Overview

• Governor Gavin Newsom’s upcoming budget revision is anticipated to reveal a significant shortfall, exacerbated by federal uncertainty over potential Medicaid and other benefit cuts.
• California leaders are debating whether to close high-income tax loopholes and adopt fairer tax measures modeled on strategies from states like Minnesota, New Mexico, and Washington.
• Minnesota has proposed a millionaire’s tax to offset potential federal Medicaid funding cuts, while New Mexico has created a Medicaid trust fund to safeguard essential services.
• Washington state has implemented an $8.7 billion revenue package, raising taxes on high earners and large businesses to prevent service cuts and stabilize its budget.
• Advocates stress that scaling back social programs during economic uncertainty risks deepening inequality and threatens access to basic needs for low-income Californians.