California Lawmakers Pass $356 Billion Budget, Delaying Newsom's Social Service Cuts
Updated
Updated · CalMatters · Jun 16
California Lawmakers Pass $356 Billion Budget, Delaying Newsom's Social Service Cuts
3 articles · Updated · CalMatters · Jun 16
Summary
$356 billion in spending cleared the Legislature late Monday, meeting California's June 15 deadline while largely rejecting or postponing Gov. Gavin Newsom's proposed social-service cuts before final talks with him.
Lawmakers pushed to delay by a year healthcare limits affecting undocumented immigrants and other vulnerable groups, rejected stricter Medi-Cal asset tests and In-Home Supportive Services cuts, but accepted a $300 million private-coverage subsidy.
To raise revenue, the plan backs a healthcare provider tax worth about $2 billion a year, a sales tax on most software starting in 2027, and an extension of the $5 million corporate tax-credit cap through 2029.
Democrats also proposed 22,000 child-care slots, $2.7 billion more for TK-12 schools and community colleges than Newsom's May plan, and $900 million for homelessness versus his $500 million.
Negotiators now have until June 30 to reconcile differences on healthcare, schools and homelessness before the fiscal year starts July 1, while also weighing a November ballot measure to expand rainy-day fund deposits.
California is rejecting social service cuts, but is it ignoring a major fiscal crisis ahead?
Will the final budget deal force a million Californians to lose healthcare coverage?
With $24 billion in homeless funds unaccounted for, can new spending fix the crisis?
Navigating a $15 Billion Gap: California’s $356 Billion 2025-26 Budget and Its Fiscal Risks
Overview
The 2025-26 California state budget is a $356 billion spending plan shaped by tough fiscal challenges. To address a substantial budget problem, state leaders relied on a mix of delays, borrowing, and reductions across departments. While the budget aimed to maintain critical services, it required difficult choices, especially as spending on health programs rose by $6.7 billion, or 16%, over the previous year. Nearly $50 billion from the General Fund was allocated to health departments, highlighting a focus on health even as other areas faced cuts. This compromise reflects the state's effort to balance priorities amid ongoing financial pressures.