News Summary

California Governor Gavin Newsom has announced a revised budget proposal of $322 billion aimed at addressing a projected $12 billion deficit. The proposal prioritizes fiscal responsibility with significant cuts to programs, including a freeze on Medicaid coverage for undocumented immigrants and the elimination of state funding for certain weight loss drugs. This budget marks a notable shift from earlier healthcare ambitions and faces opposition from lawmakers concerned about its impact on vulnerable populations. The proposal must be finalized by mid-June amidst ongoing economic recovery challenges.

California Governor Proposes $322 Billion Budget Amid $12 Billion Deficit

California Governor Gavin Newsom has unveiled a revised budget proposal totaling $322 billion to address a projected $12 billion deficit in the state’s finances. The proposal, presented on May 14, 2025, marks a significant shift from the administration’s earlier ambitions, particularly regarding health care coverage for undocumented immigrants.

Key Provisions of the Proposed Budget

One of the most notable aspects of Newsom’s budget is a plan to scale back Medicaid coverage for undocumented immigrants. Specifically, enrollment for low-income adults without legal status will be frozen beginning January 2026. Additionally, those eligible will be required to pay a $100 monthly premium starting in 2027. These changes are projected to save the state approximately $5.4 billion by the end of the 2028-2029 fiscal year.

The governor’s proposal also seeks to eliminate state health care coverage for certain weight loss drugs, expected to yield savings of $680 million by 2028-2029. Spending on in-home domestic and personal care services for low-income residents and individuals with disabilities will be capped, resulting in a projected savings of nearly $708 million for the upcoming fiscal year.

Further cost-saving measures include halting the allocation of revenues from a declining tobacco tax, which currently funds dental, family planning, and women’s health services, potentially conserving over $500 million annually. The governor also plans to close another state prison by October 2026, which is projected to save $150 million per year.

Factors Contributing to the Budget Shortfall

The projected deficit can be attributed to several factors, including the economic policies of the Trump administration, a volatile stock market, and a significant drop in global tourism. Governor Newsom has estimated that California has lost roughly $16 billion in revenue due to federal tariff policies.

Impact on Vulnerable Populations

The proposed budget has drawn criticism from various sectors, particularly regarding the cuts to Medicaid for undocumented immigrants. California’s Medicaid program, known as Medi-Cal, has previously provided coverage to over 1.6 million undocumented individuals during the current fiscal year. Lawmakers from the Democratic Party have expressed their opposition to these cuts, highlighting the state’s commitment to support its vulnerable populations during difficult economic times.

Future Considerations

With the budget proposal now on the table, it must be negotiated and finalized by mid-June, as state legislators review the various elements of the plan. The governor’s request to reauthorize the state’s cap-and-trade program until 2045, with $1.5 billion designated for the fire department, is also a significant part of the budget discussions.

Conclusion

This proposed budget represents a dramatic change from Governor Newsom’s earlier healthcare proposals, which included aspirations for universal coverage for undocumented immigrants. As the state navigates its budgetary challenges amid an ongoing economic recovery, the implications of these proposed cuts will likely spark further debates regarding health care access and financial support for low-income Californians.

California Governor Proposes $322 Billion Budget Amid Deficit