The Top 10 Budget Priorities for Local Elected Officials

May Budget Revision: What’s at Stake for Local Governments

Gov. Gavin Newsom’s May Revision of the 2025–26 state budget is due this week — and local government leaders must be ready to respond. With ongoing deficits, policy fights, and the realigned priorities of the Trump Administration, the upcoming budget decisions will directly affect cities, counties, school districts, and special districts.

In this environment, the role of local leaders is critical. They must not only monitor the budget process but advocate forcefully for their communities. The Top 10 Budget Priorities for Local Elected Officials below outlines what local leaders should be prepared to fight for — to protect local budgets, stop unfunded mandates, and prioritize essential services over costly state-driven policy experiments.

Top 10 Budget Priorities for Local Elected Officials

1. Back Prop 36 with State Funding
Ensure that the state budget funds law enforcement and treatment programs related to Prop 36, passed by voters in 2024 to roll back parts of Prop 47 and strengthen criminal penalties for repeat offenders. Local governments should not be forced to absorb these new costs.

2. Invest in Roads and Infrastructure
Push for sustained state investment in local roads, bridges, and other essential systems — not controversial social programs or inflated personnel costs. As the state tightens its budget, local leaders must demand that core physical infrastructure take priority to support economic growth, public safety, and long-term resilience.

3. Reprioritize High-Speed Rail Funding
Demand a reprioritization of state funds away from the failing High-Speed Rail project — a costly boondoggle with no clear end in sight — and toward critical local infrastructure like water conveyance systems that directly support communities, agriculture and wildfire resilience.

4. Reduce State Litigation Costs
Advocate for reducing costly and often symbolic litigation by the state. The governor and attorney general continue futile litigation efforts against cities over housing, school districts over curricula decisions, and the federal government to grandstand against President Trump. These legal battles don’t just waste millions in taxpayer dollars — they also force local governments to spend scarce resources on legal defense instead of delivering services to their communities.

5. Expand Local Energy Production Options
Promote efforts that allow local communities to maintain or expand traditional and alternative energy facilities. The state has made it increasingly difficult to approve or sustain local energy production facilities, including petroleum refineries, natural gas generators and coastal cogeneration plants. Local leaders should demand budget allocations and regulatory reforms that will help the state avoid energy shortages, bring energy prices down, and avoid more job losses.

6. Invest in Water Storage and Delivery
Push for immediate investment in reservoir expansion and water delivery systems. With water rationing, wildfire risk, and agricultural disruption threatening counties across California, state leaders must advance policies that produce water abundance, not scarcity. Local officials should demand that the state redirect billions currently spent on social engineering programs toward improving essential water infrastructure that serves their communities.

7. Prioritize Wildfire Mitigation and Relief
Call for state funding to help communities underground power lines using cap-and-trade and Rule 20A funds — a proven way to prevent wildfires. Lawmakers should also streamline CEQA (the California Environmental Quality Act) to allow cities and counties to move faster on fire prevention projects. The state must act before the next disaster strikes, not just show up to fund cleanup after lives and homes are lost.

8. Reduce Pension and Retiree Health Care Costs
Demand reforms to reduce unsustainable CalPERS and CalSTRS obligations. CalPERS manages most local governments’ pension programs and CalSTRS covers almost all of the teachers in the state. Both programs are not fully funded and don’t allow local governments the flexibility to change plans or adjust costs. Local government leaders should lobby for additional reforms to California’s pension reform law, PEPRA (Public Employees’ Pension Reform Act), to help lower the costs they’re facing now and reduce the financial burden on future budgets.

9. Unleash Local Solutions to Homelessness
Advocate for fewer legal obstacles to get homeless individuals into a conservatorship and give local governments more opportunities to create integrated strategies combining housing and mental health. Current strategies for dealing with homelessness essentially come down to cities, counties and the state fighting over who is going to pay, instead of solving the problem. Greater flexibility at the local level is essential. A proven model is Haven for Hope in San Antonio.

10. Stop Unfunded Mandates that Drain Local Budgets
Fight unfunded mandates on local governments. As the state reduces funding for critical services like public safety and health care, it continues to push new requirements onto cities and counties without providing the money to carry them out. Local officials should demand fair funding formulas and reject any mandate that shifts costs to local governments without state support.

Background

In January, Gov. Gavin Newsom previewed a sobering fiscal outlook in his initial budget draft, warning of global instability, revenue slowdowns, and rising health care obligations. That draft set the tone for contentious negotiations that will come to a head in the May Revision, with a final budget due by the constitutional deadline of June 15.

Since January, wildfires in Los Angeles, pressure from the Trump Administration, and litigation over state mandates have further complicated matters. The state must also reconcile gaps in the 2024–25 budget while planning for 2025–26 appropriations.

Despite some jurisdictions still holding federal COVID funds or having passed local tax measures, most are bracing for cuts. The Legislative Analyst’s Office predicts short-term revenue growth — but flags “mounting risks and headwinds” that few local governments are positioned to weather.

Pension liabilities, state litigation costs, and controversial state spending — including health care for undocumented immigrants — are all potential flashpoints. These costs may squeeze out funding for local needs, especially as the federal government signals austerity in entitlement programs.

As the budget revisions take shape, local government leaders should be prepared to share with their legislators how proposed changes will directly affect their communities.