California Legislature passes budget, talks with Gov. Gavin Newsom to continue

Stephen Hobbs and Andrew Graham, The Sacramento Bee on Jun 16, 2026

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The California Legislature on Monday passed the first draft of a budget for the upcoming fiscal year, but the debate over what the state’s final spending plan will look like is unresolved.

The almost $356 billion deal was driven by Democrats who showed broad support for the placeholder agreement, which was struck by leaders in both the Assembly and Senate and announced last week.

“We made some responsible decisions as we move forward to ensure that Californians don’t feel and bear the brunt of what’s already coming to us from the federal government,” said Senate President pro Tem Monique Limón, D-Santa Barbara.

The approval Monday was the product of a state constitutional deadline that requires legislators to pass a spending plan by June 15 or forgo their pay until they do. But it also a formal rejection of healthcare cuts proposed by Gov. Gavin Newsom in response to changes forced on California by President Donald Trump and concerns over the state’s future deficits.

Unlike in Newsom’s proposed budget, the deal approved by lawmakers Monday will push off a decision of whether to increase premiums for undocumented immigrants using the state’s Medicaid coverage, called Medi-Cal. It also delayed an imposition of asset limits on Medi-Cal coverage and cuts to dental care and rejected a cut to in-home supportive service care.

Those choices and others by the legislative Democrats were celebrated by advocates, but negotiations with the Governor’s Office will continue this month. It is possible that the lawmakers may not ultimately get all that they want.

The approval Monday was met with united criticism by Republicans, who not only disagreed with the budget’s policies, but also said the deal did not placate concerns about the state’s financial health. Despite a surge in tax revenues from a soaring stock market, California is still spending more than it is bringing in, a concern that has been repeatedly raised by the Legislative Analyst’s Office, which advises the Legislature on fiscal matters.

“The way that we have built this budget is so irresponsible,” said Assembly Budget Committee Vice Chair David Tangipa, R-Clovis. “It will collapse — there’s no way around it — when there is a correction in the market.”

The budget approved by legislators has even rosier predictions for state revenue than what the Newsom administration predicted just last month.

The approved budget did not include tax increases pushed by Newsom on digital software sales, private health insurance companies and certain businesses. But Senate and Assembly leaders said they would accept those proposals in a final budget when they announced their deal last week.

Senate Budget Committee Vice Chair Roger Niello, R-Fair Oaks, said Democrats should not be raising taxes, but instead be taking a critical look at state programs that were created or increased in recent years to ensure that they are achieving what they were intended to.

“That,” he said, “would provide a blueprint of where we can bring expenditures back in line with existing revenue trends.”

Some Democrats were not enthusiastically behind the deal and said they wanted to see the state spend more on education and to protect people from losing Medi-Cal coverage.

That said, Democratic leaders emphasized that the state had effectively responded to the sweeping healthcare and social service cuts pushed by President Donald Trump and Congress while balancing the state’s other needs.

“We have done the work to protect those programs and services that middle class families, that working families, that our most vulnerable rely upon,” said Assembly Budget Chair Jesse Gabriel, D-Encino.

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