California Gov. Gavin Newsom on Wednesday unveiled a revised state budget proposal, indicating a deficit he says has been caused largely by the Trump administration’s tariffs.
In January, Newsom's administration projected a budget surplus of nearly $8 billion, but now the governor's office is projecting a $16 billion reduction in revenue over the next two fiscal years.
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WATCH HERENewsom during a news conference Wednesday detailed cuts and caps to some programs, including Medi-Cal, that would help balance the budget.
Newsom earlier Wednesday announced his decision to freeze health care enrollment for undocumented immigrants, a program expansion that had a cost overrun of about $2.7 billon.
Under Newsom’s plan, low-income adults without legal status will no longer be eligible to apply for Medi-Cal, the state’s Medicaid program, starting in 2026. Those who are already enrolled won’t be kicked off their plans because of the enrollment freeze, and the changes won’t impact children. There was no indication how long the freeze would last.
Newsom’s office estimated the changes will save the state $5.4 billion by 2028-2029.
Newsom, a Democrat, kicked off his budget presentation by highlighting California’s contributions to the U.S. and world economy and blaming President Donald Trump’s economic policies for causing uncertainty that’s hindering the state.
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"California is under assault," he said. "We have a president that’s been reckless in terms of assaulting those growth engines."
On Tuesday, Newsom and state Attorney General Rob Bonta filed for an injunction to stop the Trump administration’s tariffs as part of California’s lawsuit challenging President Trump’s use of emergency powers to enact broad-sweeping tariffs that hurt states, consumers and businesses.
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SIGN UP The tariffs are projected to cost California consumers $25 billion and result in the loss of over 64,000 jobs, Newsom says. And the total cost of the tariffs is projected to cost California households upwards of $40 billion.
The Associated Press contributed to this report.
