California Governor Signs Budget with Progressive Expansions
On Friday, California Governor Gavin Newsom approved a budget that includes notable progressive measures, particularly an expansion of healthcare for low-income undocumented immigrants, all while addressing a $12 billion deficit.
This marks the third consecutive year that the most populous state has had to make cuts and halt various programs supported by Democratic leadership.
Earlier in the day, lawmakers passed a $321 billion spending plan following negotiations between Newsom and the Democratic leadership.
However, there’s a catch: if lawmakers don’t send him legislation by Monday to streamline home building, the entire budget could be rendered void.
The state leaders have claimed that the budget avoids some of the more devastating cuts to critical safety net programs. They primarily relied on state savings, borrowing from special funds, and delaying payments to fill budget gaps.
“It’s well-balanced, maintains substantial reserves, and focuses on supporting Californians,” Newsom stated in his budget announcement.
Yet, California is facing various economic uncertainties. These could result in cuts to healthcare programs and deeper budget constraints. Newsom, back in May, hinted that federal actions on tariffs and immigration could lead to a $16 billion drop in state tax revenue.
Senate Speaker Mike McGuire reflected on the difficult choices made, acknowledging that not everyone would be satisfied, but emphasizing that the decisions were made with everyday Californians in mind—without raising new taxes.
On the flip side, Republican lawmakers expressed frustration, feeling excluded from budget discussions and criticizing the Democrats for inadequate measures to handle future deficits, which could soar to between $17 billion and $24 billion annually. State Senator Tony Strickland noted the increased borrowing and lack of spending reductions, arguing that the budget fails to tackle California’s affordability issues.
Healthcare Changes
Under the new budget agreement, California plans to suspend enrollment of new undocumented adult patients starting in 2026, for state-funded healthcare programs aimed at low-income individuals.
Starting in July 2027, a $30 monthly premium will apply to immigrants who remain in the program, covering individuals under the age of 60. This adjustment to the Medi-Cal program represents a scaling back from Newsom’s earlier proposal and poses a setback in achieving universal healthcare goals.
Democratic state Senator Maria Elena Durazo voted against the healthcare changes, labeling them a betrayal of the immigrant community.
The budget also cuts $78 million in funding for mental health hotlines, impacting approximately 100,000 users annually, and delays payments for new laws requiring health insurance to cover fertility treatments.
Despite these cuts, lawmakers managed to fend off some more drastic proposals for cuts in various newspaper programs.
The budget secures funding for domestic and personal care services for low-income residents, while also protecting financial support for Planned Parenthood.
Environmental Measures
In an effort to enhance firefighting abilities, lawmakers agreed to allocate $1 billion from the Cap-and-Trade program. This market-based system aims to reduce carbon emissions by requiring companies to purchase credits for their pollution.
Although Newsom had proposed extending the Cap-and-Trade program until 2045 to ensure consistent funding for high-speed rail, this commitment wasn’t included, as lawmakers sought more flexible spending options.
The budget currently provides 25% of its cap-and-trade revenue to the rail project, which amounts to about $1 billion annually, depending on the year.
Additionally, funds were earmarked to help part-time firefighters transition to full-time roles, addressing the state’s ongoing wildfire crisis.
Public Safety Investments
The budget includes $80 million to facilitate the implementation of a stringent crime initiative approved last year. This measure aims to classify repeat shoplifting as a felony and increase penalties for specific drug offenses, giving judges the authority to mandate treatment for individuals with multiple drug-related charges.
Despite this funding, supporters argue it falls short of the estimated $400 million needed in the first year to effectively tackle the challenges presented by the measure.
Other Considerations
Newsom and legislative leaders agreed to significantly increase the state’s film tax credit from $330 million to $750 million annually to support Hollywood, with this program lasting until 2030.
A budget provision also allocates $10 million for immigration legal services, including deportation defense.
However, local governments are unlikely to receive new funds to address homelessness in the upcoming year, a situation local leaders fear may result in thousands of lost shelter beds.
Furthermore, the budget does not expand on Newsom’s proposal for large underground tunnels meant to reroute the state’s water supply.
