The Department of Finance on the governor’s behalf presented the 2026 governor’s budget as a balanced, cautious “workload” proposal that largely funds baseline program costs and delays major policy additions until the May revision. Director, Department of Finance, said the package totals $348.9 billion with $248.3 billion in general fund spending and $23.0 billion in total reserves, and he described the approach as designed to maintain fiscal sustainability beyond the budget year.

The administration said it will use the May revision to finalize larger decisions, noting revenue volatility as the primary risk. The director contrasted the administration’s forecast with the Legislative Analyst’s Office (LAO), explaining the LAO modeled a market downturn in its November estimate; the Department of Finance did not fold an explicit downturn into its base forecast but warned that a roughly 20% stock‑market correction could reduce revenues by about $25 billion to $30 billion.

The budget includes sizable constitutional and statutory obligations: the administration cited a Prop 98 guarantee at about $125.5 billion and proposed Prop 2‑related debt payments of $11.8 billion over four years (including a $3.0 billion payment in 2026‑27). The director said the package proposes a $3.0 billion rainy‑day deposit in the budget year and maintains a public‑schools rainy‑day fund and other reserves intended to manage revenue swings.

Education is a major line item: the administration said K‑12 would receive roughly $18 billion more across the budget window than in the prior budget act. The director highlighted full funding for universal access to transitional kindergarten, expansion of community schools, a $2.8 billion block grant to districts for cost pressures, a LCFF COLA of about 2.1%, and debt payoff and program support for learning recovery and special education equalization. Higher education commitments include roughly $716.3 million in ongoing resources for UC, CSU and community colleges and $688.4 million in student financial aid (about $552 million for Cal Grants).

Climate and resiliency investments continue in the proposal, including $2.1 billion in climate bond spending for the budget year and $314 million targeted to wildfire and landscape resilience. The director also said previously approved commitments such as a $1 billion GGRF allocation for high‑speed rail and a $10 million Civic Media Fund commitment are retained.

Director, Department of Finance, framed the proposal as a measured, implementable package: "We have a balanced budget that we're presenting to the legislature," he said, and he emphasized the May revision as the forum for major updates. The administration will update forecasts and consider policy changes when new federal guidance, revenue data, or other information becomes available.