California lawmakers advance 2026-27 budget agreement

California State Senate and Assembly leaders will begin negotiations Monday on the joint budget agreement released last week.

The companion bills, Assembly Bill 109 and Senate Bill 109, were introduced by lawmakers last week.

This sets the stage for up to two weeks of budget negotiations between the Legislature and the governor. Budget bill amendments are expected to reflect a future "three party" deal between the two houses and the state's chief executive.

When Assembly Speaker Robert Rivas and Senate President Pro Tempore Monique Lim?n announced the 2026-27 budget agreement on Thursday, they said it is a "response to the Trump administration's attacks on Californians' health coverage and safety net programs."

Cuts to social services by last year'sOne Big Beautiful Bill Act have resulted in scrambling bymany states to preserve services and adjust their own budgets to deal with a loss of federal funding to the Supplemental Nutrition Assistance Program (SNAP) and Medicaid programs.

"The two-party agreement represents the California State Senate's commitment to fight for services essential to the Golden State, including health care, child care, and the long-term fiscal health of our state," Limon said.

According to the leading Democrats, the budget invests in housing opportunity and affordability, sustains the party's commitment to funding for schools and classrooms, wildfire prevention and crime victims, prioritizes new revenue to preserve health and human services programs without new taxes on families or small businesses, and sets aside billions in reserves for a rainy day.

The Assembly and Senate intend to keep delaying, softening or eliminating some of the more harmful proposed federal cuts as budget conditions allow, they said.

"Trump's agenda is failing, prices are rising, and his cuts are gutting the programs working families rely on most," Rivas said. "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."

Limon added, the Legislature is looking to stop drastic cuts to safety net programs that millions of Californians rely on to make ends meet, but the budget agreement also continues to make responsible decisions for the future by laying the groundwork for the Fair Share from Big Corporations Act.

A new healthcare policy agreement prioritizes stability for patients and providers by delaying several significant service reductions and adjusting fiscal timelines, according to the budget agreement. Regarding asset requirements, there will be no changes in 2026-27, with the limit shifting to $21,000 in 2027-28.
The agreement also postpones cuts to Medi-Cal, including dental services, and defers the transition of asylees and qualified immigrants to restricted-scope Medi-Cal until 2027-28. Furthermore, the state will prevent automatic premium increases next year, granting the next governor authority over those decisions, and will allow additional time to explore alternatives to the unsatisfactory immigration status (UIS) fee-for-service transition.

To support healthcare infrastructure, the agreement provides $190 million in loans for distressed hospitals and increases funding for county eligibility workloads. Simultaneously, it bolsters care access by providing $300 million to lower premiums for low-income Covered California enrollees, alongside $40 million for reproductive health services and $26 million for gender-affirming care.

While the budget agreement tackles key legislative priorities like health care, housing affordability and preserving safety net programs, Assembly Budget Chair Jesse Gabriel said lawmakers are "committed to fiscal discipline and preparing California to weather future challenges. I'm grateful to Speaker Rivas, Pro Tem Lim?n, and our legislative partners for working together on a budget that reflects our values and will deliver for California families."

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, Gabriel said.

The lawmakers' agreement rejects proposed cuts to in-home supportive services and 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, Gabriel said.

The agreement also provides funding for additional child care 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," said Sen. John Laird, chair of the Senate Budget and Fiscal Review Committee.