California Closes $12-B Budget Deficit By Scaling Back Immigrant Healthcare

California Governor Gavin Newsom has signed a budget that rolls back several progressive initiatives—including a landmark healthcare expansion for low-income immigrants without legal status—in order to close a $12 billion deficit, Tran Nguyen reported for the Associated Press (AP).

California also faces uncertainty from potential federal cuts to healthcare programs and broader economic instability, which could trigger deeper reductions.

This marks the third consecutive year the nation's most populous state has been forced to reduce or halt programs championed by Democratic leaders.

Lawmakers passed the $321 billion spending plan earlier in the day following an agreement between Newsom and Democratic leadership. However, the entire budget could be voided if lawmakers fail to send him legislation by Monday to streamline housing development.

State leaders said the budget avoids the most devastating cuts to core safety-net programs by relying on reserves, borrowing from special funds, and delaying payments.

“It’s balanced, it maintains substantial reserves, and it’s focused on supporting Californians,” Newsom said in a statement.

California also faces uncertainty from potential federal cuts to health care programs and broader economic instability, which could trigger deeper reductions.

In May, Newsom warned that federal policies—especially those involving tariffs and immigration enforcement—could reduce the state's tax revenue by as much as $16 billion.