TL/DR –
California’s lawmakers have approved a budget to close a $12bn deficit, which could result in cuts to programs, such as a landmark healthcare policy for low-income adult immigrants without legal status. The $321bn spending plan has been backed by legislative leaders and Democratic governor Gavin Newsom, with funding largely deriving from state savings and delays in payments. However, it will only be enacted if lawmakers send Newsom legislation to ease housing construction by Monday.
California Lawmakers Approve Budget Amidst Deficit
California lawmakers approved a budget on Friday that curtailed progressive priorities, including a monumental healthcare expansion for low-income adult immigrants without legal status, to offset a $12bn deficit. This is the third consecutive year where California, the US’s most populated state, has been compelled to cut funds or halt programs championed by Democratic leaders. The state’s $321bn spending plan was negotiated by legislative leaders and Democratic Governor Gavin Newsom.
The budget, which Newsom is expected to sign, could be void if lawmakers don’t send him legislation facilitating housing construction by Monday.
Instead of drastic cuts to critical safety net programs, state leaders have mostly used state savings, borrowing from special funds, and delaying payments to deal with the budget deficit. According to Mike McGuire, the senate president pro tempore, these measures have been adopted without imposing new taxes on ordinary Californians.
Republican lawmakers criticized Democrats for excluding them from budget negotiations and for insufficiently addressing future deficits, which could amount to $17bn to $24bn annually.
Key Changes in California’s Budget
The new budget will cease enrolment of new adult patients without legal status in California’s state-funded healthcare program for low-income people known as Medi-Cal from 2026. It is a major setback to a program launched last year aimed at helping the state inch closer to universal healthcare.
The budget also withdraws $78m in funding for mental health phone lines and eliminates funding for low-income individuals’ dental services from 2026. However, it secures funding for a program providing domestic and personal care services for low-income residents and Californians with disabilities and prevents cuts to Planned Parenthood.
The budget permits the state to draw $1bn from the cap-and-trade program for state firefighting efforts. This market-based system, aimed at reducing carbon emissions, requires companies to buy credits to pollute, and the money goes into the fund.
Lawmakers also sanctioned funding to help part-time firefighters transition into full-time positions and includes $10m to increase the daily wage for incarcerated firefighters.
Law Enforcement and Hollywood Get Boost
The budget provides $80m to support a tough-on-crime initiative passed last year, which increases penalties for shoplifting, some drug charges, and authorizes judges to mandate treatment for people with multiple drug charges.
In addition, the state’s film tax credit will increase from $330m to $750m annually to incentivize Hollywood. The program, a priority for Governor Newsom, will kick-off this year and terminate in 2030.
However, there will be no new funding for cities and counties to tackle homelessness next year, which local leaders fear could lead to the loss of thousands of shelter beds. The budget does not act on Newsom’s proposal to streamline a project to reroute a substantial part of the state’s water supply through a vast underground tunnel.
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