For the second year in a row, Newsom used his budget presentation to position himself and the state as a foil to President Donald Trump. He described the White House as full of chaos agents and spent considerable time castigating the president for damaging the global and American economy through the war in Iran, unpredictable tariff policies and other actions.<\/p>\n
\u201cThe work of governing is not bluster and threats on social media, but preparing for storms before they arrive,\u201d Newsom\u2019s letter to lawmakers said.<\/p>\n
But the governor, who has raised his national profile by mocking Trump on social media, did use his time in front of reporters on Thursday to take a number of shots at the president, with one slide featuring a meme of Trump and U.S. Treasury Secretary Scott Bessent as Dumb and Dumber and another reimagining Trump\u2019s controversial White House ballroom proposal with a giant Newsom portrait along one wall.<\/p>\n
What\u2019s new in the May Revision?<\/p>\n
Newsom\u2019s budget proposes reducing general fund spending<\/a> by $1.8 billion to try and anticipate a downturn. And it raises some $8 billion in new revenues over the next two fiscal years by limiting corporate tax credits and imposing new fees on some corners of the healthcare and technology industries.<\/p>\n Alongside significant investments in public education, Newsom proposed new funds to bolster wildfire recovery and offset federal cuts to healthcare subsidies. Newsom\u2019s budget would also require community college and K-12 schools offer 14 weeks of parental leave for employees, a significant expansion of the state\u2019s parental leave for state employees. Newsom\u2019s staff described the benefit as \u201cabsorbable\u201d for schools within the growth in funding.<\/p>\n Newsom\u2019s public education investments include $5 billion into a discretionary block grant program for teacher training and student support. He also proposes increasing special education funding by 43%, or $2.4 billion. There is also a $500 million investment in literacy coaches and math support staff at struggling schools.<\/p>\n In the Republican budget response, Senate Budget Committee Vice Chair Roger Niello, R-Fair Oaks, told reporters he didn\u2019t believe the state\u2019s books were balanced, facing a structural deficit that will re-emerge after 2028. That the budget will be balanced through 2028 is also a claim he takes issue with, since the state\u2019s revenue sources are so volatile.<\/p>\n \u201cThis stock market looks a lot like the dot-com crash of 25 years ago,\u201d Niello said. \u201cStock markets never go up forever. And the further they go up in terms of inflated values, the harder the fall. And I\u2019m very concerned.\u201d<\/p>\n Immigrant healthcare fight is coming<\/p>\n Newsom\u2019s preliminary January budget proposal kicked off an uproar from lawmakers who said the governor sought to balance the budget by paring back healthcare for the state\u2019s immigrants<\/a>, including both undocumented people and those legally present in the country through humanitarian visa programs. On Thursday, he stuck to his guns on those cuts, proposing increasing new premiums for people with unsatisfactory immigration status \u2014 undocumented immigrants, DACA recipients and other visa holders \u2014 by $20.<\/p>\n Those premiums have been a point of friction between Newsom and lawmakers since last year. In 2025, he proposed a $100 a month premium, but lawmakers wore him down to $30. Now he is proposing a $50 premium, which his staff said would raise $427 million in the coming fiscal year but would drop to a $314 million saving the following year.<\/p>\n Newsom said the premiums were fair as the cheapest plan on Covered California is $46.<\/p>\n \u201cNone of these things I want to do. I\u2019m just trying to find some balance here,\u201d he said.<\/p>\n The governor also proposed reinstating asset test limits for Medi-Cal applicants<\/a> \u2014 a move advocates say will force older adults to choose between building savings or enrolling in the healthcare program. That proposal could raise close to $500 million by the 2029 fiscal year, according to Newsom\u2019s presentation. Those savings would come through taking people off the Medi-Cal rolls after recalculating their assets.<\/p>\n To counter cuts from the federal government, Newsom proposed a $300 million fund to insulate Californians from the expiration of Affordable Care Act tax subsidies spiking insurance premiums for lower income Americans.<\/p>\n According to a handout published Thursday morning, Newsom\u2019s proposal \u201cwill keep $0 monthly health plans available for lower-income Californians, expand financial help so more middle- and working-class families can afford coverage, and provide new state assistance for Californians earning up to 200% of the federal poverty level.\u201d<\/p>\n Groups advocating for increased healthcare access said the new program wasn\u2019t nearly sufficient given the size of national Republicans cuts to social services and healthcare funding.<\/p>\n \u201cThe governor promoted California\u2019s economic dominance while, in the same breath, making it more difficult for Californians with low incomes to access health care by reinstating harmful Medi-Cal asset limits, expanding work requirements, and increasing Medi-Cal premiums for certain immigrants,\u201d California Budget and Policy Center Director Chris Hoene said.<\/p>\n The center predicted as many as 2 million Californians would lose health coverage because Newsom\u2019s proposal does not sufficiently react to cuts from the federal government. More than 3 million households face loss of food benefit programs.<\/p>\n \u201cSome of the governor\u2019s proposed cuts would add to rather than mitigate that harm,\u201d Hoene said.<\/p>\n Revenue raisers<\/p>\n Surprisingly, Newsom, who has sharply opposed a proposed ballot measure to tax billionaires<\/a> and generally indicated an aversion to raising taxes, proposed a limit on corporate tax credits. Under his plan, California would limit some tax credits to either $5 million or 50% of a company\u2019s tax liability, depending on which represented a higher share of the entity\u2019s tax bill.<\/p>\n He also proposed a tax on certain software sales and a tax on healthcare management companies to raise a combined $2.8 billion this fiscal year and the next.<\/p>\n Two significant corporate tax proposals have gained momentum with lawmakers this year. One would collect billions of dollars more in revenue from multinational companies<\/a> proponents say offshore much of their profits to avoid sales taxes in California. The other imposes a fee on mega corporations whose employees rely on Medi-Cal for health insurance.<\/p>\n Newsom is pairing his tax credit cap with a cut to fees new small businesses must pay the state, according to the handout. His budget proposal also includes a $100 million fund to provide low-interest loans for people rebuilding after wildfires when home insurance falls short.<\/p>\n How we got here and the Legislature\u2019s proposals<\/p>\n Lawmakers began the legislative session in January with two drastically different assessments<\/a> of the deficit. The Legislative Analyst\u2019s Office predicted the state would be $18 billion short and the governor\u2019s office predicted a $2.9 billion shortfall. The LAO expected California would experience a stock market downturn, the likes of which has not materialized, although the office continues to warn it is likely.<\/p>\n For weeks, state and legislative officials have highlighted surging revenues, which an LAO estimate<\/a> found were $25 billion higher than what Newsom had forecasted in January.<\/p>\n Last month, the state Senate outlined their budget framework<\/a>, which called for building up reserves and resisting the governor\u2019s proposed cuts to some education, homelessness assistance and home health service programs. They also proposed delaying the premiums and cuts to dental programs for undocumented immigrants.<\/p>\n The Assembly echoed the Senate\u2019s reluctance<\/a> to make cuts to safety net programs. But it didn\u2019t join with the Senate in their call for a \u201cFair Share Contribution,\u201d a tax on large corporations that have a high proportion of workers on Medi-Cal, California\u2019s Medicaid.<\/p>\n The question of how much federal assistance the Trump administration will hold back from California remains. On Wednesday, Vice President JD Vance announced the government would withhold<\/a> $1.3 billion in Medicaid assistance from California due to the state not doing enough to combat fraud.<\/p>\n Attorney General Rob Bonta has had previous success suing to stop the Trump administration\u2019s freezes to state funding. The attorney general did not immediately indicate whether he\u2019d be taking the White House to court over the $1.3 billion Vance on Wednesday said the federal government would hold back.<\/p>\n This story was originally published May 14, 2026 at 6:01 AM.<\/p>\n Related Stories from Sacramento Bee<\/p>\n Kate Wolffe<\/a><\/p>\n The Sacramento Bee<\/p>\n Kate Wolffe is a former reporter for The Sacramento Bee.\n <\/p>\n