Newsom outlines his final budget proposal with no deficit, new major spending

SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom on Thursday proposed a revised budget proposal without a deficit for his last year of office and the next, laying out a $350 billion spending plan that includes little new spending but also avoids major cuts.

Newsom is eager to safeguard programs that have defined his tenure as the leader of the nation’s most populous state and one of the world’s largest economies. As he gears up for a possible presidential run in 2028, Newsom is promoting the budget as fiscally responsible because it protects California's progressive programs but also builds up the state's rainy day funds, a pointed rebuke to critics who say the state spends more than it has. The state’s spending has grown more than $100 billion since 2020, according to the legislative budget analysts.

“We’re cutting deficits. But we’re not cutting corners,” Newsom said.

Newsom can’t seek a third term and will leave office in January.

Revenues, driven mostly by the booming stock market and artificial intelligence industry, are $16.5 billion higher than projections in January, according to Newsom's office. That will help the state avoid a $2.9 billion deficit Newsom projected in January, guarantee no budget hole next year and cut the shortfall the following year in half, his office said.

It is a welcoming change for the state where revenues have not kept up with spending. California faced tens of billions in budget deficits several years in a row, forcing painful cuts last year such as a rollback on a promise to provide free health to low-income immigrants without legal status. Nonpartisan budget analysts projected the state will see budget holes upward of $20 billion each year in the next few years.

Still, Democrats are bracing for federal funding cuts in healthcare and the impacts of high costs on everything from gas to energy because of the war in Iran. State officials repeatedly said California can't backfill all the federal monies.

Republican lawmakers said Newsom's plan didn't go far enough to address future budget problems. Republicans are largely excluded from budget negotiations because Democrats have a super majority in both chambers.

“Governor Newsom appears to define fiscal success narrowly: if the budget doesn’t collapse on his watch, it’s a balanced one,” Assemblymember David Tangipa said in a statement.

Newsom used his presentation to blast President Donald Trump and his policies. Trump “doesn’t particularly give a damn about the financial situation of the average American," Newsom said.

The May budget proposal will officially kick off the final stretch of negotiations between Newsom and Democrats in the Legislature, who have to pass a spending plan by the end of June.

State lawmakers this year have pitched several proposals to increase taxes on corporations to help with budget problems, but Newsom has largely opposed the idea, arguing such proposals could drive businesses and wealthy people away. He has instead proposed to cut fees for new small businesses and limit some tax credits starting 2027. He is against a ballot initiative for a one-time tax on billionaires that will likely go before voters in November.

California has a progressive tax system that relies on rich people, meaning it gets about half its revenues from just 1% of the population. When the economy is good, rich people pay more in taxes and revenues can soar quickly. When the economy is bad, they pay less and revenues can drop just as fast.

The state could also see a revenue boost from expected upcoming initial public offerings by several major AI companies, which are expected to be the largest IPOs in history. But legislative budget experts warned last year of a potential AI bubble that could worsen the state's finances.

Newsom’s Thursday proposal also includes a $300 million plan to backfill some of the loss of government-sponsored health subsidies, a $5 billion education grant for teacher training and $100 million to help Los Angeles-area homeowners rebuild after the devastating wildfires last year.

FILE - California Gov. Gavin Newsom speaks alongside local and state leaders during a news conference at BACS St. Regis Center in Hayward, Calif., March 2, 2026. (Jessica Christian/San Francisco Chronicle via AP, File)

Gov. Gavin Newsom speaks about his state budget proposal Thursday, May 14, 2026, in Sacramento, Calif. (AP Photo/Jeff Chiu)

Gov. Gavin Newsom speaks about his state budget proposal Thursday, May 14, 2026, in Sacramento, Calif. (AP Photo/Jeff Chiu)

Gov. Gavin Newsom speaks about his state budget proposal Thursday, May 14, 2026, in Sacramento, Calif. (AP Photo/Jeff Chiu)

NEWTOWN SQUARE, Pa. (AP) — The chilly start to the PGA Championship made it feel like May. The test Aronimink provided was more like June in a U.S. Open, with no one better than 3-under 67 among the early starters and Masters champion Rory McIlroy giving a stink assessment of his 74.

Aldrich Potgieter, Stephan Jaeger, Min Woo Lee and Ryo Hisatsune mixed in enough birdies to offset mistakes, each of them at 67.

Xander Schauffele, who set the major championship scoring record in the 2024 PGA Championship at Valhalla with a 21-under 263, opened with a 68 and was pleased.

“I think really, really thick rough and wind and really difficult greens and tucked pin locations is why you’re seeing what you may feel like are higher scores,” Schauffele said.

That also was the recipe for McIlroy, a bad mix for the Masters champion. He struggled out of the damp, dense rough. He struggled on the greens. He closed with four straight bogeys and described his round in one word that translates loosely to doo-doo.

Some overnight rain only dampened the course, but did little to soften it. And the greens on this Donald Ross original design lived up to the fears with its massive undulations.

Potgieter, a big-hitting South African, put himself in a good position on the severe greens and an even better position when he finished his round. He was in the first group off the 10th tee and the first to post 67, a round with six birdies.

Hisatsune was even better with his seven birdies — four of them immediately after making bogey. Jaeger ran off three in a row on his front nine.

The damp air gave way to clearing skies by mid-morning, and then the wind arrived, enough to make a strong test even tougher. McIlroy hit one approach on the 15th that shot forward some 20 feet on its second hop.

“I think I hit it on the right spots on the golf course, especially on the greens,” Potgieter said. “I didn’t feel like I had to putt over some of these big slopes we had. So I definitely left myself in really good positions on the green.”

No one struggled quite like Bryson DeChambeau, who didn't make a birdie until he ended on the par-5 ninth. That kept him from matching his highest score in the PGA Championship. He shot 76 and now has to work toward avoiding a second straight missed cut in a major.

Garrick Higgo had the worst start imaginable — a late one. The South African was seconds late getting to the first tee when his group was announced. He was assessed a two-shot penalty before he even hit his opening drive. He still managed a 69.

“Unfortunately golf has these situations where we get penalized for things,” Higgo said. “But it is a rule and I obviously broke the rule. I would love to have 3 under. Hopefully, I can make a good story out of it.”

The main story Thursday morning was Aronimink, which hasn't hosted a major championship since Gary Player won the 1962 PGA Championship. It hosted two PGA Tour events in 2010 and 2011, and then another in 2018 after a restoration project.

But this is major — an old slogan the PGA Championship once used — and while this one is famous for creating a firm but fair test, this was everything the players could have wanted.

“There was a couple pins that were on hills and they were tough,” Lee said. “I think they did a really good job on putting them in tough positions, enough to think about it coming into the greens. It’s a course where you don’t want to leave it in bad positions just because it can bite you in the butt pretty quick.”

Among those at 69 was Jordan Spieth, who lacks only the PGA Championship for the career Grand Slam. This is his 10th shot at that feat, and he's rarely been in the mix on the weekend. For one round, he raised hopes with great control off the tee and enough good putting.

Spieth was tied for the lead late in his round until a long three-putt on the seventh, missing the green well to the right on the par-3 eighth and failing to get up-and-down for a birdie chance on the par-5 ninth. He was hoping for better.

“Just didn’t quite finish the way I wanted to the last three holes, but under par was a good score,” Spieth said. “It was blowing really hard, and it was cold this morning. The course played very, very difficult. It was a good start. I’m going to need to improve on it, I think, each day.”

Scottie Scheffler, the defending champion, played in the afternoon along with Cameron Young and Matt Fitzpatrick.

Jon Rahm was headed for another rough start in a major until he holed out for eagle from the 11th fairway, chipped in for birdie on the tough par-3 eighth and got up-and-down for birdie on his last hole for 69.

He was told some people thought scoring would be better in the morning. This surprised him.

“People thought it would be lower?” he replied. “Have you been out there? Have you seen this course?”

Rahm said the numbers — width of fairways, for example — can be misleading. The subtle slopes can put decent shots into the rough. And that was enough to make it tough to get it close to the hole. Throw in some wind, and it was no picnic.

“So I can see how in appearance it might be easier, but it’s not,” he said. “You need to play really good golf to shoot lower than 3 under. And then on top of that, those pin locations today are good ones. I mean, they’re tucked. They’re not easy.”

AP golf: https://apnews.com/hub/golf

Xander Schauffele chips to the green during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Matt Slocum)

Rory McIlroy, of Northern Ireland, hits from the rough on the ninth hole during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Frank Franklin II)

Jon Rahm, of Spain, waves after his putt on the sixth hole during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Matt Slocum)

Ryo Hisatsune, of Japan, watches his tee shot on the fourth hole during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Matt Slocum)

Billy Horschel chips to the green during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Matt Slocum)

Bryson DeChambeau hits from the fairway on the 10th hole during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Frank Franklin II)

Jordan Spieth hits from the fairway on the 10th hole during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Frank Franklin II)

Rory McIlroy, of Northern Ireland, retrieves his ball from the hole on the 10th green during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Carolyn Kaster)

Aldrich Potgieter, of South Africa, watches his tee shot on the fourth hole during the first round of the PGA Championship golf tournament practice round at Aronimink Golf Club, Thursday, May 14, 2026, in Newtown Square, PA. (AP Photo/Matt Slocum)

Justin Thomas hits from the third fairway during a PGA Championship golf tournament practice round at Aronimink Golf Club, Wednesday, May 13, 2026, in Newtown Square, PA. (AP Photo/Matt Slocum)