California lawmakers are poised to approve a $356 billion state budget Monday that would preserve or postpone many of the social service reductions Gov. Gavin Newsom proposed in May, setting up two weeks of negotiations before the new fiscal year begins.
The vote is expected largely because legislators must pass a balanced budget by June 15 under the state Constitution in order to continue receiving pay. But the spending plan approved by the Legislature is not likely to be the final version. Lawmakers and the governor have until July 1 to reach a final agreement on health care, education, homelessness funding and other major programs that affect communities across California, including the Inland Empire.
A major point of disagreement is health care spending. Newsom proposed cuts in response to reduced federal funding tied to a tax and spending law signed last year by President Donald Trump. His plan included restrictions on health coverage for undocumented immigrants, as well as refugees, asylees and survivors of human trafficking.
Legislative Democrats want to push those reductions back by one year while they look for ways to reduce the impact. They also oppose Newsom’s proposal to raise monthly Medi-Cal premiums for undocumented immigrants from $30 to $50, preferring to leave that decision to the next governor.
Sen. John Laird, a Santa Cruz Democrat who chairs the Senate budget committee, said the Legislature is trying to buy time and avoid deeper cuts if possible.
Lawmakers also rejected Newsom’s plan to bring back stricter asset tests for seniors and adults with disabilities enrolled in Medi-Cal by July. Instead, they proposed a less restrictive limit beginning in the 2027-28 fiscal year. With bipartisan support, legislators also turned away proposed reductions to the In-Home Supportive Services program, which helps older adults and people with disabilities remain in their homes.
The Legislature did agree with Newsom on one health care item: $300 million to help subsidize private health coverage for low-income Californians.
Education and child care are another central part of the budget debate. Democratic lawmakers want to add 22,000 state-funded child care slots over the next several years and rejected Newsom’s proposed cut of 6,800 state-supported slots. The added spaces would focus on children 3 and younger, an age group advocates say has not benefited from the state’s expansion of transitional kindergarten for 4-year-olds.
Lawmakers are also proposing $2.7 billion more for transitional kindergarten through 12th grade schools and community colleges than Newsom included in his May budget revision, based on a more optimistic revenue forecast.
Still, education groups say the Legislature did not go far enough. They had urged lawmakers to reject Newsom’s plan to withhold $3.9 billion in constitutionally guaranteed school funding as a way to avoid overpaying districts if projected revenue does not arrive.
David Goldberg, president of the California Teachers Association, accused state leaders of relying on budget maneuvers instead of fully funding schools and said the union is prepared to hold them accountable.
Counties would also receive more support under the Legislature’s plan. The proposal includes additional funding to help counties handle expanded eligibility checks for residents applying for food assistance and health care benefits, requirements tied to Trump’s federal spending law.
The Legislature also wants to provide $125 million to help counties rebuild indigent care programs for low-income residents, which were largely scaled back after the Affordable Care Act took effect. On homelessness, lawmakers propose $900 million for the state’s homelessness fund, compared with $500 million in Newsom’s plan.
To raise revenue, lawmakers are aligned with Newsom on three tax proposals. One would apply sales tax to most business software, including platforms such as Slack and Microsoft products. Another would limit the amount of tax credits large corporations can claim. A third would extend a tax on Medi-Cal health providers, a tool the state has used to draw down additional federal funding.
Those measures would not need voter approval, but they would require two-thirds support in both houses of the Legislature. The proposals come after California voters rejected many local tax measures in the June primary.
Senate Democrats had also considered a monthly charge on large employers whose workers are enrolled in Medi-Cal, but they have stepped back from that idea. Instead, they are asking the next governor to present “fully viable options” next year.
Lawmakers and Newsom also agree that California should be able to save more money in its rainy day fund, though they have not settled on the details. Under current law, the state is required to make deposits into the reserve, but the fund cannot exceed 10% of general fund tax revenue.
Changing that cap would require voter approval. Legislators are considering whether to place a measure on the November ballot to allow the state to save more for future downturns. They face a June 25 deadline to decide what, if anything, to put before voters.
Original source: CalMatters
