California Gov. Gavin Newsom on June 27 signed the state budget that is projected to close a $12 billion deficit through spending reductions for some of the state’s ongoing programs.

The signing came shortly after lawmakers approved the $321 billion spending plan earlier in the day. The plan includes $5 billion in cuts and $7.1 billion in withdrawals from the state’s rainy-day reserve fund.

“It’s balanced, it maintains substantial reserves, and it’s focused on supporting Californians—slashing red tape and catapulting housing and infrastructure development, preserving essential healthcare services, funds universal pre-K, and cuts taxes for veterans,” Newsom said in a statement announcing the budget.

The governor’s office also blamed “significant fiscal pressures” on “the Trump administration’s reckless economic and immigration policies.”

Citing the California Department of Finance, it stated that President Donald Trump’s tariff policies might cost the state an estimated $16 billion in lost general fund revenue through the next fiscal year.

“The state is delivering a responsible on-time budget in a challenging year focused on fiscal restraint and investing in the people and programs that make this state great,” state Senate President Pro Tempore Mike McGuire said in the statement.

“This budget prioritizes record funding for our kids and public schools, protects access to health care for millions of the most vulnerable, and will create more housing at a scale not seen in years.”

Spending Cuts

The budget includes targeted spending cuts to Medi-Cal, the state’s Medicaid program, by freezing enrollment for adult illegal immigrants, starting next year. It would also implement a $30 monthly premium for adult illegal immigrants who have already enrolled, starting in July 2027, with an exemption for adults aged 60 and older from paying the premium.

The plan will also eliminate funding that helps pay for dental services for low-income people in 2026 and delay the implementation of legislation requiring health insurance to cover fertility services by six months to 2026.

State Sen. Caroline Menjivar, a Democrat, said on June 10 that she was removed from a budget subcommittee on health and human services for her “straightforward opposition to the proposed health cuts to just one demographic.”

“I have worked tirelessly in the past three years to protect the most vulnerable in Subcommittee 3 and am disappointed that I won’t be able to record my dissent,” she said in a statement.

Medi-Cal is a California version of the federal Medicaid program, which provides health care coverage for low-income residents. While federal law restricts Medicaid for illegal immigrants, California expanded its coverage last year to include illegal immigrants, using state funds. However, unexpectedly higher costs forced the governor to request billions more in loans from the state for the program this past March.

The Associated Press and Jane Yang contributed to this report.