News Summary

California Governor Gavin Newsom has unveiled a $322 billion revised budget proposal to address a projected $12 billion deficit. The budget, presented on May 14, 2025, includes cuts to Medicaid for undocumented immigrants, ending tobacco tax funding for health services, and other measures impacting vital state programs. The changes are necessary due to significant revenue losses attributed to economic factors, including previous federal policies and declining tourism. The proposals will be evaluated by the state legislature as they balance fiscal needs with community impacts.

California Governor Proposes Budget Amid Deficit

California Governor Gavin Newsom has unveiled a revised budget proposal of $322 billion, aiming to tackle a projected $12 billion deficit that the state is facing. The budget was presented on May 14, 2025, and includes significant revisions, particularly affecting health care programs for undocumented immigrants and various state services.

Budget Cuts and Changes

One of the most notable aspects of the budget plan is a proposed reduction in Medicaid coverage for undocumented immigrants. Starting January 2026, enrollment will be frozen, and beginning in 2027, eligible low-income adults without legal status would be required to pay a $100 monthly premium for coverage. These adjustments are projected to yield savings of approximately $5.4 billion by the 2028-2029 fiscal year.

Additionally, the budget proposes discontinuing the use of declining tobacco tax revenues to fund dental, family planning, and women’s health services, which could save the state over $500 million annually. Planned Parenthood has criticized these cuts, asserting they would significantly impact their operations amid challenging circumstances.

Other measures include eliminating state funding for certain weight loss drugs, expected to save $680 million by 2028-2029, and capping funding for in-home domestic and personal care services for low-income residents and individuals with disabilities, aiming to reduce expenditures by nearly $708 million in the next fiscal year. Furthermore, Newsom intends to close another state prison by October 2026, a move anticipated to save around $150 million annually.

Factors Contributing to the Deficit

The projected budget shortfall can be attributed to several factors. The economic repercussions of the Trump administration’s policies, particularly its tariff policies, have led to estimated revenue losses of $16 billion for California. Additionally, a volatile stock market and a decline in global tourism have exacerbated the financial situation. As a result, the state’s budget priorities are shifting significantly, moving away from the previous goal of universal health care for undocumented immigrants, a key focus during Newsom’s time in office.

Impacts on State Programs

The proposals reflect a broader effort to address the state’s financial challenges while attempting to maintain essential services. California’s Medicaid program, known as Medi-Cal, currently provides coverage to over 1.6 million undocumented individuals in the state. The proposed changes have sparked discussions among lawmakers, with some expressing strong opposition to cuts impacting immigrant health coverage, reiterating California’s commitment to assist vulnerable populations.

In addition to these health care changes, the budget plan includes provisions related to the cap-and-trade program, which aims to reduce emissions and is proposed for reauthorization through 2045. The state has allocated $1.5 billion from this fund to support the state fire department.

Next Steps

The budget proposal is currently subject to negotiation and must be finalized by mid-June. The state legislature will evaluate the proposed measures, weighing the state’s fiscal needs against the potential impacts on public services and vulnerable communities.

California Governor Proposes Budget Amid Deficit

News Summary