Newsom outlines $248.3 billion budget, housing and education priorities in final State of the State

Governor Gavin Newsom delivered his final State of the State address to a joint convention of the California legislature on Sept. 12, 2025, asking lawmakers to approve a $248.3 billion general fund budget that he said includes $42.3 billion more in revenues than forecasters expected and funds expanded education, homelessness and housing, infrastructure and climate resilience initiatives.

Newsom framed the address around a contrast with federal policies, saying state action has protected schools and hospitals and defended residents’ access to services. He emphasized California’s economic strengths—citing the state’s share of global research and ‘‘half of America’s unicorn companies’’—and urged the Legislature to reauthorize and extend tax-credit programs aimed at keeping industries and jobs in state.

On education, Newsom said tomorrow’s budget he would submit would include a record $27,418 per student and fully fund universal transitional kindergarten while reducing class sizes. He proposed unifying policymaking between the State Board of Education and the Department of Education to let the state superintendent align early childhood through higher education policy.

Newsom framed child care and after-school expansions as economic priorities, saying investments support roughly 487,000 children through health-care expansions and will make universal after-school and summer programs available across the state. He also pledged an additional $1 billion to expand high-need community schools, on top of roughly $4.1 billion already invested.

On homelessness and behavioral health, Newsom highlighted Homekey and Project Roomkey conversions and implementation of Proposition 1. He said early data shows unsheltered homelessness fell about 9% in 2025 in California (with larger declines reported in Los Angeles, Riverside and Contra Costa) and called for a new rebuilding fund to close insurance gaps for survivors affected by recent fires. He said the state will redirect $1 billion annually to provide predictable mental health funding for housing and treatment.

Newsom detailed public-safety spending and outcomes, citing $267 million in grants to 55 local law enforcement agencies and a deployment of crime-suppression teams; he said California has seen double-digit decreases in several crime categories and lower homicide rates in several large cities. He also announced approximately 1,000 new California Highway Patrol officers added to the force.

On infrastructure and climate, Newsom described a $109 billion portfolio of more than 28,000 projects under way, from water storage to the nation’s first high-speed rail guideway in the Central Valley; he highlighted the state’s clean-energy progress and a fast-track permitting authority aimed at accelerating projects.

Newsom also cited work on consumer and health protections, including a state generic insulin pen recently launched at $11 and other efforts to lower prescription costs, and said the administration will propose pension and reserve paydowns and larger cushion for the state’s rainy-day funds.

"We’re going to rebuild our reserves, dollars 7,300,000,000," Newsom said. "We’re going to pay down long-term pensions and those obligations over $11,800,000,000 will be met over the next few years, including $3,000,000,000 just in next year's budget."

He closed by urging continued state leadership on climate, jobs and social investments and thanked members of the Legislature. The Assembly ordered the address printed in the journal as a special appendix and the joint convention adjourned.

The speech contained a mix of policy detail and aspirational rhetoric; Newsom provided specific budget figures and program totals that lawmakers and staff will review during the formal budget process beginning with the administration’s submission the next day.