Legislature Approves $325 Billion Budget Ahead of July Deadline

On Friday, the California Legislature approved its version of the 2025–26 State Budget, a $325 billion package designed to close a projected $12 billion deficit through internal borrowing, fund shifts, and limited cuts. According to CalMatters.org, the Legislature’s plan differs substantially from Governor Newsom’s May Revise, opting to preserve many social services and education programs while punting some fiscal obligations into future years.

The passage sets the stage for final negotiations with the governor, who must sign a finalized version before the fiscal year begins on July 1.

Despite repeated public statements by the governor, Speaker Rivas, and Senate Leader McGuire that affordability is their top priority in 2025, the enacted legislative budget contains few major new programs directly aimed at reducing the high cost of living for California families.

Notably Absent:

• No new gas price relief measures, including production and refining help

• No utility rate stabilization

• No consumer energy affordability programs

Included:

• $500 million in local homelessness grants

• $300 million to reduce Medi-Cal premiums for some undocumented immigrants

• No university tuition hikes, thanks to deferred payments rather than cuts

• $100 million for implementing Prop. 36, focused on behavioral health and criminal justice reform

While some programs may indirectly impact affordability (e.g., homelessness, education access), the budget lacks a coordinated affordability package that addresses Californians’ most pressing cost-of-living burdens, such as housing, fuel, and energy. In fact, by relying on deferrals and borrowing, the Legislature may be kicking the can on structural issues that ultimately increase future costs.