Thanks to surging revenues tied to California’s artificial intelligence boom, Gov. Gavin Newsom’s $348.9-billion budget proposal includes only a modest $3-billion deficit — $15 billion less than November estimates.
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Many expected to see significant belt tightening, my colleague Melody Gutierrez wrote, after the nonpartisan Legislative Analyst’s Office warned that California faces a nearly $18-billion budget shortfall.
But on Friday, the Newsom administration said it is projecting a much smaller deficit after assuming higher revenues over the next three fiscal years.
Still, California and its state-funded programs face fiscal uncertainty due to rising costs and federal funding cuts in Washington.
Changes to Medi-Cal for immigrants
California’s budget proposal didn’t include extra funding to help offset the massive cuts to Medicaid and other public assistance programs by President Trump and the Republican-led Congress. As a result, millions of low-income Californians are expected to lose healthcare coverage and other benefits.
Immigrants will take the biggest hit as the budget proposal would divide them to receive different levels of care, CalMatters reported.
While California currently offers state-funded, full-scope Medi-Cal to undocumented immigrants, other immigrants — including refugees and asylees — would be restricted to a program that covers emergencies and pregnancy care only.
“If the state doesn’t step up, communities across California will crumble,” California State Assn. of Counties chief executive Graham Knaus told The Times in a statement.
The governor is expected to revise the plan in May using updated revenue projections after the income tax filing deadline, with lawmakers required to approve a final budget by June 15.
Overhauling California’s education system
The budget proposal isn’t all bad news for the state’s education system. It calls for $350 million more for the University of California and $365 million more for the California State University system.
The proposal also calls for reshaping who runs the state’s schools, aiming to centralize oversight of the Department of Education. The plan would implement long-standing recommendations that criticize California’s fragmented education governance, Melody wrote.
The governor said the change would better align education efforts from early childhood through college.
“California can no longer postpone reforms that have been recommended regularly for a century,” Newsom said in a statement. “These critical reforms will bring greater accountability, clarity, and coherence to how we serve our students and schools.”
The proposed overhaul raised concerns for state Supt. of Public Instruction Tony Thurmond, who said in a statement Friday that “this governance proposal doesn’t establish any structures proven to move the needle on student outcomes and instead shifts authority to implement TK-12 education programs away from the official who California voters have elected to lead our state’s public schools.”
The week’s biggest stories 
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(Genaro Molina/Los Angeles Times)
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Hikers Evelyn Torres and Emanuel Leon soak at Montecito Hot Springs.
(Christopher Reynolds / Los Angeles Times)
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