By Joe W. Bowers Jr.

California Black Media

On May 14, Gov. Gavin Newsom presented his revised 2025–26 state budget, a $321.9 billion proposal designed to close a projected $11.9 billion deficit while maintaining core investments in education, health care, and behavioral health. During a 90-minute presentation, Newsom started by touting California’s status as the world’s fourth-largest economy before laying out fiscal adjustments needed to guide the state through what he described as an “uncertain and volatile” climate.

“We’re not just the fourth largest economy in the world — $4.1 trillion in annual output — we lead the nation in manufacturing, innovation, agriculture, and trade,” Newsom said. He blamed much of the current economic downturn on federal policy and called the fiscal volatility the state is experiencing “the Trump Slump.”

The May Revise uses a combination of $5 billion in spending cuts, $5.3 billion in borrowing and fund transfers, and $1.7 billion in fund shifts to help balance the budget. No new state taxes are proposed, but reserves are projected to remain at $15.7 billion.

Newsom’s biggest cuts land on Medi-Cal, the state’s health coverage program that serves over 14 million low-income Californians — including 38% of Black residents. The Governor proposes freezing enrollment for undocumented adults starting in 2026, imposing a $100 monthly premium, and eliminating access to long-term care and dental services for undocumented people. Additional cuts would bring back asset tests for seniors and reduce hours for caregivers in the In-Home Supportive Services (IHSS) program — a workforce predominantly staffed by Black women.

Despite the cuts, the state will continue investing in behavioral health services. The budget maintains funding for Proposition 1, which expands mental health and substance use treatment, including housing. It also supports the launch of BH-CONNECT, a multiyear effort to improve behavioral health care for high-need Medi-Cal enrollees, including those at risk of homelessness or involved in the justice system.

“We’ve reached a point where Medi-Cal expenditures are outpacing our revenue growth,” said Budget Director Joe Stephenshaw. “This budget tries to bring balance without dismantling core health services.”

The May Revise continues strong support for K–12 education, proposing $25,176 in total per-student funding from all sources. Of that, $18,671 comes from Proposition 98, with a 2.3% cost-of-living adjustment applied to the Local Control Funding Formula (LCFF), which directs more resources to districts serving high numbers of Black students, English learners, and low-income families. The budget also maintains funding for universal transitional kindergarten, free school meals, and extended day and summer programs.

In a notable addition, Newsom proposes new funding to support evidence-based reading instruction, literacy coaches, and teacher training. “In a really tight budget year, prioritizing reading for California kids and investing $200 million is real leadership,” said Marshall Tuck, CEO of EdVoice.

State Superintendent of Public Instruction Tony Thurmond applauded Newsom, saying, “The Governor’s proposed revision would fund critical programs that we know improve student achievement.”

The University of California and California State University systems will also see budget relief. Initially facing 8% cuts, the systems will now see reductions of just 3%, a move UC President Michael V. Drake said, “demonstrates his strong commitment to California’s students.”

However, the California School Boards Association warned about the long-term impact of Newsom deferring $1.3 billion in Prop. 98 funding. “This is the second consecutive year the budget has contained some form of unconstitutional Prop 98 manipulation,” said CSBA President Dr. Bettye Lusk.

The budget holds the line on homelessness funding but includes no new allocations. Newsom expressed frustration with local governments, saying, “I’m very negative about the performance at the local level,” while noting that California’s homelessness rate did not reflect the national 12% surge in unhoused individuals. The state only reported a 0.45% increase in its unsheltered population during 2024.

However, the absence of new investments comes as Black Californians — who make up just 6.5% of the state’s population but over 30% of its unhoused residents — remain disproportionately impacted. While a new state housing and homelessness agency and a future infrastructure bond are in development, new funding from those initiatives are unlikely to reach communities before 2027.

Newsom, in his May Revise presentation, did not address the California Legislative Black Caucus’s (CLBC) “Road to Repair” legislative package. The package includes proposals to establish a state reparations agency, launch a guaranteed income pilot program, and invest in housing, education, and health for descendants of enslaved Black Americans.

While Newsom has previously voiced support for exploring reparations, no line-item funding was included for the CLBC’s proposals. However, the budget does allocate $12 million to support the implementation of reparations-related bills already signed into law. The caucus is expected to continue negotiations through budget trailer bills ahead of the June 15 deadline.

The May Revise comes as the State is under attack from the federal government, including efforts by Congress to cut Medicaid, food assistance, and housing programs. Medi-Cal, which makes up more than 64% of all federal dollars flowing through California’s budget, is particularly threatened. Newsom warns that impending federal cuts could force the state to consider deeper reductions.

As budget negotiations move forward, Newsom says his goal is to protect vital services and uphold California’s values.