Governor Gavin Newsom’s May Budget Revision is presented to be a fiscally constrained and largely defensive budget strategy, responding to a projected multibillion-dollar shortfall driven by rising Medi-Cal costs, reduced revenue projections, federal fiscal uncertainty, and economic volatility tied to capital gains and trade disruptions. Rather than launching new programmatic expansions, the Administration seems to have prioritized preserving core state programs while implementing targeted cost containment measures—particularly within Medi-Cal.
The 2026–27 May Revision to the Governor’s Budget proposes spending of $349.4 billion in total state funds, consisting of approximately $246.6 billion from the General Fund, $95.6 billion from special funds, and $7.3 billion from bond funds.
Key themes across this May Revision include:
HEALTH CARE / MEDI-CAL
Medi-Cal Cost Pressures
Medi-Cal represents one of the largest areas of budget pressure in the May Revision, with projected General Fund expenditures rising to approximately $44.6 billion in 2025–26. The Administration attributes the increase to:
Proposed Cost Containment Measures
The May Revision includes significant cost containment measures focused largely on state-only Medi-Cal populations:
Provider Reimbursement Increases (Proposition 35)
Despite the proposed cuts, the May Revision continues implementation of Proposition 35-related MCO tax expenditures, including approximately $1.6 billion across 2025–26 and 2026–27 for increased managed care payments. Funding increases are targeted toward:
Specifically, the May Revision includes $575 million in 2026–27, $2.3 billion each in 2027–28 and 2028–29, and $1.7 billion in 2029–30 from this new tax to support the Medi-Cal program and maintain targeted rate increases for primary, maternal, and non-specialty mental health care implemented on January 1, 2024. The May Revision proposes to seek renewal of an MCO Tax effective January 1, 2027.
Federal Medicaid Risk
The Administration repeatedly references uncertainty surrounding potential federal Medicaid reductions and broader federal fiscal instability as a major driver of the revised budget outlook. This federal risk remains an overarching variable that could further constrain the state’s fiscal position in subsequent budget years.
EDUCATION
General Education Funding
The May Revision makes the following adjustments to education funding:
Career Pathways and Workforce Development
The May Revision maintains a broader emphasis on workforce development and community college funding, including continued support for the Student-Centered Funding Formula (SCFF) and ongoing investments in workforce and student success. Funding adjustments are tied to reduced cost-of-living allowance (COLA) assumptions.
No major new dedicated appropriation or structural expansion was identified for the California Education Interagency Council (CEIC). While workforce and career education themes remain embedded throughout community college discussions, there is no large, standalone Career Pathways Initiative funding proposal highlighted in the May Revision summary materials. The Administration’s education posture is focused primarily on maintaining existing commitments, limiting reductions, and preserving workforce pipeline infrastructure amid fiscal constraints.
2026 LEGISLATIVE CALENDAR – KEY REMAINING DEADLINES
The following deadlines govern the remaining legislative process for 2026.
|
Date |
Deadline / Event |
|
May 15 |
PASSED: Last day for fiscal committees to hear and report to the Floor bills introduced in their house. Last day for fiscal committees to meet prior to June 1. |
|
May 26–29 |
Floor Session only. No committee may meet except Rules Committee, bills under Assembly Rule 77.2, and Conference Committees. |
|
May 29 |
Last day for each house to pass bills introduced in that house. |
|
June 1 |
Committee meetings may resume. |
|
June 15 ★ |
BUDGET BILL MUST BE PASSED BY MIDNIGHT — Constitutional deadline (Art. IV, Sec. 12(c)(3)). Failure to meet this deadline triggers a legislative pay suspension under Proposition 25. |
|
June 25 |
Last day for a legislative measure to qualify for the November 3 General Election ballot. |
|
July 2 |
Last day for policy committees to meet and report bills. Summer Recess begins upon adjournment, provided the Budget Bill has been passed. |
|
Aug. 3 |
Legislature reconvenes from Summer Recess. |
|
Aug. 14 |
Last day for fiscal committees to meet and report bills. |
|
Aug. 17–31 |
Floor Session only. No committee may meet except Rules Committee, bills under Assembly Rule 77.2, and Conference Committees. |
|
Aug. 21 |
Last day to amend bills on the Floor. |
|
Aug. 31 |
Last day for each house to pass bills. Final Recess begins upon adjournment. |
|
Sept. 30 |
Last day for Governor to sign or veto bills passed before September 1 and in the Governor’s possession on or after September 1. |
|
Nov. 3 |
General Election. |
|
Nov. 30 |
Adjournment sine die at midnight. |
Senate budget proposals. Trailer bill negotiations on contested items—particularly Medi-Cal eligibility changes—are likely to extend beyond June 15 until the end of the session.
KEY RESOURCES & OFFICIAL DOCUMENTS
The following official sources provide additional detail on the Governor’s May Revision: