SACRAMENTO — On Thursday, Senate President pro Tempore Monique Limón and Speaker of the Assembly Robert Rivas and announced a 2026-27 budget agreement.

With the passage of H.R.1, critical safety net programs are on the verge of losing billions annually. While the state cannot backfill all lost federal funding the Senate and the Assembly are delivering a responsible, compassionate budget that protects the services people rely on the most. 

This budget also builds a foundation for the future by:

● Prioritizing new revenue to preserve human services and programs without new taxes on families or small businesses

● Investing in housing opportunity and affordability

● Sustaining our commitment to funding for schools and classrooms, wildfire prevention, and crime victims

● Setting-aside billions in reserves for a rainy day

The Senate and the Assembly intend to keep delaying, softening, or eliminating some of the more harmful proposed cuts brought about by the Trump administration, as budget conditions allow.

“The two-party agreement represents the California State Senate's commitment to fight for services essential to the Golden State, including healthcare, childcare, and the long-term fiscal health of our state. The Legislature looks to stop drastic cuts to safety net programs that millions of Californians rely on to make ends meet. The Legislature also continues to make responsible budget decisions for the future by laying the groundwork for the Fair Share from Big Corporations Act. Thank you to our partners in the Assembly, including Speaker Robert Rivas,  for their work on this plan.”

Senate President pro Tempore Monique Limón

“Trump’s agenda is failing, prices are rising, and his cuts are gutting the programs working families rely on most. This budget fights back: protecting health care and food programs, investing in affordable housing, and banking billions in reserves for whatever comes next. We’re not waiting for Washington to get its act together. California is ready — and California won’t back down.”

Speaker of the Assembly Robert Rivas

WHAT YOUR REPRESENTATIVES ARE SAYING

“The Senate and Assembly budget agreement reflects a balanced approach to addressing the state’s budget challenges. The agreement includes approximately $5 billion in additional revenues, balances the budget through the next two fiscal years, cuts the structural deficit in half, maintains strong reserves, and makes progress on Rainy Day Fund reforms. It also rejects proposed cuts to In-Home Supportive Services, rejects the proposed Medi-Cal asset test, and delays pending health care reductions that would have significant impacts on seniors, people with disabilities, and low-income Californians. The agreement also provides funding for additional childcare slots, courthouse maintenance and construction, new judgeships, and important local, regional, and program priorities. There are still unresolved issues, but the Senate will continue working with the Assembly and Governor to finalize a budget that protects Californians, supports working families, and maintains long-term fiscal stability.”

Senator John Laird, Chair of the Senate Budget and Fiscal Review Committee

 “While the Trump administration and Congressional Republicans continue to make life harder for working families, the Legislature is fighting for a budget that is rooted in compassion and opportunity for all. Our legislative budget agreement prioritizes health care, housing, affordability, and critical safety net programs that our most vulnerable communities rely on. At the same time, we are also committed to fiscal discipline and preparing California to weather future challenges. I’m grateful to Speaker Rivas, Pro Tem Limón, and our legislative partners for working together on a budget that reflects our values and will deliver for California families.”

Assemblymember Jesse Gabriel, Chair of the Assembly Committee on Budget

TK DELIVERABLES

The following is an overview of the 2026-27 budget:

Health

● Rejects immediate Medi-Cal asset limit cuts: There is no change to the asset test in 2026-27, and the asset limit would be lowered to $21,000 in 2027-28, instead of moving to the Governor’s proposed $2,000 limit now.

● Delays immediate Medi-Cal dental cuts: Delays dental supplemental payment cuts and UIS dental cuts by 12 months.

● Prevents an automatic UIS premium increase next year: Gives the next Governor authority to decide whether UIS premiums should increase next year, rather than locking in the increase now.

● Delays restricted-scope Medi-Cal changes for asylees and other qualified immigrants: Adopts the Governor’s May Revision proposal to shift asylees and other impacted qualified immigrants to restricted-scope Medi-Cal, but not until 2027-28.

● Funds Medi-Cal eligibility workload: The agreement provides additional funding for county eligibility workload tied to H.R. 1.

● UIS fee-for-service options: Gives the state time to investigate alternatives before moving forward with the UIS fee-for-service transition.

● Delays most clinic cuts: Delays most clinic cuts by 12 months, giving providers and patients additional time.

● Supports distressed hospitals: Authorizes up to $190 million in distressed hospital loans

● Lowers Covered California premiums: Provides $110 million to lower premiums for low-income Covered California enrollees, for a total of $300 million

● Protects reproductive health care and gender-affirming care: Adds $40 million for reproductive health care and $26 million for gender-affirming care.

Human Services & Safety Net

● Rejects IHSS cuts: The agreement fully rejects the Governor’s proposed IHSS cuts, protecting seniors and people with disabilities who rely on in-home care.

● Supports food banks: $100 million for CalFood, including $70 million above the Governor’s proposal, to help keep food banks stocked.

● Funds CalFresh eligibility workload: The agreement provides additional funding for county eligibility workload tied to H.R. 1.

● Rejects Adult Protective Services cuts: Rejects the Governor’s proposed cut to Adult Protective Services.

● Protects immigrant communities: $80 million more than the Governor for immigration legal services across several programs.

● Supports diaper banks: $16.5 million for diaper banks.

Housing & Homelessness

● Invests in homelessness solutions: Provides $900 million for HHAP, the state’s local homelessness program, which is $400 million more than the Governor proposed.

● Builds affordable housing: Provides $500 million for the Low-Income Housing Tax Credit.

● Supports multifamily housing: Provides $200 million for the Multifamily Housing Program.

● Keeps housing bond work moving: Anticipates a November 2026 housing bond to build more affordable homes faster and improve housing opportunity.

● Keeps families housed: $100 million for housing stability programs.

Schools & Child Care

● Delivers higher Prop. 98 funding and a payback commitment: Compared to the Governor’s May Revision, the agreement provides roughly $2.7 billion more for schools and community colleges across 2025-26 and 2026-27, while committing to a reliable schedule to pay districts the $3.9 billion omitted from the May Revision.

● Invests in special education: Increases special education base rates and cost pools by $2.4 billion ongoing.

● Expands community schools: Expands the Community Schools Partnership Program with $1 billion ongoing, including partnerships with Promise Neighborhoods.

● Invests in career technical education: $300 million one-time for career technical education.

● Supports teacher recruitment and retention: $750 million for teacher recruitment and retention strategies.

● Supports paid pregnancy leave for educators: Funds and requires up to 14 weeks of paid pregnancy leave for educators through LCFF.

● Supports community colleges: Ensures more ongoing funding for community college enrollment growth through a fair share of Prop. 98.

● Protects UC and CSU: Protects funding for the University of California and California State University.

● Expands Cal Grant access: Increases the Cal Grant age limit to 30.

● Expands child care access: Adds 22,770 new child care slots, with a priority for children ages 0-3, and protects 6,800 existing slots from the Governor’s proposed reduction.

● Supports child care providers: Provides a 2 percent COLA for all child care programs.

● Protects preschool access: Maintains access growth for 3-year-olds to preschool.

Public Safety

● Responsibly implements Prop. 36: Provides around $375 million for Prop. 36 implementation, including court workload, substance use and mental health treatment, victims support, rehabilitation and pretrial services, in addition to last year’s $300+ million investment.

● Supports victims of crime: $50 million for VOCA funding, up from $25 million in the May Revision.

● Protects communities from hate violence: $80 million ongoing for the Nonprofit Security Grant Program.

● Avoids unnecessary prison spending: Assumes an additional prison closure, generating $150 million in ongoing savings, and rejects costly corrections increases that are not needed to protect public safety.

● Supports MMIP grants: $15 million ongoing for Missing and Murdered Indigenous People grants.

● Supports CASA: $20 million for the CASA Program.

● Combats human trafficking: $10 million for human trafficking vertical prosecution grants and $10 million for victims programs.

● Funds the RIGHT Grant: $20 million for the RIGHT Grant.

Wildfires and Climate

● Funds CalFire through GGRF: AB 109 provides proposed GGRF funding to CalFire, while several other GGRF and Proposition 4 decisions remain in later negotiations. Several major climate and wildfire funding decisions are still moving through later negotiations, including GGRF and Proposition 4 bond appropriations. The budget agreement protects wildfire prevention funds that are continuously appropriated by statute.

Reserves

● Rainy Day Fund Reform: Advances a constitutional amendment that empowers voters to increase California’s ability to build reserves in good years, so the state is better prepared to protect schools, health care and safety-net programs when revenues decline.

● Main Rainy Day Fund: Investing billions in reserves to make sure Californians have a fiscal backstop for future uncertainty brought about by the Trump administration.

Responsible Revenue to Protect Californians from Trump Administration Cuts

● The Senate and Assembly plan assumes the Governor’s revenue proposals for a large corporation tax credit limitation, digital software sales tax changes, and extending and updating an existing tax on health care plans to preserve Medi-Cal funding in light of new federal requirements.

● The agreement enacts the Fair Share from Big Corporations Act to set the stage to hold big corporations accountable for taxpayer subsidies. Under the program, the administration will be required to present fully viable options to the Legislature for holding big corporations accountable for their employees’ health care costs by April 1, 2027. The options will be considered next year. Implementing any option will require subsequent legislation.