California Assembly Republican Caucus
After Blaming a Supposed “Trump Slump” Last Year, Newsom Is Now Benefiting from a “Trump Bump”.
SACRAMENTO — Last year, Governor Gavin Newsom blamed a “Trump Slump” for California’s $15 billion budget problem. Now, a “Trump Bump” fueled by a strong national economy has delivered California a $60.4 billion budget lifeline, yet Newsom is still running deficits, raising taxes, and borrowing billions to prop up a budget with deep structural problems.
That is the central finding of the Assembly Republican Caucus Office of Policy and Budget’s analysis of the 2026-27 May Revision.
According to the report, California General Fund revenue estimates have surged by $60.4 billion since the passage of the 2025 Budget Act, driven, in the Department of Finance’s own words, by “higher cash receipts, higher stock market levels, and an improved economic outlook.”
“Governor Newsom tried to blame President Trump for California’s expected budget shortfalls caused by his own reckless spending. The reality is that the ‘Trump Bump’ in our economy is what bailed out Sacramento’s deficit. The overreliance on a positive stock market is unsustainable and cannot indefinitely mask California’s spending problem,” said Assemblyman David Tangipa.
Instead of using the economic windfall to rebuild reserves and stabilize the budget, Newsom is still at the casino, gambling with California’s financial future. His May Revision drains $7 billion from the Rainy Day Fund, proposes $3.7 billion in new business tax increases, and takes on $4 billion in new borrowing, leaving California with operating deficits exceeding $10 billion annually through 2029-30.
The nonpartisan Legislative Analyst’s Office responded to Newsom’s May Revision, saying: “The existence of any operating deficits during a revenue boom of this magnitude is itself a warning sign.”
“Governor Newsom has again tried to blame the President for California’s budget problems,” said Assembly Republican Leader Heath Flora. “Even when a strong national economy has handed him $60 billion, he’s still raising taxes, raiding reserves, and kicking the can to the next Governor. When the debt finally comes due, it won’t be Washington’s fault or the economy’s fault; it will be Newsom’s.” The Assembly Republican Caucus Highlights and Analysis of the 2026-27 May Revision is available here.
