California Dems hope for a ‘miracle’ in budget proposal. Is that realistic?
AI-generated summary reviewed by our newsroom.
- California Democrats postponed over $1.7 billion in cuts, betting on future revenue.
- Lawmakers plan internal transfers and borrowing to offset shortfalls this year.
- Officials proposed tax studies targeting corporations to boost long-term revenue.
California’s Democratic leaders rejected a slew of Gov. Gavin Newsom’s proposed cuts to programs in their budget agreement released Monday, and postponed several more. The Legislature and governor are tasked with finding solutions for a $12 billion deficit for the upcoming fiscal year.
During a news conference Monday evening, Senate Budget Chair Scott Wiener, D-San Francisco, said the Legislature would not accept cuts to In Home Supportive Services, nor certain cuts to Medi-Cal providers, nor to public transportation. Some other suggested cuts would happen in 2027, giving the Legislature time to find a solution.
“I hope something turns around in the economy,” Wiener said. “You never know how things go.”
Wiener’s colleague, state Sen. Akilah Weber Pierson, D-La Mesa, who chairs the budget subcommittee on health, echoed his remarks.
“We have pushed things out for two years, because hopefully there will be a miracle, and we find ourselves at a better point for revenue,” she said.
What that “miracle” will be is unclear. The budget agreement outlined the Legislature’s plans to develop revenue sources, but there were few specifics.
In the meantime, lawmakers want to compensate for the reduction in cuts with cash the state has on hand, through billions in internal transfers and borrowing. But with expenditures outpacing revenues, the cash won’t last forever, and with President Donald Trump’s ever-present threats to pull federal funding, the state may encounter more strain on its resources soon.
Delaying cuts
The Legislature’s budget agreement, which still must be voted on before Sunday, would delay $1.1 billion in cuts to community clinics, as well as $300 million in cuts to dental providers and an elimination of dental benefits to undocumented people. It will also push the start date of $30 Medi-Cal premiums for undocumented people — lowered from Newsom’s proposed $100 — by 6 months, to July 2027.
When asked about the plan to delay and hope for the best, Chris Hoene, Executive Director of the California Budget & Policy Center, said most factors seem to be pointing in the wrong direction.
“The only changes that are coming are things outside of their control that could be negative and make things worse.”
Hoene’s organization has recommended that the state increase taxes on corporations that benefited from tax cuts in President Trump’s first term, and stand to benefit more during his second.
“I think state leaders don’t have to wait to see what federal leaders do next to say: ‘Hey, we think we should make the tax system more fair.’”
State leaders do seem to be showing interest in taxing large corporations. There were two revenue-generating directives in the budget agreement, one to have the Senate develop a “contribution requirement” for large employers with employees on Medi-Cal and one to have the Legislative Analyst’s Office study tax reform options to strengthen revenues without hurting the economy.
The agreement aims for both of those to be available for use by the Legislature within the next few years.
Lucy Dadayan, a principal research associate with the Urban-Brookings Tax Policy Center, agreed a miracle seemed unlikely, but pointed out that the state is expecting income tax for people whose filing deadline was extended due to the Los Angeles wildfires.
“We know that California is going to get strong revenues from capital gains realizations in October,” she said. “But fast forward, we don’t know what’s going to happen.”
Hearings on the budget continue this week. Legislators will be able to vote on it on Friday, and the deadline to pass the budget is Sunday. The Legislature and governor must agree upon the budget by June 27.
This story was originally published June 10, 2025 at 4:07 PM.
