California Governor Presents $322 Billion Budget to Address Deficit

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An overview of Governor Newsom's budget proposals focusing on key areas affected by financial constraints.

News Summary

Governor Gavin Newsom has unveiled a revised $322 billion budget proposal aimed at addressing a projected $12 billion deficit. Key proposals include freezing Medicaid enrollment for undocumented immigrants, healthcare cuts, and measures to control state spending. The budget comes amid economic challenges exacerbated by previous federal policies and aims to impact various sectors including healthcare and environmental services. The legislature is currently reviewing these proposals with negotiations expected to finalize by mid-June.

California Governor Gavin Newsom has unveiled a revised budget proposal amounting to $322 billion to tackle a projected $12 billion deficit. This budget, presented on May 14, 2025, aims to address key areas in need of financial support while implementing significant cuts in various sectors.

The budget shortfall arises from a combination of factors, including the economic policies of the Trump administration, fluctuations in the stock market, and a downturn in global tourism. These elements have collectively impacted California’s revenue streams, prompting the governor to make difficult financial decisions.

One of the most significant changes proposed involves the Medicaid program, known as Medi-Cal, which has traditionally provided coverage to over 1.6 million undocumented individuals. Under the new budget, enrollment for undocumented immigrants will be frozen starting in January 2026. Furthermore, eligible low-income adults without legal status will face a requirement to pay a $100 monthly premium beginning in 2027, a move aimed at saving the state an estimated $5.4 billion by the 2028-2029 fiscal year.

Healthcare Cuts and Impacts

The budget also includes proposals to cut state healthcare coverage for certain weight loss drugs, set to be eliminated in January 2026, with anticipated savings of $680 million by 2028-2029. Additionally, there will be caps on funding for in-home domestic and personal care services for low-income residents and people with disabilities, which is expected to reduce spending by nearly $708 million in the coming fiscal year.

Moreover, the governor plans to cease the use of revenue from a declining tobacco tax to fund essential services such as dental care, family planning, and women’s health, potentially saving over $500 million annually. Critics, including Planned Parenthood, have expressed concern that these cuts would significantly reduce their budget by one-third and label them as cruel during challenging times.

Environmental and Correctional Budget Measures

On the environmental front, Newsom is proposing to reauthorize the state’s cap-and-trade program, which targets emissions reduction, through 2045. The plan allocates $1.5 billion from this program to the state fire department, aimed at enhancing fire response capabilities amid increasing wildfire risks.

In an effort to further reduce state spending, Newsom has also suggested the closure of another state prison by October 2026, which is projected to save $150 million each year. These measures reflect a significant pivot from his prior commitment to achieving universal healthcare for all undocumented immigrants, a policy that had been a hallmark of his administration.

Legislative Process and Future Developments

The proposed budget is subject to negotiations and must be finalized by mid-June, with the state legislature currently reviewing the various proposals. Several Democratic lawmakers have voiced their opposition to the cuts in immigrant healthcare, underscoring California’s dedication to supporting vulnerable populations.

Newsom has attributed the state’s fiscal challenges partially to the tariff policies implemented by the Trump administration, which he estimates have resulted in losses of approximately $16 billion in California’s revenue. The ramifications of these proposed changes to the budget are anticipated to be extensive, affecting many sectors that rely on state funding.

As the dialogue around the budget continues, the implications for California’s healthcare system, social services, and overall governance are poised to be significant as decisions are made in the coming weeks.