What is the May Revision? California’s critical budget reset explained
Gov. Gavin Newsom is expected to release his “May Revision” to California’s 2026-27 budget on Thursday, May 14.
The new iteration is the second step in the three-step budget process. The process began with a proposal in January and ends with a final budget bill passed by the Legislature in June. The budget outlines how much money the state expects to collect and spend in the coming year, and often includes adjustments to the current and prior years’ budgets, too.
The May Revision is a mandatory part of the budget process that provides a more accurate revenue estimate than the January proposal because it takes into account updated tax receipts from April.
Recently, revenue forecasts have been positive, with the state Senate and Assembly both citing a short-term revenue surge as a reason to resist some cuts to education, homelessness prevention, and home health services suggested by Newsom in January.
However, there is broad consensus that the surge, fueled by enthusiasm around artificial intelligence, can’t last forever and California must address its structural deficit, with spending outpacing revenue collection. Any cuts are up to the “Big Three” — Newsom, and the leaders of both the state Senate and Assembly — and they haven’t been forthcoming so far about what’s on the chopping block.
Newsom has signaled he’s interested in treading carefully amid the influx of cash, writing in the January proposal, “California’s responsibility is to act with steady hands and anticipate future instability.”
“Significantly, the Trump administration and leaders in Congress — chaos agents who act with cruel indifference or outright malice — have attempted to shift costs to California taxpayers and disrupt the lives of working families here,” he said in the proposal.
The question of how and whether the state will backfill significant cuts wrought by President Donald Trump’s “Big, Beautiful Bill,” H.R. 1, is on many budget-watchers’ minds.
What will happen on Thursday?
Newsom is expected to present the budget to reporters and take questions in Sacramento. It will be the governor’s final May Revision and the last full budget of his governorship.
What’s changed since January?
Those tax receipts have been much higher than expected, according to a recent report from the Legislative Analyst’s Office, due to “enthusiasm around AI and the related stock market boom.”
An LAO report found that for the budget window, including last year, this year and next year, revenues are coming in $25 billion higher than the governor had accounted for.
However, the LAO has also warned “long-term imbalance will likely persist without significant policy changes.” The office estimates the state is facing a $20 billion to $30 billion structural deficit, meaning the state is set to be spending more than it is taking in.
What can we learn from Newsom’s prior budgets?
Gov. Newsom is notable for overseeing one of the largest expansions of the state budget in history, said longtime Sacramento lobbyist and adjunct law professor Chris Micheli.
“I think his budget legacy is the amount of expenditures that have been plowed into state programs,” he said.
The budget has grown considerably during Newsom’s governorship, from about $215 billion when he took office in 2019, to close to $350 billion proposed for 2026-27. A recent LAO report found 70% of the spending increase is maintaining existing services, and 30% is providing new services. The areas that saw the biggest increases include spending on schools and community colleges, health insurance for the state’s lowest earners, and services for people with developmental and intellectual disabilities.
Newsom has also been known to add policy priorities to his budgets, a practice that dates back decades and has been used by both the Legislature and previous governors to “skip the line,” according to Micheli, to get priority policies passed more easily and with less scrutiny.
Micheli noted that Assembly Democrats officially pushed back against that practice in their budget plan announced last week.
“We’d love to see this administration, and the next one, bring more of their big ideas through the traditional policy bill process and get substantive budget proposals to us well before the May Revision arrives,” Assembly Democrats said in their plan. “This allows for more public engagement, deliberation and transparency — and better outcomes for the people we serve.”
What comes after the May Revision?
The weeks after the May Revision are some of the busiest in the Legislature, as advocates and legislators jockey to get money behind their priorities, and the Big Three work to reach an agreement.
The budget bill must pass by midnight on June 15, meaning it must be in print by June 12 to accommodate the state’s rule requiring bills to be in print for 72 hours before they’re voted on.
