On Friday, California Governor Gavin Newsom signed a budget aimed at addressing a daunting $12 billion deficit, resulting in significant cuts to several progressive initiatives, notably a major health care expansion for low-income adult undocumented immigrants. This marks the third consecutive year that California has been compelled to reduce funding for programs favored by Democratic leaders, reflecting a broader trend of fiscal constraints. The budget, amounting to $321 billion, was passed after negotiations between Newsom and Democratic lawmakers and is contingent upon the legislature’s approval of legislation to streamline housing construction by Monday.
Despite the challenging fiscal landscape, state leaders indicated that the budget avoids severe cuts to essential safety net programs, primarily relying on measures like state savings, borrowing from special funds, and deferring payments. Governor Newsom described the budget as balanced, emphasizing its focus on supporting Californians while maintaining significant reserves. However, looming uncertainties, including potential federal cuts to health care programs, could exacerbate the state’s fiscal challenges in the future. Aesthetically, there are concerns that federal policy shifts could lead to an additional $16 billion reduction in state tax revenue.
In terms of specific spending cuts, notable reductions include a halt to the enrollment of new adult undocumented patients in California’s Medi-Cal program beginning in 2026, alongside the introduction of a $30 monthly premium for immigrants remaining in the program. These decisions represent a significant rollback of previous health care expansion efforts aimed at universal coverage. Moreover, funding for mental health resources, including vital phone services, was also eliminated, sparking considerable dissent among some lawmakers, such as Democratic Senator Maria Elena Durazo, who viewed the changes as a betrayal of immigrant communities.
Environmental initiatives saw some funding allocated despite the cuts. Lawmakers agreed to utilize $1 billion from the state’s cap-and-trade program to bolster firefighting efforts, although Newsom’s bid to secure long-term funding for high-speed rail through this program did not materialize in this budget. Nevertheless, provisions were included to transition part-time firefighters to full-time positions, aiming to strengthen the state’s wildfire response capabilities and increase compensation for incarcerated firefighters, acknowledging their essential roles in battling blazes.
Public safety also received attention, with the budget allocating $80 million to advance a tough-on-crime initiative approved by voters last year. This initiative includes measures to increase penalties for certain offenses and provide additional funding for behavioral health services, although advocates argue that the financial support falls significantly short of what is needed to effectively implement the program. With projections stating that the first-year costs could reach around $400 million, concerns about adequate funding remain prevalent among law enforcement and community leaders.
In other areas, the budget increases the state film tax credit to enhance support for the Hollywood industry, showing a continued commitment to promoting that sector. Additionally, $10 million has been earmarked for immigration legal services, including defense against deportations. However, the budget fails to provide new funding for combating homelessness, raising alarm among local leaders who warn that the absence of financial support may result in the loss of thousands of shelter beds across the state. Overall, the budget reflects a complex balancing act between addressing immediate fiscal constraints and managing competing priorities, leaving many advocates concerned about the implications for Californians in need.
