leave up a shrine to the 37-year-old mother of three.
The Portland shootings happened outside a hospital Thursday afternoon. Federal immigration officers shot and wounded a man and woman, identified by the Department of Homeland Security as Venezuela nationals Luis David Nico Moncada and Yorlenys Betzabeth Zambrano-Contreras, who were inside a vehicle, and their conditions weren't immediately known. The FBI and the Oregon Department of Justice were investigating.
Portland Mayor Keith Wilson and the city council called on ICE to end all operations in the city until a full investigation is completed. Hundreds protested Thursday night at a local ICE building. Early Friday, Portland police reported that officers had arrested several protesters after asking the to get out of a street to allow traffic to flow.
Just as it did following Good's shooting, DHS defended the actions of the officers in Portland, saying it occurred after a Venezuelan man with alleged gang ties and who was involved in a recent shooting tried to “weaponize” his vehicle to hit the officers. It wasn't immediately clear if the shootings were captured on video, as Good's was.
The Minneapolis shooting happened on the second day of the immigration crackdown in the Twin Cities, which Homeland Security said is the biggest immigration enforcement operation ever. More than 2,000 officers are taking part and Noem said they have made more than 1,500 arrests.
The government is also shifting immigration officers to Minneapolis from sweeps in Louisiana, according to documents obtained by The Associated Press. This represents a pivot, as the Louisiana crackdown that began in December had been expected to last into February.
Good's death — at least the fifth tied to immigration sweeps since Trump took office — has resonated far beyond Minneapolis, with protests happening in Texas, California, Detroit and elsewhere and hundreds of others planned for this weekend, according to Indivisible, a group formed to resist the Trump administration.
“This is hitting people who previously were not engaged,” said co-executive director Ezra Levin, adding that he’s seen a rise in veterans, rural Americans and some Republican voters speaking critically about the shooting.
Homeland Security Secretary Kristi Noem, President Donald Trump and others in his administration have repeatedly characterized the Minneapolis shooting as an act of self-defense and cast Good as a villain, suggesting she used her vehicle as a weapon to attack the officer who shot her.
Several bystanders captured video of Good's killing, which happened in a neighborhood south of downtown. Minneapolis Mayor Jacob Frey said videos show that any self-defense argument is “garbage.”
The recordings show an officer approaching an SUV stopped across the middle of the road, demanding the driver open the door and grabbing the handle. The Honda Pilot begins to pull forward and a different ICE officer standing in front of it pulls his weapon and immediately fires at least two shots at close range, jumping back as the vehicle moves toward him.
It is not clear from the videos if the vehicle makes contact with the officer, and there is no indication of whether the woman had interactions with agents earlier. After the shooting, the SUV speeds into two cars parked on a curb before crashing to a stop.
The federal agent who fatally shot Good is an Iraq War veteran who has served for nearly two decades in the Border Patrol and ICE, according to records obtained by AP.
Noem has not publicly named him, but a Homeland Security spokesperson said her description of his injuries last summer refers to an incident in Bloomington, Minnesota, in which court documents identify him as Jonathan Ross.
Ross got his arm stuck in the window of a vehicle whose driver was fleeing arrest on an immigration violation. Ross was dragged and fired his Taser. A jury found the driver guilty of assaulting a federal officer with a dangerous weapon.
Attempts to reach Ross, 43, at phone numbers and email addresses associated with him were not successful.
Associated Press reporters Steve Karnowski and Mark Vancleave in Minneapolis; Ed White in Detroit; Valerie Gonzalez in Brownsville, Texas; Graham Lee Brewer in Norman, Oklahoma; Michael Biesecker in Washington; Jim Mustian and Safiyah Riddle in New York; Ryan Foley in Iowa City, Iowa; and Hallie Golden in Seattle contributed.
Supporters of United States Immigration and Customs Enforcement rally outside the Bishop Henry Whipple Federal Building in Minneapolis, Friday, Jan. 9, 2026. (AP Photo/Adam Bettcher)
Minneapolis Public Schools families, educators and students hold signs during a news conference at Lake Hiawatha Park in Minneapolis, on Friday, Jan. 9, 2026, demanding Immigration and Customs Enforcement be kept out of schools and Minnesota following the killing of 37-year-old mother Renee Good by federal agents earlier on Wednesday. (Kerem Yücel/Minnesota Public Radio via AP)
A supporter of United States Immigration and Customs Enforcement argues with a counter protester outside the Bishop Henry Whipple Federal Building in Minneapolis, Friday, Jan. 9, 2026. (AP Photo/Adam Bettcher)
Protesters confront law enforcement outside the Bishop Henry Whipple Federal Building in Minneapolis, Friday, Jan. 9, 2026.(AP Photo/Adam Bettcher)
Protesters' shadows are cast on the street near law enforcement outside the Bishop Henry Whipple Federal Building in Minneapolis, Friday, Jan. 9, 2026. (AP Photo/Adam Bettcher)
Protesters confront law enforcement outside the Bishop Henry Whipple Federal Building in Minneapolis, Friday, Jan. 9, 2026.(AP Photo/Adam Bettcher)
An American flag burns outside the U.S. Immigration and Customs Enforcement facility on Thursday, Jan. 8, 2026, in Portland, Ore. (AP Photo/Jenny Kane)
Two protesters are lit by a police light as they walk outside the U.S. Immigration and Customs Enforcement facility on Thursday, Jan. 8, 2026, in Portland, Ore. (AP Photo/Jenny Kane)
Protesters are arrested by federal agents outside the Bishop Henry Whipple Federal Building in Minneapolis, Friday, Jan. 9, 2026. (AP Photo/Adam Bettcher)
Protesters sit on a barrier that is being assembled outside the Bishop Henry Whipple Federal Building as protesters gather in Minneapolis, Friday, Jan. 9, 2026. (AP Photo/Adam Bettcher)
Protesters stand off against law enforcement outside the U.S. Immigration and Customs Enforcement facility in Portland, Ore., Thursday, Jan. 8, 2026. (AP Photo/Jenny Kane)
Demonstrators protest outside the White House in Washington, Thursday, Jan. 8, 2026, against the Immigration and Customs Enforcement (ICE) agent who fatally shot Renee Nicole Good in Minneapolis. (AP Photo/Jose Luis Magana)
Protesters chant and march during a rally for Renee Good, who was fatally shot by an ICE officer the day before, Thursday, Jan. 8, 2026, in Minneapolis. (AP Photo/John Locher)
Protesters gather during a rally for Renee Good, Thursday, Jan. 8, 2026, in Minneapolis, after she was fatally shot by an ICE officer the day before. (AP Photo/Adam Bettcher)
Protesters confront federal agents outside the Bishop Henry Whipple Federal Building, Thursday, Jan. 8, 2026, in Minneapolis, Minn. (AP Photo/Tom Baker)
People gather around a makeshift memorial honoring the victim of a fatal shooting involving federal law enforcement agents, near the site of the shooting, Thursday, Jan. 8, 2026, in Minneapolis. (AP Photo/Tom Baker)
U.S. Border Patrol Cmdr. Gregory Bovino arrives as protesters gather outside the Bishop Henry Whipple Federal Building, Thursday, Jan. 8, 2026, in Minneapolis, Minn. (AP Photo/Tom Baker)
A protester pours water in their eye after confronting law enforcement outside the Bishop Henry Whipple Federal Building, Thursday, Jan. 8, 2026, in Minneapolis, Minn. (AP Photo/Tom Baker)
People gather around a makeshift memorial honoring the victim of a fatal shooting involving federal law enforcement agents, near the site of the shooting, Thursday, Jan. 8, 2026, in Minneapolis. (AP Photo/Tom Baker)
