Gov. Gavin Newsom, California Democrats announce budget deal. Vote expected Monday
Gov. Gavin Newsom and California Democrats announced a budget deal Friday that pushes off some healthcare cuts and changes that alarmed advocates and were previously rejected or delayed by legislative leaders.
Newsom had called for raising a monthly premium for undocumented people using the state’s Medicaid program, known as Medi-Cal, to $50 from $30. But Friday’s agreement instead requires California’s next governor to come up with a figure in between those two numbers.
The deal also delays the elimination of dental help for undocumented adults a year later than Newsom proposed.
“California leaders aimed to balance this year’s budget on the backs of hard-working, vulnerable immigrants, but our communities fought back and protected the health care our lives depend upon,” Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network, said in a statement.
Assembly and Senate Democrats had delayed or rejected several healthcare cuts Newsom had proposed when they passed a first draft of the state’s spending plan on June 15. One of them was a plan by Newsom to put a $2,000 assets limit on low-income elderly people receiving Medi-Cal, which also did not make it into Friday’s agreement.
“This budget demonstrates responsible choices that protect our fiscal strength while continuing to invest in what matters most,” Newsom said in a statement. “In California, we support working families, create more opportunity, and build safer, healthier communities.”
Friday’s deal also includes a compromise on a homeless-related grant program, which was another area of disagreement. Legislators had called for the state to set aside $900 million for the Homeless Housing, Assistance, and Prevention program, $400 million more than the governor had originally proposed.
The new spending proposal has the $900 million figure, but it also includes a provision that requires recipients of the grant money to spend all of it or risk receiving less money in future rounds of the program.
The Department of Finance by March 1 will also be required to come up with one or more ways legislators could “hold the state’s largest corporations accountable for the taxpayer costs of their employees enrolled in the Medi-Cal program” as part of the newly announced deal. The idea was pushed by legislators in their June 15 budget.
One of the options presented must be placing a premium on companies with at least 250 employees, who don’t offer health coverage, to offset the cost to taxpayers for having their workers enrolled in Medi-Cal, according to the deal.
Arnulfo De La Cruz, President of the SEIU California labor union, celebrated the inclusion of that requirement. The group is part of a statewide effort to increase what corporations pay in taxes.
“We refused to accept a rigged system where working people pay more in taxes than many profitable corporations,” De La Cruz said in a statement.
The agreement, though, does not include a plan to close another state prison, which was supported by legislative Democrats but not Newsom.
Despite some large gaps heading into Friday, legislative Democrats and the governor had already closed several other ones. In recent weeks, the Legislature approved bills that raise taxes on commercial health insurance plans and software programs and voted to put both a housing bond and a constitutional amendment to change how the state’s “rainy day” savings account operates in front of voters in the November election. Those policies are supported by Newsom.
The latest budget is notable because it is Newsom’s last spending plan before he completes his second term as governor, and it also benefited heavily from a spike in tax revenue driven by a surging stock market.
The Legislative Analyst’s Office, which advises the Legislature on fiscal and policy matters, and Republicans repeatedly have issued warnings that the state has been on an unsustainable spending path that will lead to large deficits if the stock market, and the tax revenue it generates, drops significantly.
Newsom and Democratic leaders have argued that their plans are fiscally responsible and a counterweight to cuts and other policy choices pushed by President Donald Trump and his administration.
“We’re protecting health care, preserving food programs, investing in housing at record levels and building reserves to fight back no matter what Trump and Republicans throw at us,” Assembly Speaker Robert Rivas, D-Hollister, said in a statement.
The Governor’s Office said the agreement includes $29 million to help with staffing increases, equipment upgrades for counties to speed up vote counting, along with other election-related spending. Trump and other Republicans have criticized how long it takes elections offices across the state to count ballots, which is now the subject of federal investigations.
Senate and Assembly budget committees are scheduled to hold hearings Monday morning to review the spending plan and legislators in both chambers are expected to vote on the budget later in the day. The state’s new fiscal year begins July 1.
This story was originally published June 26, 2026 at 7:25 PM.
