Golden State legislators strike budget deal days before deadline

SACRAMENTO, Calif. (CN) — California lawmakers on Monday touted a budget agreement they’ve reached between legislative houses, noting its fiscal plan closely mirrors the solutions outlined last month by Governor Gavin Newsom.  

Lawmakers in their budget — a version of which must be signed by June 15 — noted that the solutions offered by Newsom in his May draft wouldn’t bridge the monetary gap, a problem discovered after last month’s reveal. Lawmakers now intend to fix a $12 billion deficit through reducing $3.5 billion from the 2025-26 fiscal year budget, drawing $7.8 billion from revenue and borrowing, and getting $1 billion from delaying or deferring certain spending.

“While we have made many tough but necessary decisions to achieve a balanced budget, we will never waver in our commitment to all Californians,” Assembly Speaker Robert Rivas and Senate President Pro Tempore Mike McGuire said in a joint statement. “This budget fights to protect health care access for millions of the most vulnerable families, speeds-up housing construction, and makes homes more affordable.”

Democratic lawmakers, a supermajority in the Legislature, wrote in their budget summary that, in January, Newsom presented a draft budget that required no money from reserves. Action taken last year fixed the anticipated shortfall.

However, the Los Angeles wildfires and the administration of President Donald Trump soon changed that view.

“First and foremost, the policies of the new federal administration — in particular the tariff increase policies — have caused economic forecasts throughout the world to be significantly downgraded,” the lawmakers wrote in their budget summary. “The federal policies have greatly impacted California’s economic forecast as well, with the May revision projecting slower growth and the Newsom administration indicating that absent federal economic policy changes, state General Fund revenues would be $16 billion higher.”

The Legislature made some changes to Newsom’s draft budget. It added a housing package, which includes, among other items, $500 million in low-income housing tax credits and $120 million for the multifamily housing program.

It also tweaked Newsom’s proposed changes to the state’s Medi-Cal program.

Newsom in May called for freezing enrollment in the program’s expansion for undocumented adults and creating a $100 monthly premium for those over 19 years old.

Lawmakers reduced the monthly premium to $30 a month, limited the age range of those affected to between 19 and 59, and didn’t start the modification until January 2027.

The Legislature also pushed back on Newsom’s suggested cap on overtime hours for in-home supportive services providers and his plan to eliminate those services for undocumented state residents.

Those, and other, proposed changes by the governor are a concern to some legislators. Assemblymember Jeff Gonzalez, an Indio Republican, is planning a Tuesday press conference about the program.

A large point of contention between the parties is funding for Proposition 36.

Republicans on Monday held a press conference about that November public safety measure, which passed overwhelmingly at the polls.

That ballot measure increased penalties for certain theft and drug crimes and mandated treatment for others. Republicans earlier this year were quick to accuse Newsom of not respecting the voters’ will, as he included no funding for it.

Under the Legislature’s plan, the measure has $100 million of one-time funding.

Republicans on Monday called for $400 million in ongoing funding.

“Already, we’re making progress,” said Assemblymember and Minority Leader James Gallagher, of Yuba City, of the money added. “This is part of a bigger theme. We have allowed crime to run rampant in California.”

Gallagher pointed to the weekend protests in Los Angeles over federal immigration enforcement, saying that some people threw bricks at officers’ vehicles.

Yolo County District Attorney Jeff Reisig said authorities have arrested thousands of people who qualify for mandated treatment since the measure passed. However, the state lacks enough money to pay for it.

“Many of these people are sitting in jails, waiting for treatment, resources,” he added.