California Governor Gavin Newsom and state legislators reached a budget deal, agreeing on a $311 billion spending plan that covers a $32 billion shortfall without dipping into the state’s rainy-day reserves.

The budget for the year starting in July contains some funding cuts, including for the governor’s signature climate change programs and zero-emission vehicle push, while it gives a boost for transit agencies struggling to rebound from the pandemic and stay afloat.

A provision to set aside a $38 billion reserve will give the state its largest-ever buffer, according to a report from the California State Assembly.

Newsom had presided over back-to back surpluses since he took office in 2019, including a record almost $100 billion surplus in the current fiscal year. Now with a downturn in the key tech sector and volatility in the stock market, the Golden State is seeing a slowdown in revenue. California’s disproportionate reliance on its wealthy residents for tax income means the state coffers are vulnerable to the swings in the financial markets.

Unlike the boom years, when Newsom expanded government spending — sending up to $1,050 stimulus checks to 23 million residents in 2022-23 — this year’s budget forced difficult trade-offs for lawmakers.

Read More: California’s $3.1 Billion Transit Bailout Forces Trade-0ffs

“In the face of continued global economic uncertainty, this budget increases our fiscal discipline by growing our budget reserves to a record $38 billion, while preserving historic investments in public education, health care, climate and public safety,” Newsom said in a statement.

California’s late-night Monday budget announcement came after weeks of wrangling between the governor and the Democratic super-majority over how to close the shortfall.

Lawmakers in the San Francisco Bay Area say the state budget does not provide enough money to avoid cuts to their transit agencies, which saw one of the worst ridership collapses in the country. They are now pushing the legislature to raise bridge tolls around San Francisco by $1.50 for five years to help sustain bus and train systems.

Beyond the deficit, Newsom and lawmakers haggled over the governor’s backing of a controversial 45-mile (72-kilometer) tunnel that would bring water from Northern to Southern California. Newsom also wanted to speed up infrastructure projects by sidestepping some environmental protection regulations. The final compromise dropped the water project but backed Newsom on eliminating red tape.

“In good years, we buckled down so that in tough years like this one, we could meet our needs,” said Senate President pro Tempore Toni Atkins.

The legislature passed a placeholder budget bill earlier this month, which Newsom is expected to sign into law on Tuesday, and lawmakers will vote on more bills tied to the spending plan later this week.