• California's new $321 billion budget reduces funding for immigrant healthcare amid a $12 billion deficit.
• Governor Gavin Newsom faces criticism for cutting progressive programs for the third consecutive year.
• Budget relies on state reserves and borrowing instead of new taxes to address the deficit.
• Significant changes to Medi-Cal include halting new enrollments for undocumented adults and introducing premiums.
• Republican lawmakers condemn the budget for lacking long-term fiscal responsibility.

California Governor Gavin Newsom signed a $321 billion budget that aims to close a $12 billion deficit by scaling back several key progressive initiatives, including a major healthcare expansion for low-income undocumented immigrants. This decision marks the third year in a row that the state has had to implement cuts to programs typically supported by Democratic leadership, influenced by declining revenues and economic uncertainties affecting state funding, according to latimes, indiatimes, and newsweek.

The budget plan, backed by state leaders, is structured to manage the deficit primarily through the use of state reserves and internal borrowing from special funds, rather than imposing new taxes on residents. Governor Newsom emphasized that the budget is balanced and focused on supporting Californians during challenging economic times exacerbated by federal policies impacting state revenue, including tariffs and immigration enforcement. In May, Newsom warned that these factors could lead to a reduction in revenue by as much as $16 billion, according to latimes and indiatimes.

Significantly, starting next year, California will cease enrolling new adult undocumented immigrants in its Medi-Cal program and will enforce a $30 monthly premium by July 2027 for those remaining enrolled, including some legally residing individuals under 60. This marks a retreat from California's ambitious healthcare expansions aimed at providing universal coverage and is likely to impact hundreds of thousands. Critics state that these cuts severely undermine immigrant healthcare access, reflecting a broader trend of disinvestment in progressive policies, according to latimes, indiatimes, and newsweek.

Moreover, the new budget eliminates $78 million in funding for mental health services and cuts dental care for low-income residents by 2026. However, it does preserve funding for certain essential services like in-home care and Planned Parenthood despite the significant cuts elsewhere, demonstrating a more complex fiscal strategy amidst a tough economic landscape. The budget’s passage depends on the approval of related housing legislation by a close deadline, which could render the entire budget void if not addressed, according to latimes, indiatimes, and newsweek.

Republican leaders have criticized the budget, claiming that the lack of fiscal restraint may contribute to ongoing budgetary issues. They argue that this approach does nothing to address affordability challenges for California residents and that the cuts disproportionately affect marginalized communities. "We're increasing borrowing, we're taking away from the rainy day fund, and we’re not reducing our spending," stated Republican state Senator Tony Strickland prior to the budget's approval. This perspective highlights the ongoing divisiveness in California’s approach to budget management, stressing that these decisions may not alleviate long-term economic burdens, according to latimes, indiatimes, and newsweek.