WATCH: Senate committee passes $355.9B California budget

“Our state continues to face some hard choices in this budget,” Laird said during opening comments about Assembly Bill 109, the Budget Act of 2026. “In making these hard decisions, the Legislature has come together and remain faithful to the framework put forward by the Senate, which was that we were committed to responsible budgeting and maintain vital programs California depends on. It takes a balanced approach, making targeted reductions while adopting $5 billion in new revenues.”

The budget approved on Monday delays Medi-Cal cuts to July 1, 2027, which Gov. Gavin Newsom proposed. The cuts would affect California residents with “unsatisfactory immigration status,” or those who are illegal immigrants or immigrants who sought asylum in California. It also allocates up to $190 million in forgivable loans to distressed hospitals, and an additional $250 million for public hospitals, among other items in the budget.

The budget also preserves the current number of taxpayer-funded slots for childcare sand allocates enough funding to increase the number of spots by 22,770 in 2026-27. The budget also provides additional funds for affordable housing and homelessness housing assistance, Laird said.

Republican lawmakers on the committee said they felt the budget was incomplete. They noted the budget is built on the assumption that taxes would actually go up to fuel the state’s high level of spending in the budget.

“The only way out of our structural deficit, which still exists, is to do the hard analysis of the efficacy and realistic sustainability of select spending programs,” Sen. Roger Niello, R-Fair Oaks and vice chair of the Senate Budget Committee, said during his opening remarks. “That hasn’t been done.”

The latest version of the budget cleared the Senate Budget Committee weeks after the Legislative Analyst’s Office projected a $16.9 billion deficit, even with the governor’s attempts to present a balanced budget for his last year in office. Newsom’s May budget proposal advanced solutions to close the budget gap, including limiting business credit use, taxing software and taxing managed care operations, The Center Square previously reported.

According to a May 19 story by The Center Square, the Golden State still remains in a multi-year budget deficit despite higher-than-expected revenues, mostly due to planned spending exceeding revenue growth.

“Even with the higher level of resources, at the end of the day, the budget condition is broadly very similar to the budget condition that we saw in the May revision,” legislative analyst Gabriel Petek testified before the committee.

After its passage by the Senate Budget Committee, the bill advanced to the Assembly Budget Committee.