California: Governor Newsom, Legislative leaders announce 2026-27 balanced budget agreement that ensures $0 deficit, while funding healthcare and key services
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Jun 26, 2026

Governor Newsom, Legislative leaders announce 2026-27 balanced budget agreement that ensures $0 deficit, while funding healthcare and key services

NO deficit THIS YEAR. NO deficit NEXT YEAR.

✅ FUNDED: small business tax cuts
✅ FUNDED: free school meals, free summer school, universal pre-school, and childcare slots
✅ FUNDED: historic investment in students with disabilities
✅ FUNDED: healthcare affordability
✅ FUNDED: cutting red tape to build more housing
✅ FUNDED: disaster rebuilding fund
✅ FUNDED: safeguarding and speeding up elections

What you need to know: Governor Newsom, Senate President pro Tempore Limón, and Assembly Speaker Rivas announce a balanced budget agreement  — with zero deficit this year, and next — that maintains California's progress, prepares for the future, and protects vulnerable communities from Trump's cruel assaults on the state.  Para leer este comunicado en español, haga clic aquí.

SACRAMENTO – Governor Gavin Newsom, Senate President pro Tempore Monique Limón, and Assembly Speaker Robert Rivas today announced a three-party agreement on California's 2026-27 state budget, delivering a balanced spending plan with zero deficit that protects Californians while maintaining the state's long-term fiscal stability amid continued economic uncertainty and President Trump's politically motivated attacks on the state, including the withholding of state funding.

The agreement builds on California's strong fiscal foundation by preserving reserves, maintaining responsible budgeting practices, and continuing strategic investments that strengthen communities, grow the economy, and expand opportunity across the state.

A balanced budget isn't an end in itself—it's how we deliver for Californians. This budget demonstrates responsible choices that protect our fiscal strength while continuing to invest in what matters most. In California, we support working families, create more opportunity, and build safer, healthier communities. That's how we keep California the engine of America's economy and a place where everyone has the opportunity to succeed.

Governor Gavin Newsom

"In January, California was faced with a difficult fiscal outlook that prompted the legislature to take a hard look at the financial future of the Golden State. Thankfully, despite continued funding cuts from the federal administration, California was able to mitigate the impacts to programs that millions rely on. Today's budget agreement reflects our commitment to protect core programs and address our short and long-term financial future by building up our rainy day fund and making responsible budgeting choices. I am also proud that the Senate was able to secure critical funding for child care slots, safeguard access to care, and take significant steps towards ensuring large corporations pay their fair share. Thank you to the Governor and Speaker of the Assembly for their partnership to deliver a strong foundation for our future."
Senate President pro Tempore Monique Limón

"Working families deserve a budget that has their back — and that's exactly what California is delivering. We're protecting health care, preserving food programs, investing in housing at record levels and building reserves to fight back no matter what Trump and Republicans throw at us. While Washington's agenda drives up prices and guts critical programs, California is focused on what matters: Real solutions that put affordability first."
Assembly Speaker Robert Rivas

Commitment to help Californians

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The budget agreement reflects the Governor and Legislature's longstanding commitment to balanced budgets that protect Californians while preparing the state for future economic uncertainty.

Governor Newsom's administration has prioritized building reserves, reducing long-term liabilities, and making historic investments in education, public safety, housing, healthcare, climate resilience, infrastructure, and economic opportunity.

Earlier this week, Governor Newsom and legislative leaders announced two major agreements that form key pillars of the broader budget package:
  • The historic Veterans and Affordable Housing Bond Act of 2026 to help fund housing construction, preserve affordable housing, and expand homeownership opportunities, including assistance for veterans, middle- and lower-income households, affordable rental housing, and interim and supportive housing for people experiencing homelessness.  
  • The Save for California's Future Act, a constitutional amendment that strengthens the state's Rainy Day Fund and modernizes California's fiscal safeguards to better prepare for future economic uncertainty. The Save for California's Future Act will also help protect schools and businesses by reducing unemployment insurance trust fund liabilities and potential costs for employers.

Among its key priorities, the balanced budget agreement:
  • Maintains a balanced budget — not just for the coming fiscal year, but the following year as well — by setting aside more than $6 billion in anticipated revenues in a holding account.
  • Continues investments in public safety and efforts to improve community safety across California.
  • Adds billions in funding for TK-12 schools, community colleges, and higher education.
  • Improves school support and accountability by moving management of the Department of Education into the Executive Branch, and strengthens the State Superintendent's role to foster alignment of education policies across public education from TK through college.
  • Limits large corporate tax breaks for the state's largest corporations to help protect California's critical programs, including healthcare.
  • Advances critical state housing finance reforms to accelerate affordable housing construction, reduce costs, and make state housing investments go further, while strengthening accountability for state homelessness funding.
  • Continues investments in behavioral healthcare and implementation of Proposition 1.
  • Supports healthcare access for Californians.
  • Maintains California's leadership on climate resilience, clean energy, and wildfire preparedness.
  • Invests in infrastructure, economic growth, workforce development, and affordability.
  • Provides new investments to safeguard and speed up elections – increase staffing, voter outreach and education, and combat mis- and disinformation.

The agreement also reflects California's continued commitment to responsible fiscal management, preserving the state's ability to respond to future economic conditions while protecting the essential programs Californians rely upon.

The Governor, Senate, and Assembly will continue working together through the constitutional budget process in the coming days.

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California's fiscal foundation

Over the past seven years, California has transformed its fiscal outlook by paying down debt, building historic reserves, maintaining the state's credit rating, and making record investments in the people and infrastructure that power one of the world's largest economies. This budget continues this disciplined approach — protecting essential services today while positioning California for long-term success.

Since Governor Newsom took office, California has:
  • Built and maintained the largest state budget reserves in California history.
  • Paid down billions of dollars in long-term liabilities.
  • Made historic investments in education, transportation, public safety, housing, behavioral health, climate resilience, and economic opportunity.
  • Continued prioritizing one-time investments where appropriate to strengthen the state's long-term fiscal outlook.
  • Advanced landmark reforms balancing fiscal discipline with long-term investments, such as modernizing budget reserves and championing significant housing and homeownership initiatives.

The 2026-27 budget agreement continues this disciplined approach — making strategic investments while preserving California's fiscal strength for years to come. A fact sheet is available here.

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