Gov. Gavin Newsom’s proposed state budget is drawing mounting resistance at the Capitol as lawmakers near a constitutional deadline to approve a spending plan, with education and health care groups warning that proposed reductions could hit schools, low-income families and vulnerable residents across California, including in Southern California and the Inland Empire.
Newsom has promoted his revised budget as a step toward restoring California’s fiscal footing before he leaves office, saying his administration has produced “a balanced budget structurally for 18 months.” The word “structurally” has become central to the debate because California has faced a continuing mismatch between spending commitments and ongoing revenue.
According to Legislative Analyst Gabe Petek, state budgets over the past four years have spent a combined $125 billion more than California actually brought in, after Newsom and the Legislature expanded programs based on revenue projections that proved too optimistic. Budget analysts commonly refer to that kind of ongoing imbalance as a structural deficit.
Newsom’s proposed $349.4 billion budget for the 2026-27 fiscal year, which begins July 1, estimates $226.5 billion in general fund tax revenue. But planned general fund spending would total $246.6 billion, leaving a roughly $20 billion gap. The shortfall is smaller than in some recent years, but it continues to raise questions about whether the state has truly solved its underlying budget problem.
The administration would close the gap through a combination of higher-than-expected short-term revenue, spending reductions, borrowing and other budget maneuvers. Still, the budget documents acknowledge that deficits are expected to continue in future years, though they may be smaller than earlier projections.
Petek has cautioned that the proposal still leaves California “ill-prepared” for even a modest downturn in revenue.
Newsom has defended the plan, saying, “We’re cutting deficits but not cutting corners.” But as the June 15 deadline approaches, advocates for schools, health care and social services are pressing legislators to reject cuts or funding delays affecting programs for low-income residents, children and people with disabilities.
At the Capitol, rallies and press events have become frequent as organizations seek to protect their funding. Education groups are especially critical of Newsom’s proposal because they say it withholds money that schools are entitled to receive under Proposition 98, the constitutional formula that sets minimum funding levels for K-12 schools and community colleges.
Last week, the California School Boards Association joined school unions and other education organizations at a rally outside the Capitol, calling on Newsom and legislators to provide the funding they say schools are owed.
Debra Schade, president of the school boards association, said Proposition 98 is “a matter of law, not a suggestion that can be discarded when it becomes inconvenient for policymakers.”
She criticized the administration for what she described as a third straight year of attempts to alter the minimum school funding guarantee. “Once we open the door to the idea that Proposition 98 can be manipulated whenever the state faces fiscal pressure, we fundamentally weaken the protections voters deliberately put in place for California students,” Schade said.
Health care advocates are also pushing back. Supporters of dental care for children in Medi-Cal released a report warning that more than 1.2 million low-income California children could lose access to dental services if Newsom’s proposed Medi-Cal dental reductions are approved.
Child care and early education advocates have objected as well, saying the governor’s plan would reduce all child care and pre-kindergarten programs by 2% in real spending. They argued that the proposal marks a reversal for a governor who has previously emphasized early childhood programs and family support.
The Legislature’s Democratic supermajority has historically supported many of the programs now at risk, and some lawmakers are expected to be sympathetic to advocates’ concerns. Raising taxes could be one way to avoid deeper reductions, but Newsom has shown little interest in ending his governorship with a major tax increase.
That sets up a difficult choice for Democratic legislators: accept reductions to programs they have championed, or challenge the governor’s budget framework in the final weeks of negotiations. The outcome will determine not only how the state closes its immediate deficit, but how much strain schools, health care providers and social service programs may face in the year ahead.
Original source: CalMatters
