California's budget arrived closer to balance than many had feared — and with Gov. Gavin Newsom's stamp on what may be one of his last spending plans.
A gap closed mostly with revenue
The roughly $352 billion plan for fiscal 2026-27 closes a projected shortfall largely through new revenue rather than the deep program cuts budget-watchers had braced for, ABC30 reported. According to that reporting, the turnaround leaned on a restructured health-care provider tax, a new sales tax on certain software, and limits on some corporate tax breaks, helped along by stronger-than-expected income-tax receipts tied to a booming tech sector. Republicans were skeptical of the "balanced" label; state Sen. Roger Niello argued Newsom was "just leaving us with his tab," contending the fixes are temporary and leave a structural gap for the next governor.
Health care: delayed, not resolved
The most contested terrain was Medi-Cal, the state's Medicaid program covering millions of low-income Californians. Lawmakers agreed to delay — but not reverse — a proposed rollback of dental benefits for low-income immigrants in the country illegally, and set aside a plan to raise certain monthly premiums. Advocates welcomed the reprieve; some Democrats called it incomplete. "This is a budget that bought time: Medi-Cal delayed, not resolved," state Sen. María Elena Durazo said, per ABC30.
What it funds
On the spending side, the plan reflects familiar Newsom priorities: roughly 23,000 new subsidized child-care slots, continued free school meals, and expanded broadband, while preserving previously enacted minimum-wage increases for fast-food and health-care workers. Some climate spending decisions, including for the cap-and-trade program, were deferred to the next administration. The budget also set aside funds to modernize vote-counting equipment and support voter education.
A parting argument
Newsom, who is term-limited and leaves office in January 2027, cast the budget as a rebuttal to critics of progressive governance. "To every other state across our country — come to California," he said, per ABC30, presenting the plan as evidence that social investment and fiscal discipline can coexist. The governor has not ruled out a national run, and allies describe the budget as part of cementing his record. His successor will be chosen in a closely watched race. The same week, Newsom also signed a separate measure narrowing the state's mental-health diversion program, CalMatters reported — one of a cluster of end-of-session actions shaping his final stretch in office.
