California Gov. Gavin Newsom has proposed a $322 billion budget without a deficit, a welcome change after two years of significant budget shortfalls in the nation's most populous state.

Gov. Newsom's 2026 budget aims to address California's deficit and prioritize education, housing, healthcare, and more. Learn about the proposed allocations.

But the budget Newsom announced Monday is mostly a placeholder as California waits to see if incoming President Donald Trump will follow through on threats to revoke billions in federal dollars, which could force lawmakers to make painful cuts to essential programs.