California Democrats present new budget plan and resist healthcare reductions

California’s budget deal, a quick look

California lawmakers passed a $355.9 billion budget late Monday, just 90 minutes before the deadline. The Legislature had to pass a balanced budget by June 15 to keep collecting their paychecks. Now the real work begins.

Governor Gavin Newsom has until June 30 to sign the budget. Negotiations between him and lawmakers will continue over the next two weeks. The final spending plan could still change significantly before the new fiscal year starts on July 1.

Medi-Cal cuts for immigrants delayed

One of the biggest fights was over Medi-Cal coverage for immigrants. Newsom’s budget proposal sought to raise monthly premiums for some immigrant Medi-Cal enrollees from $30 to $50 starting in July 2027 and move ahead with other limits affecting immigrant coverage, on top of previously approved cuts that froze new full-scope Medi-Cal enrollment for undocumented adults beginning in January 2026.

Democratic lawmakers pushed back and proposed delaying or softening several of the new changes. Their plan leaves some decisions for the next governor while giving the state more time to look for alternatives.

Your health insurance premiums could rise

The budget renews a tax on health insurance plans that could mean higher costs for you. The federal government changed the rules, forcing states to tax commercial plans more evenly with Medi-Cal plans.

Health plans warn this could raise annual premiums by about $100 for an individual or $400 for a family of four. Supporters say the tax helps bring in federal matching funds for Medi-Cal. The new tax structure is expected to generate about $2.3 billion in revenue.

New tax on software and corporations

Here’s something that might affect your wallet. The budget includes a 7.25% sales tax on cloud-based software like Slack, Zoom, and Microsoft Office starting in January 2027. It also caps tax credits that big corporations can claim. 

These moves are expected to generate over $1.4 billion in new taxes for the 2026-27 fiscal year. Business groups aren’t happy, saying it will make innovation more expensive in California. But lawmakers say the state needs the money to protect essential services.

$20 million for new judges

Here’s something both parties actually agree on. The budget sets aside over $20 million to create new judgeships across California. Courts are overwhelmed, and judges have caseloads far above what they should handle.

San Bernardino County, for example, serves over 2.2 million people with judges working way too hard. Republicans and Democrats both said this investment is long overdue. It should help cases move faster through the system.

More money for homeless housing

California’s homelessness crisis isn’t going away, and lawmakers want to throw more money at the problem. The budget includes $900 million for the Homeless Housing, Assistance, and Prevention program.

That’s $400 million more than Governor Newsom originally proposed. Local counties will get this money to help get people off the streets. It’s one of the few areas where both parties found some common ground during the negotiations.

Child care slots get a big boost

Working parents might catch a break here. Democratic lawmakers want to add 22,000 new state-funded child care slots over the next few years. They also rejected Newsom’s plan to cut 6,800 existing spots.

The new slots would prioritize children ages 3 and under, filling a gap that Newsom’s transitional kindergarten expansion left behind. Advocates say this will help more families afford care while parents work.

Schools get extra $2.7 Billion

California’s schools and community colleges would get $2.7 billion more than Newsom proposed. That sounds good, but educators wanted even more. They’re still fighting over $3.9 billion that the state might hold back.

The teacher’s union is not happy. Stop with the gimmicks and the shell games, and fully fund our schools, said the California Teachers Association president. They promise to hold lawmakers accountable if schools don’t get what they’re owed. The final budget negotiations will determine how much actually reaches classrooms.

Fun fact: California law requires a certain percentage of the state budget to go to schools, but lawmakers can use accounting maneuvers to delay payments.

Counties get help with new rules

Counties are getting extra money to handle new federal requirements. Under Trump’s spending bill, counties must do more eligibility checks for food stamps and healthcare benefits. That costs money.

The Legislature’s budget gives counties more funding to manage these administrative workloads. It also allocates $125 million to help counties reestablish indigent care programs. These programs serve low-income Californians and largely disappeared under Obamacare. The extra funding should help counties manage their new responsibilities.

Fun fact: The federal requirements under H.R. 1 have forced states across the country to reassess how they administer Medicaid and food assistance programs.

In-home support services fully funded

This is a big win for people with disabilities and seniors. The Legislature rejected Newsom’s proposed cuts to the In-Home Supportive Services program. This program allows people to stay in their homes instead of moving to care facilities.

Keeping people at home is usually cheaper than institutional care anyway. Lawmakers from both parties fully supported funding this program. They recognized how important it is for families who need help caring for loved ones.

Republicans say it’s not enough

Republicans aren’t celebrating this budget. Assemblymember Carl DeMaio called it a get-my-paycheck budget that punishes working families. He pointed to tax hikes and said the state has a spending problem, not a revenue problem.

GOP lawmakers also slammed the $50 million for implementing Proposition 36 as totally insufficient. They say the public safety measure actually needs $400 million a year to work properly. Some called it an unfunded mandate on counties.

What about your gas prices?

Republicans also criticized California’s high gas prices, arguing that state taxes and regulations are making life more expensive for drivers. AAA listed California’s average regular gas price at $5.642 per gallon on June 18, compared with a national average of $3.999.

California’s fuel excise tax is scheduled for its routine annual inflation adjustment on July 1, while the June budget package focused on other revenue measures, including software taxes, health plan taxes and business tax credit limits.

Republicans say the state should pursue reforms to lower costs at the pump, while Democrats argue that key revenues help fund public services and transportation needs.

The debate over taxes and affordability is increasingly spilling into California politics. For more on the issues shaping public opinion across the state, check out how the California election system faces renewed attention after Trump’s remarks.

What happens next?

The budget isn’t done yet. Lawmakers and Governor Newsom have until June 30 to work out their differences. They’ll meet over the next two weeks to hash out the final details before the new fiscal year starts on July 1.

Voters might also get a say. Lawmakers are considering a November ballot measure to raise the rainy day fund limit. That would let the state save more money for future lean years. But first, they need to agree on the proposal by June 25.

While lawmakers debate California’s financial future, the state is also dealing with challenges much closer to home. Check out how California inland heat could test June norms this week to see what residents may be facing in the days ahead.

Think your health insurance premiums are already too high? This budget might add $400 more to your family’s yearly costs. Drop a comment with your thoughts and hit that like button if this update caught your attention.

This slideshow was made with AI assistance and human editing.

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