Newsom’s set to leave office with a balanced budget, but at what cost?

Governor Gavin Newsom’s final state budget doubles down on previous reductions to Medi-Cal access for undocumented immigrants in the state.

Reductions in various areas, including health care access for immigrants, have resulted in a $0 structural deficit through July 2028, well after Newsom leaves office. The May budget revision proposes a $50 monthly premium for undocumented immigrants (up from $30) and will transition the population to fee-for-service coverage, on top of the existing reductions and frozen Medi-Cal enrollments the state Legislature approved in 2025.

“No one in the country has done more and no one has done better to address their anxiety and needs, and the fact that we capped it is in stark contrast to other states that cut those that were already enrolled. We didn't do that,” Newsom said in response to a question from CALÓ News. He later added, “and to that extent, we are forced to make decisions. That's called reality. It's called math. And it's a difficult thing, and we try to do it in a thoughtful way.”

In his May revision, Newsom put forth a $350 billion savings plan that will zero-out the state’s deficit for the next two years. “I’m not gonna walk away from this state and put the next legislature and the next governor in a difficult spot,” he said.

A balanced budget, but immigrants are paying for it

The governor is proposing several changes to Medi-Cal coverage for undocumented immigrants that will save the state over one billion dollars per year.

Passed last year, the federal H.R 1 budget bill is set to wreak havoc on California’s health care system. The bill will result in around $30 billion worth of cuts to federal Medi-Cal funding per year. 1.5 million Californians are expected to lose their health care coverage due to the bill.

A federal policy going into effect Oct. 1 will exclude individuals with “unsatisfactory immigration status,” or undocumented immigrants, from being eligible for full scope Medi-Cal coverage. 

The governor is opting to move this entire population to the state’s fee-for-service system, where health care providers are paid directly by the state for providing services to individuals on Medi-Cal. The move will result in decreased benefits for undocumented immigrants including tailored case management.

Newsom’s proposal also includes a new $50 monthly premium for undocumented immigrants, up from $30. The governor said he believes this change is “fair.”

The proposed cuts only expand on reductions the state has set in motion to cut costs on the backs of immigrants’ health care. The Legislature last year froze enrollments for all undocumented adults beginning Jan. 1 of this year and will restrict dental benefits beginning in July.

When CALÓ News asked Newsom if he is worried cutting immigrant health care to increase savings will become a pattern, he admitted he knows it is an “easy place for people to go.”

“I’m trying to balance all these concerns as I balance the budget, and trying to do it in a way that I think is consistent with my values and the values that we hold dear in this state.”

The governor’s proposed changes set up a clash with Legislature Democrats who have made clear they want to restore Medi-Cal access for undocumented immigrants.

“The working people and those who are underserved in California deserve seamless access to health care in the world's fourth largest economy,” said Sen. Lena Gonzalez (D-Long Beach), chair of the Latino Legislative Caucus in a statement. “We will continue finding budget solutions that are reasonable and sustainable, but that put dignity in health and people first.”

Newsom’s proposed budget now goes to the state Legislature for negotiations. The final 2026-27 budget is due June 30.