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Prepared by Precision Advocacy
Budget negotiations are now entering their final stretch, with both houses of the legislature having released their respective budget proposals. Between now and the June 15 constitutional deadline for the legislature to send a budget bill to the governor, the Senate and Assembly will work to reconcile differences between their plans while also negotiating with the administration on a final agreement.
For Orange County, the next two weeks will be especially important as the legislature and administration determine whether to adopt, modify, or reject key funding proposals that directly affect county programs and local service delivery. This week’s update provides a breakdown of budget actions impacting Orange County, including where the governor’s January and May Revision budget proposals, the Senate budget plan, and the Assembly budget plan align, and where significant differences remain. The update also highlights the major issues still under negotiation, including health and human services funding, public safety investments, courts, homelessness, and local government impacts related to federal policy changes.
Three Budgets Under Negotiation
County Budget Priorities
H.R. 1: Medi-Cal County Eligibility Workforce Administration
Orange County Request: Augmentations of $197 million statewide in 2026-27 and $367 million in 2027-28 for training to support Medi-Cal beneficiaries.
Governor’s Budget: Includes a one-time augmentation of $57.2 million in 2026-27.
Senate Budget: Includes augmentations of $197 million in 2026-27, $367.4 million in 2027-28, $236.6 million in 2028-29, and $163.6 million ongoing.
Assembly Budget: Augments funding by $197 million in 2026-27.
H.R. 1: CalFresh County Eligibility Workforce Administration
Orange County Request: Augmentations of $9.3 million statewide in 2025-26, $102 million in 2026-27 and $57.9 million in 2027-28 to support CalFresh training requirements.
Governor’s Budget: Includes a $30 million one-time increase in 2026-27 and $119 million reduction in 2026-27 from caseload.
Senate Budget: Includes an $89 million increase in 2026-27 and $58 million increase in 2027-28.
Assembly Budget: Includes a $103 million increase in 2026-27.
H.R. 1: County Indigent Care Program
Orange County Requests: $250.4 million over two years for an emergency services-only County Indigent Care Program.
Governor’s Budget: No funding
Senate Budget: No funding
Assembly Budget: Includes $250.4 million General Fund over two years to establish an emergency services only county indigent care program.
H.R. 1: County Behavioral Health
Orange County Request: $224 million statewide in 2026-27 and $828 million in 2027-28 for behavioral health services.
Governor’s Budget: No funding
Senate Budget: No funding
Assembly Budget: No funding
Behavioral Health: Mobile Crisis Benefit
Orange County Request: Support the Senate and Assembly proposals for $125 million for mobile crisis teams dispatched through 988 centers.
Governor’s Budget: Repeals the statewide mobile crisis benefit in Medi-Cal when it is scheduled to expire in April 2027, and transitions mobile crisis services to a voluntary, county-funded benefit program.
Senate Budget: Allocates $150 million 988 State Suicide and Behavioral Health Crisis Services Fund to support maintenance of the mobile crisis benefit ($125 million), provide additional funding for 988 Crisis Centers ($20 million) and support the California Press 3 option for LGBTQ+ suicide prevention ($5 million).
Assembly Budget: Allocates $125 million from the 988 State Suicide and Behavioral Health Crisis Services Fund to continue funding mobile crisis teams dispatched through 988 centers.
Behavioral Health: Behavioral Health Services Act
Orange County Request: Protect Proposition 1/Behavioral Health Services Act investments from being redirected to cover H.R. 1-related shortfalls.
Governor’s Budget: Redirects various allocations from the Behavioral Health Services Fund (BHSF) to offset General Fund expenditures in other state programs that are similar to the allowable activities under Proposition 1, the Behavioral Health Services Act (BHSA).
Senate Budget: Modifies the governor’s budget by approving the redirections of BHSF with the following changes:
- Eliminates all funding ($44.6 million BHSF and $53.4 million General Fund) for the Behavioral Health Services and Supports Platform.
- Restores $10 million to for the Innovation Partnership program.
- Restores $6.7 million to the Commission for Behavioral Health for advocacy contracts.
- Redirects additional $4.5 million BHSA Behavioral Health Workforce Initiative funding to support Title IV-E Stipend Program.
Assembly Budget: Rejects the governor’s budget.
Proposition 36
Orange County Requests:
- $400 million statewide for Proposition 36 implementation of recovery support services and substance use treatment.
- $110 million statewide for pre-trial diversion and behavioral health rehabilitative services.
Governor’s Proposal: No funding
Senate Budget: $100 million one-time General Fund
Assembly Budget: No funding
Homeless Housing, Assistance, and Prevention (HHAP) Program Round 7 Funding, Round 7 Statutory Framework, and Round 8 Authorization
Orange County Requests:
- Round 7 statewide funding of $500 million for 2026-27, an additional $500 million in the current fiscal year and $1 billion ongoing annually.
- Delay the governor’s proposed accountability requirements and identify modifications that provide flexibility to address homelessness in ways that reflect the needs of our community.
Governor’s Budget: Appropriates $500 million for a seventh round of the HHAP program in the 2026-27 fiscal year contingent on the enactment of accountability legislation to govern administration of the new round.
Senate Budget: Adopts placeholder budget trailer bill language that:
- Funds Round 7 at $1 billion;
- Facilitates the streamlined availability of initial Round 7 HHAP funding disbursements by no later than September 1, 2026;
- Includes explicit, consistent, and streamlined system performance metrics;
- Ensures any new funding disbursement prerequisites are appropriate, realistic, and not administratively burdensome; and
- Authorizes HHAP Round 8 funded at $1 billion.
Assembly Budget: Funds Round 7 at $800 million and adopts placeholder trailer bill language.
In Home Support Services (IHSS) – Cost Shift to Counties
Orange County Request: Oppose proposal to eliminate the state’s share of cost for growth in IHSS hours and shift $233.6 million in costs to counties.
Governor’s Budget: Cuts $233.6 million General Fund “to remove the state’s share of cost for IHSS hours per case growth” beginning in 2027-28, $385 million in 2028-29, and $414.7 million in 2029-30.
Senate Budget: Rejects the governor’s budget.
Assembly Budget: Rejects the governor’s budget.
Workforce and Affordable Housing Budget Request
Orange County Requests:
- Support the proposed 2026 Affordable Housing Bond for $10 billion.
- Include funding eligibility in the Housing Bond for the Local Housing Trust Fund (LHTF) and the California Housing Accelerator program.
Governor’s Budget: Defers to the policy process.
Senate Budget: Defers to the policy process.
Assembly Budget: Defers to the policy process.
Veterans Services
Orange County Requests:
- Budget language authorizing the California Department of Veterans Affairs to expend funds from the Southern California Veterans Cemetery Master Development Fund for at least the first stage of project development (Preliminary Plans), and potentially the second stage (Working Drawings).
- $30 million statewide for County Veterans Services Offices (CVSOs).
Governor’s Budget: Not included
Senate Budget: Not included
Assembly Budget:
- Includes budget bill language providing $10 million Spending Authority for Project Phases 1 and 2 from the Southern California Veterans Cemetery Master Development Account.
- Includes $6 million General Fund one-time to be expended over three years for CVSOs.
Airport Fire Budget Request
Orange County Request: The California Department of Forestry & Fire Protection (CalFire) to dismiss its litigation against the County for $31.7 million for fire suppression costs.
Governor’s Budget: Not included
Senate Budget: Not included
Assembly Budget: Not included
Homelessness & Housing
Local Development Impact Fees on State-Funded Affordable Housing Projects
Governor’s Budget: Includes budget trailer bill language intended to reduce the imposition of local development fees on state-subsidized affordable housing projects by treating the waiver of local development fees as a local contribution when scoring affordable housing project funding applications; and prohibiting local governments from imposing development fees when the local government is the one seeking state funding for an affordable housing project.
Senate Budget: Rejects the governor’s proposal without prejudice and defers any further consideration of the proposed budget trailer bill to the policy bill process.
Assembly Budget: Defers trailer bill language to a 3-party agreement between the Assembly, Senate, and administration.
Proposal to Restructure the State’s Affordable Housing Funding system
Governor’s Budget: Includes multiple budget trailer bill proposals and multiple budget change proposals that together would significantly restructure how the state awards its affordable housing funding.
Senate Budget: Defers adoption of the proposed trailer bills and defers approval of the corresponding resources and staffing requests pending a 3-party agreement on the overall affordable housing funding system restructuring proposal and the provision of adequate funding for state affordable housing programs.
Assembly Budget: Defers proposals to a 3-party agreement.
Enhanced State Low Income Housing Tax Credits (LIHTC)
Governor’s Budget: No funding
Senate Budget: Includes $500 million for enhanced state LIHTC to further support affordable housing development statewide.
Assembly Budget: Adopts $700 million for enhanced state LIHTC.
Disaster Rebuilding Fund
Governor’s Budget: Includes a statutory framework and $100 million in funding for the creation of a Disaster Rebuilding Fund at the California Housing Finance Agency to assist homeowners seeking to rebuild in the wake of natural disasters, such as wildfire, through a combination of a loan loss guarantee program, an interest rate buydown program, and other tools intended to reduce borrowing costs and facilitate access to private financing.
Senate Budget: Adopts placeholder trailer bill language that establishes the Disaster Rebuilding Fund and provides additional direction and detail regarding the scope of activities to be undertaken, eligibility criteria, and safeguards against predatory and/or discriminatory lending practices. Approves the corresponding appropriations request pending a 3-party agreement on the content of the trailer bill language. Directs staff to explore possible additional options for homeowners unable to take on additional debt.
Assembly Budget: Approves the governor’s budget proposal and adopts placeholder trailer bill language.
Multifamily Housing Program (MHP) Funding
Governor’s Budget: No funding
Senate Proposal: Includes $500 million in 2026-27. MHP provides financial support to targeted deeply affordable housing projects statewide.
Assembly Budget: Includes $200 million in 2026-27.
Housing Disability Advocacy Program
Governor’s Budget: No funding
Senate Budget: No funding
Assembly Budget: Approves $25 million General Fund one-time for the Housing Disability Advocacy Program.
Home Safe
Governor’s Budget: No funding
Senate Budget: No funding
Assembly Budget: Approves $50 million General Fund one-time for the Home Safe Program.
Health: H.R. 1
California Health Benefit Exchange (Covered CA): State Premium Subsidy Augmentation
Governor’s Budget: Includes $300 million annually to support additional state health care affordability subsidies for consumers in the Covered California health benefit exchange.
Senate Budget: Approves the governor’s budget.
Assembly Budget: Approves the governor’s budget.
Medi-Cal
Reinstatement of Medi-Cal Asset Limit
Governor’s Budget: Restores the asset limit of $2,000 for an individual, and $3,000 for a couple for seniors and persons with disabilities to qualify for Medi-Cal.
Senate Budget: Rejects restoration of the asset limit.
Assembly Budget: Delays implementation of the stricter asset limit to July 1, 2027.
Elimination of Optional Adult Acupuncture Benefit
Governor’s Budget: Eliminates the acupuncture benefit in Medi-Cal.
Senate Budget: Rejects the elimination of the benefit.
Assembly Budget: Rejects the elimination of the benefit.
Move Unsatisfactory Immigration Status Population from Managed Care to Fee-For-Service
Governor’s Budget: Transitions individuals with UIS from the managed care delivery system to the fee-for-service delivery system to save $583.8 million ($471.6 million General Fund) in 2026-27 and $1.5 billion ($1.2 billion General Fund) annually thereafter from
Senate Budget: Approves the governor’s proposal and adds additional net General Fund savings of $100 million annually from including CalAIM benefits on a state-only, fee-for-service basis to avoid higher cost utilization of services. Adopts modified placeholder trailer bill language to implement these provisions, as well as include additional safeguards for beneficiaries including, but not limited to, continuity of care.
Assembly Budget: Adopts a placeholder plan to carve out emergency benefits for UIS in fee-for-service, while retaining non-emergency benefits under managed care.
2027 Managed Care Organization Tax
Governor’s Budget:
- Renews the tax on managed care organizations (MCOs) effective January 1, 2027, that conforms with new, stringent H.R. 1 federal requirements that prohibit taxes that assess a higher rate on Medi-Cal plans than on commercial plans. If approved, this new MCO tax would result in General Fund savings of $575 million in 2026-27, $2.3 billion in 2027-28 and 2028-29, and $1.7 billion in 2029-30.
- Implements a continuation of an MCO tax, also effective January 1, 2027, that is substantially similar to the current MCO tax, pursuant to the requirements of Proposition 35, approved by voters in 2024, which caps taxes on commercial plans to no more than $36 million, and requires DHCS seek federal approval of a substantially similar tax.
- Includes trailer bill language to implement these MCO tax proposals.
Senate Budget: Rejects the governor’s budget proposal and replaces it with the Fair Share Charge:
- The Medi-Cal Fair Share Charge would impose a charge on large employers who do not provide adequate health coverage for their low-wage employees and rely on Medi-Cal to ensure the health of their workforce.
- The charge would be $285 per month per employee enrolled in Medi-Cal for employers with 500 or more employees, beginning April 1, 2027.
- This proposal would result in revenue of approximately $575 million in 2026-27 and $2.3 billion ongoing.
Assembly Budget: Approves the governor’s budget.
Medi-Cal Coverage for Individuals with Unsatisfactory Immigration Status (UIS)
Medi-Cal for Qualified Non-Citizens
Governor’s Budget: Beginning October 1, 2026, H.R. 1 amends the definition of “qualified alien” for eligibility for the Medi-Cal program to exclude refugees, humanitarian parolees, asylum grantees, certain abused spouses and children, trafficking victims, and certain other non-citizens. The governor’s budget proposes to disenroll immigrants in these categories from full-scope Medi-Cal coverage beginning July 1, 2027, and instead enroll them in restricted-scope coverage, which only provides emergency and pregnancy services.
Senate Budget: Rejects the governor’s budget and maintains full-scope Medi-Cal for qualified non-citizens.
Assembly Budget: Approves the governor’s budget.
Increases Premiums from $30 to $50
Governor’s Budget: Increases monthly premiums for undocumented Californians age 19 and older enrolled in full-scope Medi-Cal coverage, effective July 1, 2027, from $30 to $50. General Fund savings for this proposal are estimated at $427.3 million in 2027-28, decreasing to $314.3 million annually by 2029-30.
Senate Budget: Rejects the governor’s budget.
Assembly Budget: Approves the governor’s budget.
In-Home Supportive Services (IHSS)
IHSS Backup Provider System
Governor’s Budget: Eliminates the IHSS Back-up Provider System in 2026-27, a reduction of $3.2 million General Fund.
Senate Budget: Rejects the governor’s budget.
Assembly Budget: Rejects the governor’s budget.
Auto-Termination of IHSS Eligibility to Align with Medi-Cal Loss
Governor’s Budget: Includes the auto-termination of IHSS to align with Medi-Cal loss which would result in General Fund savings of approximately $56.3 million in 2026-27, $141.1 million in 2027-28, $199.9 million in 2028-29, and $215.3 million in 2029-30.
Senate Budget: Approves the governor’s budget, contingent on adoption of trailer bill language to improve noticing for IHSS recipients.
Assembly Budget: Rejects the governor’s budget. Instead, adopts no-cost trailer bill language to make improvements to the noticing to IHSS recipients about their reliance on Medi-Cal to retain IHSS, and to provide for other improvements that assist with IHSS retention and reestablishment after a termination and subsequent curing of Medi-Cal.
IHSS Collective Bargaining
Governor’s Budget: Includes trailer bill language adding enforcement provisions related to collective bargaining agreements for IHSS provider wages and benefits. Specifically, counties that have not reached an agreement by July 1, 2026, would be required to reach an agreement with the employee organization within 90 days. Failure to reach agreement within that timeframe would result in withholding of 1991 realignment funding, regardless of whether the county is operating under an expired contract.
Senate Budget: Adopt placeholder trailer bill language consistent with the Administration's proposal.
Social Services
CalFood Program
Governor’s Budget: Investment of $30 million General Fund one-time above the $8 million base funding.
Senate Budget: Includes a $108 million augmentation for CalFood in 2026-27.
Assembly Budget: Includes a $110 million augmentation for CalFood in 2026-27.
Adult Protective Services
Governor’s Budget: Reduction of $70 million General Fund in 2026-27 and ongoing to revert the expansion of Adult Protective Services (APS) adopted in 2021-22, including changing the age of eligibility from 60 back to 65 and eliminating enhanced APS services such as extend case management. This proposal includes corresponding trailer bill language.
Senate Budget: Rejects governor’s budget.
Assembly Budget: Rejects governor’s budget.
Revenues
Digital Prewritten Software Tax
Governor's Budget: Applies sales tax to sales of electronically delivered prewritten software, commencing January 1, 2027.
Senate Budget: Approves the governor’s proposal and adopts placeholder trailer bill language.
Assembly Budget: Adopts placeholder trailer bill language.
Permanent Credit Limitation
Governor's Budget: Includes a permanent business tax credit limitation commencing with the 2027 tax year. The proposed limit would be the greater of $5 million per company per year or 50% of a company’s tax liability. This limit structure is intended to ensure small businesses still have access to the credits, and larger businesses may still utilize a significant portion of credits before being limited by the cap. Businesses impacted by the current temporary cap limitation from 2024 though 2026, would still retain refundability provisions related to those foregone credits.
Senate Budget: Approves the proposal and placeholder trailer bill language.
Assembly Budget: Adopts placeholder trailer bill language.
Upcoming Hearings
Agendas are typically posted on the committee websites in the Assembly and Senate a few days prior to the hearings. To view hearings after they take place, you may access them in the Assembly or Senate media archives where they are generally available within a few hours of committee adjournment.
Monday, June 08 2026, 2:30 P.M.
Assembly Transportation
1021 O Street, Room 1100
Informational Hearing: Overview of the Department of Motor Vehicle's Autonomous Vehicle Regulations
Wednesday, June 10 2026, 1:30 p.m.
Assembly Joint Hearing Local Government And Revenue And Taxation
State Capitol, Room 444
Joint Initiative Hearing: Limits Ability Of Voters To Raise Revenues For Local Government Services. Initiative Constitutional Amendment. (#1983)
Wednesday, June 10 2026, 3:00 p.m. to 5:00 p.m.
Assembly Select Committee on Youth Mental Health and Treatment Accessibility
State Capitol, Room 126
Informational Hearing: Policy Levers and Solutions to the Youth Mental Health Crisis
Grant Opportunities
Below is a list of the latest grant opportunities released by the state. All opportunities for local jurisdictions may be found here.
Application Deadline: 9/30/26 23:59
Title: Transformative Climate Communities Round 6 IMPLEMENTATION Grant (FY 25-26)
State Agency / Department: Strategic Growth Council
Match Funding? 50%
Estimated Total Funding: Approximately $82.5 million is available for three Implementation Grant awards of up to $27.5 million each.
Funding Method: Advances & Reimbursement(s)
Application Deadline: 9/30/26 23:59
Title: Transformative Climate Communities Round 6 PLANNING Grant (FY 25-26)
State Agency / Department: Strategic Growth Council
Match Funding? No
Estimated Total Funding: Approximately $900,000 will be available for 3 awards of up to $300,000 each.
Funding Method: Advances & Reimbursement(s)
Application Deadline: 9/30/26 23:59
Title: Transformative Climate Communities Round 6 PROJECT DEVELOPMENT Grant (FY 25-26)
State Agency / Department:Strategic Growth Council
Match Funding? No
Estimated Total Funding: $15,000,000
Funding Method: Advances & Reimbursement(s)
Anticipated Open Date: June 2026
Title: CAL FIRE Forest Health Research Program (FY 2026-27) California Climate Investments Grants (RP-RFP-2026-01)
State Agency / Department: Department of Forestry and Fire Protection
Match Funding? No
Estimated Total Funding: $4,000,000
Funding Method: Advances & Reimbursement(s)
Anticipated Open Date: June 2026
Title: CAL FIRE Forest Health Research Program (FY 2026-27) Proposition 4 California Climate Bond Grants (RP-RFP-2026-03)
State Agency / Department: Department of Forestry and Fire Protection
Match Funding? No
Estimated Total Funding: $3,000,000
Funding Method: Reimbursement(s)
Anticipated Open Date: June 2026
Title: CAL FIRE Forest Health Research Program (FY 2026-27) California Climate Investments Graduate Student Grants (RP-RFP-2026-02)
State Agency / Department: Department of Forestry and Fire Protection
Match Funding? No
Estimated Total Funding: $500,000
Funding Method: Reimbursement(s)
Expected award announcement: The date on which the grantor expects to announce the recipient(s) of the grant. End 2026
Title: Regional Wildfire & Landscape Resilience Grants
State Agency / Department: Department of Forestry and Fire Protection
Match Funding? No
Estimated Total Funding: $30,000,000
Funding Method: Advances & Reimbursement(s)
Application deadline: 7/31/26 20:00
Title: 2026 Natural Community Conservation Planning Local Assistance Grant Program
State Agency / Department: Department of Fish and Wildlife
Match Funding? No
Estimated Total Funding: $576,000
Funding Method: Other. The grantee sends invoices to CDFW.
Governor’s Press Releases
Below is a list of the governor’s press releases beginning May 27.
June 2: Trump is still trying to rob victims to pay criminals for their political support
June 1: ICYMI: California ranks #1 in U.S. for supporting maternal mental health
June 1: Governor Newsom issues legislative update 6.1.26
May 31: Governor Newsom proclaims Jewish Heritage Month
May 30: Governor Newsom proclaims Asian American and Pacific Islander Heritage Month
May 29: First Partner Siebel Newsom celebrates the annual Move Your Body, Calm Your Mind Day in Sacramento
May 29: Governor Newsom applauds updates to California’s Cap-and-Invest Program
May 29: Governor Newsom celebrates graduation of emergency response leaders, highlights investments since 2019
May 29: Governor Newsom proclaims Foster Care Month
May 28: Governor Newsom’s Clean California initiative celebrates 100 community designations across the Golden State, leading the way for safer and cleaner environments
May 28: Governor Newsom proclaims Mental Health Awareness Month
May 28: Governor Newsom announces new funding for nonprofits and faith-based groups following San Diego mosque shooting
May 27: Governor Newsom signs legislation to further protect California elections from interference and intimidation
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