California Budget Deficit Will Drive Tax Discussion in Governors Race

California Gov. Gavin Newsom’s fiscal 2026-27 budget plan sticks to the outgoing Democrat’s trademark avoidance of substantial tax increases or new levies.

But as the race to succeed the term-limited governor ramps up, tax lawyers, professors, and lobbyists say Newsom’s replacement will have a harder time maintaining that tax policy position given fiscal pressures in the complex, high-tax state that’s home to the world’s fourth-largest economy.

The governor’s budget projections paint a rosier picture for California than other official sources. The Legislative Analyst’s Office predicted in a November report that the state would face an $18 billion deficit for 2026-27. ...