![\"The](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/06\/SAC_0056_Capitol_HA_260506.JPG\" "\\"The")
<\/p>\n <\/p>\n
The California state Capitol building seen from a drone on Thursday, April 30, 2026. Democrats in the legislature announced a deal on a new state budget.<\/p>\n
HECTOR AMEZCUA<\/p>\n
hamezcua@sacbee.com<\/p>\n
Democratic leaders in the Assembly and Senate announced an agreement Thursday on a budget for the upcoming fiscal year that rejected or delayed many of the healthcare cuts proposed by Gov. Gavin Newsom<\/a>.<\/p>\n The step does not mark an end to budget negotiations, but instead brings the two chambers in line on their proposals to craft a final agreement with Newsom.<\/p>\n The deal leaves the Senate\u2019s suggestion of a tax on corporations who leave their employees reliant on the state\u2019s Medicaid system, called Medi-Cal, by the wayside for this year. Instead, the agreement leans on a Newsom-proposed tax on commercial health insurance plans to raise more revenue, which is expected to increase the cost of many working Californians\u2019 monthly premiums<\/a>.<\/p>\n Officials with Senate leadership said without their advocacy for revenue increases in this compromise, Newsom might not have included any tax measures in his budget proposal at all. Though the governor and Assembly leaders did not adopt the tax mechanisms senators wanted, the agreement includes language requiring the next governor to put forward a proposal for a tax on corporations who leave their employees to rely on Medi-Cal.<\/p>\n \u201cThe Legislature looks to stop drastic cuts to safety net programs that millions of Californians rely on to make ends meet,\u201d said Senate President Pro Tem Monique Lim\u00f3n, D-Santa Barbara, in a statement. \u201cThe Legislature also continues to make responsible budget decisions for the future by laying the groundwork for the Fair Share from Big Corporations Act.\u201d<\/p>\n Senators had proposed a fee per employee enrolled in Medi-Cal which would apply only to corporations that employ more than 100,000 people.<\/p>\n It\u2019s unclear how the next governor, which will either be Democrat Xavier Becerra<\/a> or Republican Steve Hilton<\/a>, will feel about budget language that forces them to, at the very least, craft a tax on such powerful business interests.<\/p>\n The deal delays another politically loaded decision on whether to increase premiums on undocumented immigrants using Medi-Cal. Assembly leaders had previously accepted<\/a> Newsom\u2019s proposal to increase a monthly premium for many undocumented immigrants using Medi-Cal from $30 to $50. Senate budget leaders had flatly rejected the premium increase.<\/p>\n The agreement would also leave that decision for the next governor to hash out with lawmakers.<\/p>\n That was one of several areas where lawmakers either rejected Newsom\u2019s healthcare cuts or delayed them until after he leaves office \u2014 giving the next Legislature a chance to undo them once he\u2019s out of Sacramento.<\/p>\n Lawmakers delayed an imposition of asset limits on Medi-Cal that Newsom had proposed setting at $2,000, which would have affected elderly low-income Californians. Notably, the Legislature would also protect some 200,000 humanitarian immigrants<\/a> who are lawfully present in the country as asylees from losing full-scope Medi-Cal this year. The chambers\u2019 compromise pushes that change into next year\u2019s budget as well.<\/p>\n Cuts Newsom proposed to Medi-Cal\u2019s dental care would also be delayed under the Legislature\u2019s plan.<\/p>\n In social services, the Legislature is rejecting a cut by the governor to popular in-home supportive service care funding for Californians with disabilities \u2014 including older adults and children. Lawmakers also propose a substantive, $80 million investment in legal aid for immigrants swept up in the Trump administration\u2019s deportation crackdown.<\/p>\n The agreement calls for the state to close another prison to cut costs<\/a> and provide $900 million in homeless-related money for local governments and regional organizations \u2014 $400 million more than Newsom had proposed. But the compromise left unresolved questions about how the state will respond to reduced funding for greenhouse gas reduction efforts<\/a>.<\/p>\n Where does the budget head next?<\/p>\n The Legislature is required to pass a budget by Monday<\/a> or go without pay until they do so. The agreement comes about a month after Newsom announced a revised budget plan<\/a>, which was designed to leave the state without a deficit for the next two fiscal years.<\/p>\n That was made easier this year as enthusiasm around artificial intelligence has flooded the state with higher-than-expected tax revenues. California\u2019s budget can rise and fall sharply based on gains in the stock market, which puts the state in good financial position during booms and vulnerable during busts.<\/p>\n The Legislative Analyst\u2019s Office, which advises the Legislature on fiscal and policy matters, warned that the state<\/a> could face deep deficits if the stock market drops sharply because the dramatic rise in revenue has still not been enough to cover the state\u2019s ongoing spending.<\/p>\n Thursday\u2019s deal calls for constitutional amendment to allow the state to increase the amount of money that can be put into the state\u2019s Budget Stabilization Account, known as the \u201crainy day fund,\u201d during strong financial years.<\/p>\n \u201cOur legislative budget agreement prioritizes health care, housing, affordability, and critical safety net programs that our most vulnerable communities rely on,\u201d said Assembly Budget Chair Jesse Gabriel, D-Encino. \u201cAt the same time, we are also committed to fiscal discipline and preparing California to weather future challenges.\u201d<\/p>\n This story was originally published June 11, 2026 at 7:31 PM.<\/p>\n Related Stories from Sacramento Bee<\/p>\n Stephen Hobbs<\/a><\/p>\n The Sacramento Bee<\/p>\n Stephen Hobbs is an enterprise reporter for The Sacramento Bee\u2019s Capitol Bureau. He has worked for newspapers in Colorado, Florida and South Carolina.\n <\/p>\n
\n ![\"Profile](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/06\/20220812_LS_Stephen_Hobbs_016a.jpg\")
\n <\/a><\/p>\n