The California Legislature has approved a preliminary budget of $325 billion, a record. The final details must be finalized prior to the commencement of the new fiscal year on July 1.
This budget sets a new record, as polling indicates that an increasing number of Californians are now in favor of reduced taxes in exchange for fewer government services. Until 2023, the majority of Californians supported higher taxes and more services in nearly every PPIC survey since the question was added in 2003, according to the nonpartisan Public Policy Institute of California.
In the past decade, state spending has doubled, while the population has remained relatively stable. According to officials, the average salary of state employees has increased by 42% from 2019 to $177,000.
“This budget continues to overspend while hoping for a growth in revenue instead of cautiously preparing for the worst,” said state Sen. Roger Niello, R-Fair Oaks, who serves as vice chair of the Senate Budget and Fiscal Review Committee.
Some of the more proactive cuts proposed by California Gov. Gavin Newsom from the taxpayer-funded Medi-Cal public health care system, including benefits for illegal immigrants, were only partially adopted by the Legislature.
The governor’s proposals included the requirement for illegal immigrants enrolled in Medi-Cal to pay $100 per month in premiums and the prohibition of new illegal immigrants who are 19 years of age or older from enrolling in Medi-Cal beginning in January 2026.
Additionally, Newsom advocated for the reintroduction of an asset test for Medi-Cal enrollment for seniors, the cessation of Medi-Cal coverage for weight loss drugs like Ozempic, the termination of in-home supportive services coverage for illegal immigrants, and the restriction of in-home supportive services overtime.
The majority of the governor’s proposals were incorporated into the adopted budget; however, the issue of illegal immigrant Medi-Cal premiums was not addressed.
The Legislature’s analysis of the adopted budget predicts that ceasing the enrollment of new illegal immigrants in Medi-Cal will result in a savings of up to $3.3 billion annually. Additionally, the elimination of weight loss drug coverage for Medi-Cal will result in a savings of up to $680 million annually. The reintroduction of Medi-Cal asset limits for seniors at $130,000 will result in a savings of up to $510 million annually.
Despite the savings from the governor’s proposed budget, the state is still facing “persistent future deficits” of $10 billion to $20 billion per year, according to the state-funded Legislative Analyst’s Office’s Memorial Day weekend report on state finances.
“To balance the budget going forward, the Legislature will likely need to adopt additional solutions that increase ongoing revenues or reduce ongoing spending — both of which involve the most difficult and consequential trade-offs for policymakers,” wrote the LAO.
It is uncertain how lawmakers will attempt to address the state’s deteriorating financial situation, particularly in light of the polled preference of voters for reducing state services and lowering taxes, as the new budget for the fiscal year sets yet another record.
