Diapers, AI and film tax credits: 6 takeaways from Newsom’s proposed California budget
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TAKEAWAYS FROM NEWSOM’S 2025-26 BUDGET PROPOSAL
Via Stephen Hobbs and Andrew Sheeler...
Department of Finance Director Joe Stephenshaw presented the first version of the state’s 2025-26 budget on Friday and projected California will have a $363 million surplus for the upcoming year.
Stephenshaw said the state is a “lot better off” than it has been in recent years, when Gov. Gavin Newsom’s administration had to deal with a more than $40 billion shortfall. But many questions remain.
Here are some of the takeaways:
1. Long-term budget concerns
Despite rosier finances, Stephenshaw said: “We still have work to do to ensure long-term sustainability.”
Future risks include uncertainty about President-elect Donald Trump’s plans related to tariffs and immigration and how that could affect prices, labor supply and the state’s population. In November, the nonpartisan Legislative Analyst’s Office said California could face deficits of $20 billion or more annually in upcoming years. Stephenshaw acknowledged that and said the department would be monitoring the state’s fiscal outlook and would include adjustments in May, when Newsom’s administration releases a revised budget.
2. Job cuts less than initially announced
In May, Newsom announced the state could cut 10,000 unfilled state positions. Stephenshaw said that number will actually be 6,500. That came after meeting with departments and agencies, he said, and excluded cuts to fire and safety jobs.
3. Diaper initiative
The budget proposes setting aside $20 million over the next two fiscal years to provide a three-month supply of diapers at no cost to families with newborn babies.
4. New agencies
The budget calls for the creation of two new state agencies: the California Housing and Homelessness Agency and the Consumer Protection Agency.
More information on both agencies will be provided this spring through a reorganization plan submitted to the Little Hoover Commission, an independent state oversight commission.
5. More use of AI
The state is expanding its use of generative artificial intelligence (GenAI) for certain functions.
According to the budget, the Department of Housing and Community Development is seeking potential GenAI models “to assist in analyzing lengthy House Element Annual Progress Reports.”
“GenAI can reduce the time staff spend reviewing these reports, allowing HCD to direct its resources toward other priorities such as enforcement and statewide housing and homelessness planning,” according to the budget.
Other agencies exploring expanded GenAI usage include the Government Operations Agency, the Department of General Services, the Department of Technology and the Office of Data and Innovation, as well as the Department of Finance.
“Some of the proposed changes will streamline internal administrative procurements, (California Department of Technology) project approvals and oversight processes, and reassess how technology projects are currently funded,” according to the budget proposal.
6. Expanded film tax credits
Newsom’s proposed budget calls for more than doubling the California Film and Television Tax Credit, from $330 million to $750 million for fiscal years 2025-26 through 2029-30.
While this expansion applies would begin in fiscal year 2025-26, it will likely be some time before those credits are claimed “because film productions typically take multiple years and credits are only claimed once a verified tax return is filed,” according to the budget.
WIENER INTRODUCES BILL TO SHIELD ALL TRANS PEOPLE’S COURT RECORDS
Two years ago, California lawmakers passed a law — AB 223 — that requires courts to automatically seal any minor’s petition for a change of gender or sex identifier and name.
Now, State Sen. Scott Wiener, D-San Francisco, voicing concern for what may happen to members of the transgender community once Trump takes office next week, has introduced a bill — SB 59 — that would retroactively make such court records confidential regardless of the petitioner’s age.
“Unfortunately, right-wing groups and individuals have used publicly available personal information to harass trans people in California and across the nation. The incoming Trump administration will only embolden abusive right-wing extremists, and it is up to states like California to defend LGBTQ and other targeted communities amid a rising swell of hate,” Wiener said in a statement.
The senator pointed out that bad actors are able to use public court records such as petitions to change a name or gender marker to prove that someone is transgender or nonbinary, and also to learn their “dead name,” a term referring to the name a trans person was born with but no longer uses.
This isn’t a hypothetical. Wiener’s office cited the case of a transgender woman in Stanislaus County who successfully sued to have her court records made private after she was forcibly outed on social media and at work by anonymous internet trolls , as reported by the San Francisco Chronicle.
Anti-transgender hate crimes rose more than 10% from 2022 to 2023, according to the California Attorney General’s Office, and nationwide in 2021, trans people are more than four times more likely to be victims of a violent crime than were their peers, according to the UCLA Williams Institute. In 2022, nearly a third of trans people nationwide said they were verbally harassed in the last year because of their gender identity, according to the U.S. Trans Survey conducted by advocacy groups.
“While the ability to update identity documents is life-affirming, the risk of having personal information publicly accessible can lead to discrimination, harassment, or even violence. With the alarming rise in attacks against the trans community, it is more important than ever to strengthen protections that allow transgender individuals to live authentically and safely,” said Kathie Moehlig, executive director of TransFamily Support Services, a sponsor of the bill.
The bill has been sent to the Senate Rules Committee for referral to a policy committee, which will likely take up the bill later this spring.
QUOTE OF THE DAY
“People are dying. Thousands of homes have been lost. Firefighters and frontline workers are risking their lives and we are in an active emergency in our state and region. This is disgraceful by Speaker Johnson and he should apologize.”
- Rep. Robert Garcia, D-Long Beach, referring to a post from Speaker Mike Johnson on X blaming “the feckless leadership” in California for the worsening wildfires, via Bluesky.
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