State Leaders Announce Budget Deal

State leaders announced today they’ve reached a deal on the state budget.

The deal reached between the legislators and Gov. Gavin Newsom involves $300 billion in expenditures while filling in a $46.8 billion budget deficit. That includes pulling $12.2 billion from the state’s rainy day fund over the next two years while seeking a constitutional amendment in 2026 to grow the surplus fund.

The deal includes a nearly 8% reduction in nearly all state department budgets—in all categories, from personnel and contracting to not filling vacant positions—to save the general fund over $2 billion.

In a statement, Gov. Gavin Newsom said the agreement sets the state on a path for long-term fiscal stability while addressing the current budget shortfall and preserving programs in education, health care and combatting homelessness.

“I’m grateful for the partnership of our legislative leaders in meeting this challenge with balanced solutions that continue to make progress on California’s priorities,” Newsom said.

State leaders are cutting nearly $750 million for various health care workforce programs and reducing state and local public health initiatives by $40 million. But the budget agreement does implement minimum wage increases to get the state’s lowest-paid health care workers to $25 an hour, per a law Newsom signed last year that was initially slated to go into effect on June 1.

The deal maintains funding for in-home supportive services, a program that provides health care to all Californians based on their income, regardless of their immigration status.

“We are extremely happy that the Legislature and the governor has continued California’s vision of inclusivity as it relates to the California immigrant population,” said Ronald Coleman Baeza, managing director of policy for California Pan-Ethnic Health Network.

Groups across California applauded the budget’s commitment to health care, especially the more than $275 million in public health infrastructure funding at state and local levels, known as the Future of Public Health Initiative.

“We understand that in tough budget years like this one, the state is faced with difficult decisions, and we appreciate efforts to protect public health workforce and infrastructure investments,” Michelle Gibbons, executive director of the County Health Executives Association of California, said in a statement. “California must never forget the lessons learned during the COVID-19 pandemic: investment in public health saves lives.”

Despite budget cuts of 8% to state departments across the board, the deal preserves more than $7 billion to expand behavioral health services for children.

The budget deal increases mandatory minimum funding for pre-K–12 schools and community colleges from last year, at $115.3 billion, or $18,399 per student. The 2023–2024 education budget for pre-K–12 and community colleges was $101.3 billion.

“Students will grow and succeed because we kept classroom spending whole,” Assembly Speaker Robert Rivas, who represents Salinas, said in a statement.

While state lawmakers passed a budget on June 15, it didn’t represent the final deal announced today. Lawmakers still have to vote on the final budget before July 1, when the new fiscal year begins.

Senate President pro-Tempore Mike McGuire, who represents the North Coast, said in a statement that the agreed-upon budget helps “shrink the shortfall, protect our progress, and maintain responsible reserves.”

“Make no mistake: This is a tough budget year, but it also isn’t the budget situation we were originally fearing,” McGuire said.

KQED’s Azul Dahlstrom-Eckman and Lakshmi Sarah contributed to this story.