Gov. Newsom and Lawmakers Strike Budget Deal: Cuts Made, Core Services Preserved

July 2, 2025

of California's 2025-26 Budget Deal California has approved a $321. 1 billion state budget for the 2025-26 fiscal year, addressing a $46. 8 billion shortfall through various fiscal measures including cuts, delays, and revenue shifts.

Who is affected

Public school students and educators benefiting from $114.6 billion in Proposition 98 funds
Higher education students at UC, CSU, and community colleges whose base funding was preserved
Undocumented adults ages 19-59 who will face new $30 monthly Medi-Cal premiums starting July 2027 and enrollment freezes beginning January 2026
Low-income seniors and people with disabilities affected by the reinstated $130,000 Medi-Cal asset test
Homeless individuals and potential homebuyers targeted by various housing programs
Black Californians and other vulnerable communities whose core services were mostly protected but face some new restrictions
Schools recovering from the 2025 Los Angeles wildfires receiving special support

What action is being taken

The state is implementing a 2.3% cost-of-living adjustment for the Local Control Funding Formula
Officials are distributing $1.7 billion in discretionary block grants for student needs
The state is preserving base funding for the University of California and California State University systems
The government is continuing to fund the Middle Class Scholarship at 35% of award levels
Community colleges are receiving $100 million for enrollment growth and $60 million for student support
The state is providing $500 million for the Homeless Housing, Assistance, and Prevention program
Officials are allocating $100 million for encampment resolution

Why it matters

This budget represents California's response to significant fiscal challenges while attempting to maintain essential services during economic strain. The protection of education funding preserves access to public schools and higher education institutions that serve diverse communities, including Black Californians. The changes to Medi-Cal eligibility create new barriers for undocumented residents and seniors, potentially limiting healthcare access for vulnerable populations. The budget's reliance on one-time solutions—including delays, deferrals, and borrowing—raises concerns about long-term fiscal stability. The compromise between maintaining services and achieving fiscal balance reflects the difficult trade-offs required during budget shortfalls, with impacts that will be felt across various communities and demographic groups.

What's next

No explicit next steps stated in the article, though it mentions lawmakers noted that further adjustments may be needed depending on Congressional debates about federal funding that could affect California.

Read full article from source: The San Diego Voice & Viewpoint