California Governor, Gavin Newsom, has signed a pared-down budget that leads to cuts in several progressive initiatives, including significant health care expansions for undocumented low-income adults. Aimed at closing a $12 billion deficit, this budget marks the third consecutive year where America’s most populous state has had to reduce funding or terminate projects led by the Democratic leadership.
Earlier on Friday, legislators passed the budget after Newson reached an agreement with Democratic leaders on a $321 billion spending outline. However, the budget’s implementation is contingent on lawmakers passing a housing bill by Monday to facilitate construction.
Despite these cutbacks, state leaders have managed to preserve core safety net programs. The budget primarily relies on tapping into state reserves, borrowing from particular funds, and deferring payments to manage the fiscal shortfall. Governor Newsom mentioned in a statement that the budget is balanced, maintains substantial reserves, and focuses on offering support to Californians.
The state’s financial situation is threatened by potential federal cuts to healthcare initiatives and economic unpredictability, both of which could necessitate further budget reductions. Governor Newsom had previously estimated in May that federal policies on tariffs and immigration enforcement might reduce state tax revenue by an additional $16 billion. Senate President Pro Tempore Mike McGuire acknowledged the difficulty of recent budget decisions, noting that while many might not be pleased, the adjustments are achieved without imposing new taxes on Californians.
Republican legislators raised concerns over being excluded from budget discussions and rebuked Democrats for insufficient efforts in addressing future potential deficits, projected to range between $17 billion and $24 billion annually. GOP state Senator Tony Strickland criticized the approach, highlighting continued borrowing, depletion of reserves, and lack of focus on affordability.
**Health Care**
The budget deal halts new enrollments for undocumented adult immigrants in California’s Medi-Cal program starting in 2026 and introduces a $30 monthly fee in 2027 for those, including some legal residents, already enrolled. These changes, while more restrained than Newsom’s original proposals, affect the drive toward universal healthcare and have drawn criticism from Democratic state Senator Maria Elena Durazo, who voted against it.
The plan also withdraws $78 million from mental health hotlines and eliminates future funding for certain dental services by 2026. However, it preserves funding for essential services, such as in-home care for low-income residents and support for Planned Parenthood.
**Environment**
California’s cap-and-trade program, which pulls corporate fees into funds dedicated to reducing carbon emissions, will be tapped for $1 billion to support firefighting efforts. While Newsom proposed extending this program through 2045, lawmakers decided against committing funds to the high-speed rail project within this budget, preferring to negotiate separately. Additionally, the budget includes $10 million to enhance the daily earnings of incarcerated firefighters.
**Public Safety**
The budget allocates $80 million to implement a voter-approved tough-on-crime initiative. The funding will primarily assist counties in expanding behavioral health facilities, with allocations also made for pre-trial services and handling increased judicial caseloads.
**Other Priorities**
Efforts to bolster the film industry’s tax credit will see an increase from $330 million to $750 million annually. However, Newsom’s budget will not support additional funding to aid cities and counties in tackling homelessness, nor address the advancement of a comprehensive project to reroute part of the state’s water supply.
The fiscal plan highlights California’s complex balancing act of managing its expansive progressive agenda amidst economic constraints. While striving to preserve key elements, the cuts reflect the broader challenges in sustaining ambitious initiatives under financial pressure.