California lawmakers and Governor Gavin Newsom are expected to pass the largest state spending plan in California's history, a $351.7 billion budget for the upcoming fiscal year.
This represents a 40% increase in total state spending since Newsom took office in 2019. The first budget under Newsom in 2019-2020 was $208 billion.
Main Drivers of Spending Growth
According to the Department of Finance and the California Legislative Analyst's Office (LAO), the increase is primarily due to higher spending on education and health and human services.
The LAO analysis found that 70% of the spending growth is to sustain and pay for programs established before Newsom took office. Specific areas of growth include:
- Community colleges: Additional $37 billion
- Medi-Cal (health insurance for lower-income individuals): Additional $25 billion
- Department of Developmental Services, In-Home Supportive Services, child care slots, and universities: Billions more
Medi-Cal Expansion
Governor Newsom expanded Medi-Cal to cover more people, including undocumented immigrants. Currently, about 2 million undocumented immigrants are on Medi-Cal. New adults ages 19-65 are not eligible to enroll, but undocumented children and seniors are.
Starting July 2027, the state will charge each undocumented individual $50 per month for coverage.
Legislative Debate
During a budget committee hearing, Republican and Democratic leaders argued over spending priorities:
- A Republican assemblymember stated that the state spends 8 to 10 times more on services for undocumented immigrants than on veterans.
- A Democratic assemblymember responded that the comparison is "apples and oranges" and noted additional funds were added for veterans.
AI Technology Deal
Governor Newsom announced a deal with the AI company Anthropic, allowing state agencies to use its AI technology at a discount. The cost was not immediately disclosed, and it is not part of the current state budget. The LAO noted that $9 billion of spending growth is related to state operations, including IT.
Budget Approval Timeline
Lawmakers are expected to finalize the vote by around 6 p.m. tonight, and the governor is expected to sign it by the end of the night.