Newsom Unveiled Revised State Budget Featuring $12B Deficit
Sacramento, CA — In a $322 billion 2025-26 revised budget plan unveiled Wednesday by Governor Gavin Newsom, calls to reduce state Medicaid coverage for undocumented immigrants, stop covering some weight-loss medications, and redirect funds from a major climate program to support state fire response.
“California is under assault,” Newsom said. “We have a president that’s been reckless in terms of assaulting those growth engines.”
The governor’s proposal seeks to close a $12 billion budget deficit. One way Newsom proposes to close that deficit is a pause in enrolling more low-income immigrants without legal status for state-funded health care benefits in 2026. He also wants to start charging people who are already enrolled a $100 monthly premium in 2027. The changes won’t impact children. Newsom’s office says the proposal could save the state $5.4 billion by 2029. Regarding the deficit, Newsom points to the economic policies of the Trump administration, a shaky stock market that reduced the amount of money that rich taxpayers paid, and a drop in international travel.
“California’s fundamental values don’t change just because the federal winds have shifted,” Newsom said in a statement. “Even as the Trump Slump slows the economy and hits our revenues, we’re delivering bold proposals to build more housing, lower costs for working families, and invest in our kids.”
Republican lawmakers criticized the governor for blaming all the state’s woes on Trump. Instead, they argued that the budget woes are a direct result of their poor prioritization and unsustainable budgeting practices.
Mother Lode Assemblyman and Vice Chair of the Assembly Budget Committee, Heath Flora, countered, “Republicans in both chambers have always looked for ways to make the budget sustainable, and sometimes that means making cuts. We just disagree with the governor on where those cuts and investments should be made, and so we’ll continue to work with our colleagues to ensure that the final budget continues to fund critical services for Californians.”
Newsom now opens budget negotiations with lawmakers. California’s annual budget must be balanced by law. In January, Newsom originally presented a proposal that did not include a predicted deficit. His updated plan is already on its way to state lawmakers, who must negotiate until the middle of June before a final budget act is required by the end of next month. Click here for a closer look at the revised budget.
