News Summary

California Governor Gavin Newsom has introduced a revised budget of $322 billion aimed at addressing a $12 billion deficit. The proposal includes cuts to health care services for undocumented immigrants, a freeze on Medi-Cal enrollments for those without legal status, and significant changes to other health programs. With these measures, the state hopes to save $5.4 billion by 2029 while also reallocating funds for environmental goals. The budget is set for legislative evaluation by mid-June 2025 as opposition emerges from some lawmakers.

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 reflects a significant shift in funding priorities, particularly affecting health care services for undocumented immigrants in the state.

To mitigate the budget shortfall, which stems from multiple factors including the economic policies during the Trump administration, fluctuations in the stock market, and a decrease in global tourism, Newsom’s plan includes a series of cuts and changes. A key element is the implementation of a freeze on Medicaid coverage, known as Medi-Cal, for immigrants without legal status starting in January 2026. This freeze means that new enrollments would not be permitted, while those already enrolled would experience changes to their coverage.

Under the new proposal, low-income adults without legal status who remain eligible for the program will be required to pay a monthly premium of $100 starting in 2027. This modification is anticipated to save California approximately $5.4 billion by the fiscal year 2028-2029. Previously, California’s Medi-Cal program provided health care services to over 1.6 million undocumented individuals during the current fiscal year.

Additionally, the budget seeks to discontinue the use of revenues from a declining tobacco tax, which has traditionally been allocated for dental, family planning, and women’s health services. This change could potentially result in an annual saving of more than $500 million. Organizations such as Planned Parenthood have criticized these proposed cuts, highlighting the impact on their operations, which could see their budget reduced by a third during a time of increased health service demand.

Further austerity measures proposed by Newsom include the elimination of state health coverage for certain weight loss drugs starting in January 2026, projected to save about $680 million by 2028-2029. Spending for in-home domestic and personal care services for low-income residents and individuals with disabilities would also face caps, aiming to reduce expenditure by almost $708 million in the upcoming fiscal year.

Investments to support the state’s environmental goals are also included in the proposal. The governor plans to reauthorize California’s cap-and-trade program through 2045, with $1.5 billion from that funding allocated to the state fire department. In a move aimed at saving costs, Newsom has proposed closing another state prison by October 2026, expected to result in an annual savings of $150 million.

This budget proposal signals a significant retreat from Newsom’s previous commitments to provide universal health care to all undocumented immigrants, a policy that had defined much of his administration’s agenda. The need for such budget adjustments has been underscored by estimated losses of $16 billion in state revenue attributed to federal tariff policies implemented during the previous administration.

As the budget proposal is subject to negotiation, it must be finalized by mid-June 2025, with the state legislature poised to evaluate its various components. Some Democratic lawmakers have voiced their opposition to the proposed cuts, particularly those affecting immigrant health care coverage, emphasizing California’s longstanding commitment to supporting vulnerable populations.

California Governor Unveils $322 Billion Budget Amid Deficit

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Author: HERE Huntington Beach