Saratoga, California — Governor Gavin Newsom and legislative leaders announced a balanced budget agreement on June 26 that closes California's deficit and delivers a spending plan with zero deficit for both the current and next fiscal year, protecting core programs from healthcare to education while setting aside more than $6 billion in anticipated revenues to ensure the following year also stays in the black.
Saratoga, situated in Silicon Valley approximately 50 miles south of San Francisco in Santa Clara County, has a population of about 31,000 and is home to many residents who work at major tech companies whose corporate tax contributions are central to California's fiscal health.
The agreement caps months of negotiations after California faced a difficult fiscal outlook at the start of the year, compounded by continued federal funding cuts. "A balanced budget isn't an end in itself — it's how we deliver for Californians," Newsom said. "This budget demonstrates responsible choices that protect our fiscal strength while continuing to invest in what matters most."
The budget fully funds small business tax cuts, free school meals, universal pre-school, childcare slots, healthcare affordability, a disaster rebuilding fund, and investments in students with disabilities. Senate President pro Tempore Monique Limón said the legislature "was able to mitigate the impacts to programs that millions rely on" despite federal cuts.
The agreement leaves California with approximately $37.2 billion in various reserve accounts. Two major legislative pillars announced earlier in the week support the broader budget package: the Veterans and Affordable Housing Bond Act of 2026, which funds housing construction and homeownership opportunities, and the Save for California's Future Act, a constitutional amendment to strengthen the state's Rainy Day Fund.