SACRAMENTO — Gov. Gavin Newsom has agreed not to cut funding for child care programs and health insurance for low-income older adults as part of his plan to cover the state’s estimated $54.3 billion budget deficit.
Newsom’s budget proposal had recommended making fewer older adults eligible for Medicaid to save nearly $68 million. He had also proposed 10% cuts to all child care programs that help low-income adults go to work.

After negotiations with the state Legislature, Newsom has agreed to drop those cuts. The move was confirmed by a senior Newsom administration official on Monday who spoke on condition of anonymity because they weren’t authorized to discuss publicly ongoing negotiations with Legislative leaders.
The news comes as state lawmakers are scheduled to approve an operating budget on Monday that rejects most of Newsom’s proposed budget cuts. But the budget lawmakers approve likely will not become law. That’s because legislative leaders still don’t have an agreement with Newsom, who has the power to sign, veto or alter whatever the Legislature sends to him.
Lawmakers are passing the budget anyway because the state constitution says if they don’t don’t pass a spending plan by midnight they won’t get paid — part of voter-approved reforms in 2010 that were supposed to prevent the legendary battles in the past that have resulted in lengthy delays of the state’s budget.
Meanwhile, legislative leaders continue to negotiate with the Newsom administration to reach an agreement on the budget before the start of the new fiscal year on July 1. Newsom’s concessions are a sign the budget talks are progressing, but there are still many more issues to resolve before the Legislature can pass an amended budget.

Newsom: ‘Pleased by Conversations’ With Legislature

“I’m very pleased at the conversations we’ve been having,” Newsom said during a news conference on Monday. “I’m not going to say anything publicly that puts any of those conversations at risk.”
Representatives for Senate President Pro Tem Toni Atkins and Assembly Budget Committee chair Phil Ting declined to comment.
California’s budget problem is the same issue plaguing other states. The state’s stay-at-home order forced many businesses to close and more than 6 million people to file for unemployment benefits.
The state has already delayed its tax filing deadline to July 15, making it harder for state officials to know for sure how much money they will have to spend. The Newsom administration predicts state revenues will drop by $41 billion. The rest of the $54 billion deficit is because the state expects many more people will sign up for government services, including Medicaid and other safety net programs.
Newsom’s spending plan would cover that deficit by making billions of dollars in cuts to items such as public schools and health care services — including eliminating or cutting programs that aim to keep older adults out of nursing homes, which have been a source of coronavirus outbreaks in the state. Those cuts would automatically go away if Congress sends the state at least $14 billion in additional aid by July 1.
The Legislature’s plan rejects all of those cuts. Instead, it would cover the deficit by borrowing from some of the state’s restricted funds and taking more money from the state’s savings accounts. Their plan also would delay billions of dollars in payments to public schools. That means school districts could go ahead and spend the money and the state would pay them back later.