Governor Gavin Newsom has unveiled a revised $321 billion budget for California’s 2025–2026 fiscal year, aimed at closing a projected $12 billion deficit. The plan includes targeted spending cuts, strategic borrowing, and new investments in digital infrastructure.

At a press conference, Newsom attributed the shortfall to federal tariff policies and economic uncertainty, calling it an “assault” on California’s trade relationships. Despite earlier projections of a surplus, the state now faces $16 billion in lost revenue, prompting $5 billion in early program reductions.

Key measures include:

• Enrollment freeze for undocumented adults in Medi-Cal
• $30 monthly premium for some immigrant enrollees starting 2027
• $1.07 billion cut to the Government Operations Agency
• $53 million boost for DMV’s Digital eXperience Platform
• $8 million for generative AI data initiatives
• Creation of a new Business and Consumer Services Agency (BCSA) to streamline licensing and oversight

While some departments face cuts, others—like transportation, health, and higher education—will retain funding. Lawmakers are also considering legislation to support housing and wildfire safety before the budget deadline.