Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Connie Juarez-Diroll, Chief Legislative Officer
Subject: Analysis of the Governor's FY 2026-27 State Budget Proposal
RECOMMENDATION:
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Accept this informational analysis of the Governor's FY 2026-27 State Budget Proposal.
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BACKGROUND:
On January 9th, Governor Gavin Newsom released his last state budget proposal for FY 2026-27, which largely outlines a status quo spending plan that limits new ongoing expenditures without making significant or additional reductions to currently funded programs. The plan outlines a $348.9 billion balanced budget that includes $248 billion in General Fund revenue, supported by stronger-than-expected cash receipts, resilient financial markets, and an estimated improved economic outlook. The proposal reflects more than $42 billion in additional General Fund revenue over the three-year budget window (FY 2024-25 through FY 2026-27) compared to last year's enacted budget, resulting in a modest projected deficit of $2.9 billion. While the Administration assumes the current deficit to be relatively moderate, the Legislative Analyst's Office estimates a much larger deficit of $18 billion for the upcoming year. The Governor's January proposal also refills the state's Budget Stabilization Account (Rainy Day Fund) to increase reserves. It suggests focused investments in education, affordability measures, public safety, wildfire resilience, and government efficiencies.
While the Governor's budget includes $1.4 billion to address the state's fiscal impacts as a result of the requirements of H.R. 1, it does NOT include any funding to address the impact of H.R.1 on county budgets. Counties are facing billions of dollars in new Medi-Cal, CalFresh, and indigent care costs due to the implementation of H.R. 1. These costs include direct cost shifts, increased county workload, and ...
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