California lawmakers are expected to adopt a $356 billion state budget today that would largely avoid or delay billions of dollars in social service cuts Gov. Gavin Newsom proposed last month.

Then, the (real) budget negotiations can begin.

Today’s vote is only a formality, because lawmakers are constitutionally required to pass a balanced budget by June 15 each year to continue collecting their pay. They have until the end of the month to strike a deal with Newsom before the new fiscal year starts July 1.

In the next two weeks, legislators will have to settle their differences with Newsom on health care cuts, funding for schools and homelessness and more.

Here are five takeaways from the Legislature’s spending plan:

Punt and soften healthcare cuts

Faced with federal funding cuts under the tax and spending law President Donald Trump signed last year, Newsom proposed several measures to limit healthcare coverage for undocumented immigrants as well as refugees, asylees and human trafficking survivors.

Top legislative Democrats want to delay those cuts by a year while looking for alternatives to soften the impact.

Newsom also wants to raise the monthly Medi-Cal premium undocumented immigrants pay from $30 to $50. But lawmakers prefer waiting him out, proposing to leave the decision to the next governor.

“I don’t think it’s about Gavin Newsom,” said Sen. John Laird, a Santa Cruz Democrat who chairs the budget committee. “It’s really about trying to stretch as far as we can in the hope that we don’t have to make those cuts.”

The Legislature rebuked Newsom’s proposal to reinstate stringent Medi-Cal asset tests for seniors and adults with disabilities by July, instead pitching a less restrictive limit to take effect in fiscal year 2027-28. With bipartisan support, the lawmakers also rejected Newsom’s proposed cuts to the In-Home Supportive Services program.

They did, however, agree to Newsom’s plan to spend $300 million to subsidize private healthcare for low-income Californians.

Restoring some child care, TK-12 money

Democratic lawmakers want to add 22,000 state-funded child care slots over the next few years. They also rejected Newsom’s proposed reduction of 6,800 state-supported spaces due to declining federal and state funding.

The new slots would prioritize children ages 3 and under. Advocates who applauded the proposal say it would address a gap left unfilled by Newsom’s transitional kindergarten expansion to reach 4-year-olds.

Banking on a rosier revenue forecast, state lawmakers proposed $2.7 billion more in funding for TK-12 schools and community colleges than Newsom did in May.

Schools and educators were hoping for more. They wanted the Legislature to reject Newsom’s proposal to withhold $3.9 billion in constitutionally guaranteed school money — an accounting mechanism to prevent overpaying schools in case the projected revenue doesn’t materialize.

“We demand that the Legislature and the governor follow the law, stop with the gimmicks and the shell games, and fully fund our schools,” said David Goldberg, president of the California Teachers Association. “Our union is prepared to do whatever it takes to hold them accountable if they don’t. Our students deserve no less.”

More generous with counties

The Legislature’s spending plan would give counties more money to step up eligibility checks for Californians applying for food stamps and health care benefits, reviews that are now required under Trump’s spending bill.

It would also allocate $125 million to help counties reestablish indigent care — a program serving low-income Californians that largely went away under Obamacare.

State lawmakers also want to set aside $900 million for the state’s homelessness fund, whereas Newsom included just $500 million in his proposal.

More revenue, please

Newsom proposed three new tax measures and lawmakers are on board with them:

• Applying a sales tax on most company software, like Slack and Microsoft Suites
• Capping tax credits big corporations claim
• Extending a tax on Medi-Cal health providers, which the state has relied on to qualify for more federal funding.  

The proposals come at a time when California voters have rejected most local tax initiatives during the June primary. But Newsom’s proposals require no voter approval — just the support of two-thirds of each legislative chamber.

There’s still an appetite among lawmakers to make corporations pay up. Senate Democrats had proposed a monthly charge on big employers for having employees enrolled in Medi-Cal, but have now backed away from the plan, instead asking the next governor to pitch “fully viable options” next year.

Save more money for rainy days

There’s a consensus between the Legislature and the governor to raise the ceiling on the revenue the state can deposit into its rainy day fund. The question is how much. State leaders are constitutionally required to make deposits into the account each year, but the balance cannot exceed 10% of the state’s general fund tax revenue under current law.

Changing that amount would require voter approval. Lawmakers are considering placing a measure on the November ballot that would allow them to sock away more money for lean years. They have a tight deadline of June 25 to settle on what they want to put before voters.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

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