Gov. Gavin Newsom is reportedly preparing to sign a state budget shaped by the shadow of a multi-billion-dollar deficit.
The $12 billion shortfall, lawmakers say, has been driven by the Trump administration, particularly due to the president’s tariff policies. But California has been challenged by its efforts, lawmakers acknowledged in a summary of the budget act, including faster-than-expected growth in Medi-Cal costs, the state’s Medicaid health care program, and the devastating Los Angeles wildfires in January that increased state spending. By UCLA’s estimate, the wildfires caused anywhere from $76 billion to $131 billion in total property and capital losses.
The result is a budget containing a $321.1 billion spending plan that comes amid California being affected by “massive uncertainty in the economy, federal funding, and the broader world,” lawmakers described in one report. But the uncertainty also comes from within California, as some critics say lawmakers haven’t reined in enough spending.
As the start of the fiscal year on July 1 nears, here is a non-exhaustive summary of just some of the ways in which the budget impacts Californians’ health, education, and way of living, largely based on the Assembly Budget Committee’s June 24 initial summary of the state budget plan. However, the committee’s budget report is a draft summary, so the figures and elements presented in it and in this article may change or be corrected.
Healthcare and Medi-Cal
Newsom’s proposed changes to Medi-Cal, unveiled in the May revision of the budget, appear to be moving forward with adjustments from lawmakers.
The budget maintains a Medi-Cal enrollment freeze for undocumented Californians ages 19 and older beginning Jan. 1, 2026, although this is specific to new enrollments, as people already enrolled in the program can’t age out.
What has been revised from the governor’s proposal is the amount in monthly premiums certain people would have to pay. Individuals with “unsatisfactory immigration status” who are ages 19 to 59 will have to pay $30 monthly Medi-Cal premiums starting July 1, 2027 — a $70 decrease from Newsom’s proposal. Those with this status include undocumented immigrants, according to a previous fact sheet from the governor’s office.
Additionally, full-scope dental coverage will be eliminated for Medi-Cal enrollees with an unsatisfactory immigration status and who are 19 and older, no sooner than July 1, 2026.
Other changes to Medi-Cal pertain to medications. Pharmacy coverage for GLP-1 agonists used for weight loss, such as Ozempic, will be eliminated beginning Jan. 1, 2026, although these drugs would continue to be covered for diabetes treatment. People who demonstrate a medical necessity for the weight loss medication may still get it approved on a case-by-case basis, according to the budget report.
Among the many funding allocations related to mental health services and support in California include $436,000 in 2025-2026 and $232,000 in 2026-2027 to develop and submit a report to the legislature on a statewide strategy to address the mental health risks linked to social media usage among children and youth as required by previous legislation. Recent legislation in California has tackled kids’ excessive use of social media, which experts say harms their mental health.
The budget also includes $17.5 million to support the 988 Suicide and Crisis Lifeline centers’ contact volume capacity, according to the budget report and the May revisal.
Among what Newsom proposed in the May revisal to address the projected budget shortfall and achieve a balanced budget were capping In-Home Supportive Services provider overtime and travel hours at 50 hours per week beginning in 2025-2026. The IHSS program provides in-home care to eligible Californians, including those who have a disability and senior adults. The budget rejected that proposal, among others.
K-12 and higher education
In California, there is a minimum funding level the state must provide to K-12 schools and community colleges through Proposition 98, calculated through formulas, explains the Legislative Analyst’s Office. According to the budget report, the 2025-26 budget year is estimated to have a Prop 98 funding level of $114.6 billion.
California Community Colleges, which reported that it saw more than two million students in 2023-2024, will see millions of Prop 98 funding to support a 2.35% enrollment growth. On the other end is the early schooling children receive, or more specifically, the California Department of Education’s initiative for all four-year-old children in the state by the 2025-2026 school year: access to Universal Transitional Kindergarten, which comes before children enter kindergarten. This initiative gets an additional $2.1 billion in funding.
Funds also support California students’ nutrition.
The California Universal Meals program sees an increase of $90.7 million in annual Prop 98 funding so that all students can continue receiving two meals a day for free. Additional funds support training, equipment, worker recruitment, and more for the program.
Additionally, the state budget will support what is described as a “comprehensive, four-year, educator recruitment and retention package” aimed at recruiting teacher candidates and supporting retention early in their careers and in “high priority schools.”
Pending legislation, the budget appropriates $150 million for career technical education and career pathways, according to a June 24 summary of the budget act. If legislation is not enacted by next January, that funding will go toward the Career Technical Education Incentive Grant Program, which benefits K-12 students.
Housing and homelessness
Newsom’s signature on the budget is reportedly contingent on “finalizing legislation to cut red tape and unleash housing and infrastructure development” across California, the Los Angeles Times and CalMatters have quoted a spokesperson for the governor saying.
Among what the budget goes toward are affordable housing projects and construction efforts, according to the summary of the budget act, with trailer bills described as furthering “innovative housing affordability solutions” in California. A trailer bill is a separate bill introduced to make changes to existing law in order for budget changes to be implemented, explains the California Department of Finance.
Additionally, $300 million is to go toward the California Dream for All Shared Appreciation Loan program that assists first-time homebuyers with their down payment.
As for Californians experiencing homelessness, the Encampment Resolution Fund will get $100 million. The grant program assists local efforts to provide services and support to people in encampments that “results in meaningful paths to safe and stable housing,” said the California Department of Housing and Community Development. Millions will also go toward housing and homelessness prevention programs at the Department of Social Services, according to the budget report.
However, KQED reported the budget doesn’t include new funding for the Homeless Housing, Assistance and Prevention grant program for the fiscal year, which makes funds available to cities and counties to tackle homelessness in their area and was described by KQED as one of the “state’s largest homelessness service programs.”
Wildfires
Unsurprisingly, California’s ongoing fight against wildfires is among the focuses of the budget, including maintaining Cal Fire’s operations. According to the budget report, lawmakers will appropriate $39 million from the General Fund in 2025-2026 to support the transition of seasonal firefighter positions to permanent ones.
Trailer bill language, according to the budget summary, would require Cal Fire to maintain “the ability to hire seasonal, temporary firefighters as needed to allow for surge hiring capacity” in emergency fire conditions or personnel shortages.
Paris Barraza is a trending reporter covering California news at The Desert Sun. Reach her at pbarraza@gannett.com.
This article originally appeared on Palm Springs Desert Sun: California budget breakdown: How it impacts your life, from Medi-Cal and education to fires
Reporting by Paris Barraza, Palm Springs Desert Sun / Palm Springs Desert Sun
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