The new shortfall comes on top of $27.3 billion in fiscal remedies already planned for 2025-26.
California is facing an additional $12-billion state budget shortfall next year, a deficit largely caused by overspending that Gov. Gavin Newsom said was made worse by President Trump’s federal tariff policy.
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“California is under assault,” Newsom said. “The United States of America, in many respects, is under assault because we have a president that’s been reckless.”
Newsom unveiled the forecast during a presentation Wednesday of his $321.9-billion revised spending plan that proposes walking back free healthcare for low-income undocumented immigrants, eliminating Medi-Cal benefits for expensive weight loss treatments and cutting back overtime hours for in-home supportive service workers, among dozens of other trims.
The new deficit comes in addition to $27.3 billion in fiscal remedies, including $11.2 billion in cuts and a $7.1-billion withdrawal from the state’s rainy day fund, that lawmakers and the governor already agreed to make in 2025-26.
The overall shortfall marks the third year in a row that Newsom and lawmakers have been forced to reduce funding for state programs after dedicating more money than California has available to spend.
Though Newsom said his plan still provides significant funding for Californians in need of government support, his proposed cuts received fierce pushback from unions and other advocacy groups often allied with Democrats.
“While California leads the fight against Trump’s extremist attacks on our neighbors, our co-workers and our families, we must stand strong behind our values here at home,” said David Huerta, president of SEIU California, in a statement. “Instead, the governor’s proposed budget reads more like a CEO wishlist — sticking it to the working poor to protect tax breaks for the rich, and continuing to hollow out good, middle-class jobs.”
New budget
cuts proposed
Among the new cuts Newsom put on the table Wednesday is a call to cut back on his signature policy to provide free healthcare coverage to income-eligible undocumented immigrants.
Newsom is proposing freezing new Medi-Cal enrollment for undocumented adult immigrants as of Jan. 1 and requiring those over 18 to pay $100 monthly premiums to receive healthcare coverage through Medi-Cal.
The cost share will reduce the financial burden on the state and could lower the total number of people enrolled in the healthcare program if some immigrants cannot afford the new premiums. Freezing enrollment may prevent the price tag of the program from continuing to balloon after more people signed up for coverage than the state anticipated.
The changes offer minor savings next year, which grow to $5.4 billion in 2028-29. The finance department said the cap is expected to result in a decline of 18,000 patients per month as people exceed income limits or drop out for other reasons and no new applicants are accepted.
Newsom’s budget proposes other cuts to healthcare for immigrants, including saving $333.3 million in 2025-26 by eliminating long-term care benefits for undocumented immigrants and others who are not recognized as citizens under federal law.
The California Immigrant Policy Center said the organization was “outraged by the cuts” to Medi-Cal and other funding reductions.
“At a time when Trump and House Republicans are pushing to slash healthcare access and safety net programs while extending tax cuts for the wealthy, California must lead by protecting, not weakening, support for vulnerable communities,” said Masih Fouladi, executive director of CIPC, in a statement.
The governor is following the federal government’s lead and cutting $85 million in benefits for Ozempic and other popular weight loss medications from all Medi-Cal coverage plans.
Newsom also wants to cap overtime hours for in-home support service workers, according to his budget, to save another $707.5 million next year.
The governor’s budget includes a controversial proposal to grab $1.3 billion in funding in 2025-26 from Proposition 35, a measure voters approved in November that dedicated the revenue from a tax on managed care organizations to primarily pay for increases to Medi-Cal provider rates.
The decision drew pushback from a coalition of doctors, clinics, hospitals and other healthcare groups that supported the proposition, which nearly 68% of voters backed. They said the governor’s move “raises serious legal concerns and disregards the will of California voters.”
Planned Parenthood Affiliates of California said the proposed changes in Newsom’s budget would slash the organization’s annual budget in the state by a third.
When California leadership (DEMOCRATS) stop spending money on ILLEGAL ALIENS, I might care about this …
If Gruesome Nuisance would be successful with all his trips to China maybe they would cut him his
own Tariff deals?
After all he’s such a big wheeler dealer.
He constantly acts as if California isn’t even part of the USA.
If he’s complaining about Trumps tariff deals he may want to take a look at what the stock market is doing.
He is unamerican and a subversive demigod in his own warped mind.
Maybe his current third recall petition effort will be a charm and we will be rid of him.
It is simple the Democrats do not and have not cared for decades how their radical Socialist agenda is a wrecking ball on the budgets of the private Capitalists sector.
They state “it’s the environment” well guess what after a minimum of 4 decades of failure about the environment what is their excuse? “We haven’t done enough”….. while the freeways crumble and make delivery of goods and services more expensive.
Look above. How much of the radicalized agenda out of Sacramento is forced on cities and counties.???
Whole bunches…….Forced on every taxpayers.
Now add all of the cities and counties that have deficits on top of the irresponsible spending of Sac. you get what the real problem is.
Did you vote for democrats? Why? Are you that rich and don’t have to worry about retirement?
All smoke and mirrors folks. Don’t believe a word of it.