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As Governor Gavin Newsom rolled out his latest state budget, Reform California Chairman and State Assemblyman Carl DeMaio didn’t mince words—calling it a dishonest shell game designed to conceal a massive fiscal meltdown.
“This budget is cooked from top to bottom,” DeMaio said. “Newsom is lying to Californians to hide the budget crisis he created—and the bill is coming due.”
Despite a headline claim of just a $2.9 billion deficit, DeMaio says Newsom’s numbers rely on fantasy revenue projections, suspended voter protections, and accounting gimmicks that leave California exposed to an economic crash.
Just months ago, the nonpartisan Legislative Analyst warned California was staring down an $18 billion shortfall for the 2026-27 fiscal year. Newsom now claims he's closed that gap—not by cutting spending, but by assuming $42.3 billion in new revenue that may never materialize.
Much of that supposed revenue comes from one-time money and accounting revisions—not real economic growth—at a time when California’s economy is already showing signs of strain.
Recent IRS migration data underscores the problem:
California alone led the nation in losses, with $11.9 billion in income leaving the state—a direct hit to the tax base Newsom is relying on to balance his budget.
“That’s not budgeting—that’s gambling,” said DeMaio. “He’s betting California’s future on taxpayers who are already leaving.”
To paper over the gap, Newsom even suspended a $2.8 billion deposit into the Rainy-Day Fund, undermining the intent of Proposition 2, which voters approved specifically to prepare for downturns.
“He raided the Rainy-Day Fund to make his budget look balanced,” DeMaio said. “That tells you everything you need to know.”
According to the nonpartisan Legislative Analyst’s Office, California’s cost-of-living crisis is outpacing the rest of the nation—driven by spikes in transportation, gas, and housing costs.
“These aren’t abstract numbers—this is why families feel like they’re falling behind,” DeMaio said. “Higher gas, higher rent, higher costs across the board—and Sacramento keeps making it worse.”
As affordability worsens, job growth has slowed and businesses continue to relocate or scale back operations—further weakening the state’s economic outlook.
Even with the gimmicks, Newsom's own budget admits California will face tens of billions in operating deficits every year through 2030.
“This isn’t a one-year problem—it's a structural collapse,” DeMaio warned. “Overspending has become permanent policy in Sacramento.”
While Californians struggle with the highest cost of living in the nation, Newsom’s budget locks in:
Meanwhile, the Governor refuses to fund mental-health and drug-treatment programs required by voter-approved Proposition 36, provides no meaningful funding to combat fraud in Medi-Cal or other benefit programs, and offers no relief to families crushed by soaring gas, electricity, and housing costs.
“Newsom always has money for his pet projects,” DeMaio said. “But when it comes to public safety, affordability, or stopping fraud—suddenly Sacramento is broke.”
DeMaio warned that when Newsom’s revenue gamble fails, Californians will once again be hit with service cuts, tax hikes, and emergency budget deals.
“He wants to hide this crisis because he has bigger ambitions,” DeMaio says. “But Californians will be the ones paying the price.”
Reform California is urging voters to get informed, get involved, and help hold Sacramento Democrats accountable before temporary gimmicks turn into a permanent fiscal disaster.
Don’t buy the spin,” DeMaio says. “Demand the truth—and help us fight to fix California.”
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