California Gov. Gavin Newsom’s office said Friday that the state is projecting a $2.9 billion budget deficit this year, far less than the $18 billion legislative budget analysts projected two months ago but still big enough to put the brakes on some ambitious new programs during his final year. 

Department of Finance officials unveiled the outgoing Democratic governor’s proposed $348 billion spending plan for the upcoming fiscal year, which starts July 1, 2026. His proposed budget includes $248 billion in general fund spending, about $11 billion more than the current year. His office cited a revenue rebound, elevated stock prices, and a more favorable outlook.