ADVOCATING FOR THE INDUSTRY


The Governor’s themes for the year ahead, which are reflected in this budget, include more efficient and leaner government and accountability. This involves innovative ways to streamline the state’s procurement process, public-private partnerships, AI pilot projects, and civil service reform.


2025 Brings a Balanced State Budget


BY MELANIE PERRON J


anuary means the California Legislature returned to Sacramento to begin its work, and Governor


Gavin Newsom unveiled his proposed state budget for the upcoming fiscal year. Thirty-four new legislators began


their terms, quickly tackling issues such as recovery from Southern California’s wildfires and potential impacts to Cal- ifornia from the new federal adminis- tration, including a special session to authorize funds for litigation against the federal government. Te Governor’s proposed budget is


$322.2 billion, with a “modest” $363 million surplus and revenues currently $16.5 billion over expectations. Tis is a positive shift following recent fiscal fluctuations from previous budget cycles.


Rainy Day Funds Te budget, part of the two-year frame- work adopted last year, allows better planning for future fiscal conditions, something that is clearly reflected in this budget proposal. Part of this framework includes using $7.1 billion from various rainy-day funds that was generally agreed upon in previous budget negotiations. Te Governor has proposed $1.2 bil- lion in new investments, with potential for additional funding for expiring pro- grams. However, this budget proposal was finalized before the devastating Southern


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CALIFORNIA CONSTRUCTOR MARCH/APRIL 2025


California wildfires and before the new federal administration came into office. Tose two major events have the potential to significantly change California’s budget in a short period of time. Te Governor will release a revised budget in May that will account for these factors. Te Governor has also proposed two


key policy changes to strengthen state budget reserves: (1) increasing the annual deposit amount from the General Fund into the Budget Stabilization Account, and (2) excluding these deposits from the state appropriations limit (known as the Gann limit).


Leaner Government, Accountability Te Governor’s themes for the year ahead, reflected in this budget, include more efficient and leaner government and ac- countability. Tis involves innovative ways to streamline the state’s procurement process, public-private partnerships, artificial intelligence pilot projects, and civil service reform. Another key initiative is a “career


passport” program, which would con- vert work experience, including military service, into a degree, thereby helping qualified Californians with meaningful job experience even if they have little or no college education. Te construction industry continues


to fare well from ongoing federal and state investments, including $66 billion in federal funds and $42.3 billion in state investments since 2021. Bond measures approved in the 2024 ballot will provide $10 billion each to educational facilities (K-12 and community colleges), and impact climate change through infra- structure improvements.


Transportation Project Funding In transportation, the proposed budget includes $15.4 billion for various projects, including: • $7.7 billion for high-priority transit and rail infrastructure projects to improve rail and transit connectivity between state and local/regional services.


• $4.2 billion for the High-Speed Rail Authority to continue building the 119-mile Central Valley Segment from Madera to just north of Bakersfield.


• $1.2 billion for goods movement projects at port terminals.


• $1.1 billion for active transportation, climate adaptation, and equity- focused projects.


• $1.1 billion for the Zero-Emission Transit Capital Program.


• $150 million for grade separation projects that support critical safety improvements.


• $25 million for the Clean California Program.


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