Overview

• Gov. Gavin Newsom’s administration forecasts a $16 billion revenue loss through June 2026, largely attributed to President Trump’s tariffs on imports from Mexico, Canada, and China.
• California’s Medi-Cal expansion to undocumented immigrants has resulted in over $6 billion in unexpected costs, requiring an emergency funding infusion earlier this year.
• Despite $6.8 billion in higher-than-expected tax receipts through April, the state anticipates an overall budget deficit for 2025-26 due to economic and policy pressures.
• California has filed a federal lawsuit challenging the legality of Trump’s tariffs and plans to seek a preliminary injunction to halt their enforcement.
• The state has already implemented $27.3 billion in spending cuts and reserve withdrawals for 2025-26, with further reductions expected as legislative negotiations continue.