If his budget is approved, it would be the first time in two years California is not expected to have a deficit in its state budget. Newsom attributed the 2025 plan to planning in the last budget that allowed the state to avoid a shortfall this year.

“Last year, we endeavored to make this year’s budget a nonevent,” he said. “Last year, we endeavored to solve the problems this year and did something we haven’t done in the past.”

His office estimates tax revenues for this year are $16.5 billion above projections. The governor’s proposal included a $228.9 billion general fund that would rely on $17 billion in reserves.

California has the fifth-largest economy in the world. Last year, the state faced an estimated $46.8 billion budget deficit, and in 2023, it faced a $32 billion budget deficit.

“We are America, but in the future tense, the future happens here first,” Newsom said. “We are America’s coming attraction. California is the future, and we certainly are the future of the American economy, because we’re the tentpole of the American economy.”

The governor said his budget has little new spending in its proposals, save for a few. One new item in the budget would allow California to implement in full the first universal transitional kindergarten program in the U.S., which would make such school free for around 400,000 4-year-olds throughout the state. The governor has advocated this plan since 2021.

The budget plan also includes increasing California’s film and TV tax credit to $750 million, in hopes that it would entice filmmakers to move their operations back to Hollywood.

The budget announced Monday, however, is viewed as somewhat of a placeholder as the state awaits announcements from President-elect Donald Trump on whether he plans to follow through on threats to revoke billions in federal dollars.

The state’s high-speed rail project, which is planned to run between Los Angeles and San Francisco, has floundered for years and faces an increased risk under Trump of falling apart. In 2019, Trump canceled nearly $1 billion in federal funding, but President Joe Biden later reallocated federal funds for the project. Several Republican members of Congress have already bemoaned the project’s high costs.

“This is not just a transportation project,” Newsom said at a construction site for the project Monday. “This is a transformation project. To the cynics that are filled with cynicism, that stand on the sidelines and don’t engage, we’re here making this work.”

Newsom’s administration plans to provide more details on the budget proposal before the Friday deadline to present it to lawmakers. Newsom announced the numbers early before traveling to Washington for former President Jimmy Carter’s funeral services.