California Governor Unveils $322 Billion Budget Amid Deficit

News Summary

California Governor Gavin Newsom has introduced a revised budget proposal of $322 billion to address a projected $12 billion deficit. The budget, unveiled on May 14, 2025, includes significant cuts, particularly affecting the state’s Medicaid program for undocumented immigrants. Starting in January 2026, enrollment for these individuals will freeze, and by 2027, low-income adults will need to pay a $100 monthly premium for care. Other proposed cuts involve reductions in health services and a cap on spending for in-home care, reflecting a shift from previous universal health care goals.

California Governor Gavin Newsom has unveiled a revised budget proposal of $322 billion on May 14, 2025, aimed at addressing a projected $12 billion deficit. The proposed budget offers a series of cuts and changes that notably impact the state’s Medicaid program, particularly for undocumented immigrants.

The budget shortfall has been attributed to several factors, including economic policies from the Trump administration, fluctuations in the stock market, and a decline in global tourism. In response to these financial challenges, the revised proposal includes significant adjustments to state-funded health care services.

One of the most contentious aspects of Newsom’s plan includes scaling back Medicaid coverage for immigrants without legal status. Beginning January 2026, enrollment for these individuals will be frozen, and starting in 2027, eligible low-income adults would have to pay a $100 monthly premium to receive care. These alterations to the Medicaid program, known as Medi-Cal in California, are projected to save the state approximately $5.4 billion by the 2028-2029 fiscal year.

Further changes to the budget propose the cessation of the use of revenues from a dwindling tobacco tax, previously allocated for dental, family planning, and women’s health services. This shift could result in an annual saving of over $500 million. Additionally, state health care coverage for specific weight loss drugs is set to be eliminated as of January 2026, which is anticipated to save $680 million by 2028-2029.

The governor is also proposing strict caps on spending for in-home domestic and personal care services aimed at low-income residents and individuals with disabilities, with expected reductions nearing $708 million in the upcoming fiscal year. Furthermore, the state’s cap-and-trade program, designed to reduce emissions, is suggested to be reauthorized through 2045, with $1.5 billion allocated for the fire department.

In a bid to manage costs, Newsom plans to close another state prison by October 2026, projecting annual savings of $150 million. These measures mark a clear shift from his previous goal of implementing universal health care for undocumented immigrants, a priority that has now been significantly scaled back.

California’s current Medicaid program has offered coverage to over 1.6 million undocumented individuals in the ongoing fiscal year. However, Governor Newsom’s latest budget proposal has raised concerns among advocates. Planned Parenthood noted that funding cuts would reduce their budget by a third, describing the potential impacts as “cruel” during difficult economic times.

As the budget proposal works its way through the legislative process, it faces scrutiny from some Democratic lawmakers who have voiced opposition to the cuts regarding health coverage for immigrants. These legislators stress California’s tradition of providing support to its most vulnerable residents.

Governor Newsom has pointed to the federal government’s tariff policies implemented during the Trump administration as a direct factor affecting California’s revenue, claiming losses of approximately $16 billion. The budget proposal is now set for negotiation and finalization by mid-June as state lawmakers assess the outlined measures.

The implications of these budget changes could play a significant role in shaping the welfare landscape of California and the dynamics of health care access for undocumented immigrants and low-income residents across the state.

Deeper Dive: News & Info About This Topic

• The New York Times: California Governor Newsom’s Healthcare Budget Proposal
• Wikipedia: California Medi-Cal Program
• CBS News: California Budget and Immigration
• Google Search: California budget healthcare immigration
• NBC News: Newsom’s Healthcare Benefits for Undocumented Immigrants
• Encyclopedia Britannica: California
• AP News: Newsom’s Revised Budget and Health Coverage Cuts
• Google News: California Budget 2025