California State Senate Unveils "Foundation for the Future" Budget Plan
What you need to know:The Foundation for the Future budget plan makes responsible choices now to prevent tougher and more harmful budget decisions in the future, for both families and the overall economy.
SACRAMENTO – Today, the California State Senate unveiled its “Foundation for the Future” budget plan for the 2026-27 fiscal year. This proposal aims to bring stability to the state and address the current funding shortfall. The framework helps protect vital programs while strengthening our financial health for the future.
“At the center of the Foundation of the Future budget plan are the people feeling the greatest financial strain: working families and the middle class. California families are doing everything right, yet many are still struggling to keep up. The Senate’s comprehensive plan refocuses our efforts on maintaining strong essential programs, while addressing some of the financial pressure on Californians.”
Senate President pro Tempore Monique Limón
The budget focuses on three pillars: building the state reserves, maintaining funding for essential programs, and reducing the long-term structural deficit. This framework proposes increasing the Rainy Day Fund to help the Legislature manage the state’s volatile revenue system and balance the budget for the current and ongoing fiscal years. With a balanced budget and billions in reserves, the state can fund critical programs, including HHAP, California Dream for All, and the creation of 44,000 additional child care slots.
“This Senate budget plan reflects the kind of disciplined choices Californians expect. We’re setting aside more in reserves and holding the line on new ongoing spending, while continuing to fund the programs people rely on – programs like housing, health care, and education. At the same time, we’re taking a balanced approach to the state’s long-term deficit by pairing targeted spending reductions with new revenue, including asking large corporations to help cover costs they’ve shifted onto taxpayers. That’s a responsible way to stabilize the budget without turning our backs on the commitments we’ve made.”
Senator John Laird, Chair of the Senate Budget and Fiscal Review Committee
The Senate is developing a balanced approach to address the ongoing structural deficit with new revenues and targeted actions to bring overall costs down. That is why the Senate is introducing the Fair Share Contribution that applies to the top 1-2% of corporations in the state that do not pay for employee healthcare coverage.
Currently, 42% of Medi-Cal enrollees are full-time workers who are not enrolled in their company’s healthcare plan. This is often because their wages are low enough to qualify for state-subsidized health care. As a result, a significant portion of healthcare costs are being covered by California taxpayers rather than companies that employ these workers.
The Fair Share Contribution requires the state’s largest 1-2% of corporations that are not paying their share of Medi-Cal for their employees to pay that cost to the state. California can no longer subsidize some of our largest corporations that are not paying healthcare coverage for their employees. Between $5-8 billion could be raised to offset healthcare-related costs and Medi-Cal.
To read more about the Foundation for the Future framework, click here.
WHAT YOUR SENATORS ARE SAYING
Senator Sasha Renée Pérez, Chair of the Senate Budget Subcommittee No. 1 on Education: “The Foundation for the Future budget framework will make extraordinary investments in California’s students. Our investments will help to stabilize our schools by adding $5.9 billion to the Prop 98 Rainy Day Fund, $5.7 billion for one-time allocations, and $2 billion in ongoing Prop 98 funds. We will also protect the Middle Class Scholarship that serves as a vital lifeline for middle income families to achieve their dreams of sending students to college. As Chair of the Budget Subcommittee No. 1 on Education, I am proud of the work we are doing and the investments we’re prioritizing in this plan that will ensure California’s students can thrive.”
Senator Eloise Gómez Reyes, Chair of the Senate Budget Subcommittee No. 2 on Resources, Environmental Protection and Energy: “Communities like mine are already bearing the weight of climate-fueled disasters and they want solutions that protect their health. They also want responsible long-term budget solutions, not one-time investments used to address structural problems. The Future Budget Plans address these demands, making clear that GGRF and Prop 4 funds must be allocated through the Legislature’s transparent budget process, with decisions guided by the communities we represent.”
Senator Caroline Menjivar, Chair of the Senate Budget Subcommittee No. 3 on Health and Human Services: “In a difficult time when the state is dealing with a structural problem, we worked hard to ensure the solutions did not fall on the backs of our most vulnerable communities. We cannot simply cut our way out of this problem which is why I’m proud to have our plan proposed offsetting Medi-Cal state costs by holding very large employers accountable in paying their fair share. When 42% of the people on Medi-Cal are working, we know something needs to change. Postponing harmful cuts previously approved under Budget Subcommittee #3 on Health and Human Services provides the best outcome possible to meet the basic needs of all Californians. From protecting our long-term caregivers to fulfilling our promise of more child care slots and further investing in our distressed hospitals, this Senate Budget Plan puts us in a good place to lead with our values and protect the people who need it most.”
Senator Melissa Hurtado, Chair of the Senate Budget Subcommittee No. 4 on State Administration and General Government: “From my Central Valley district to the Oregon border, the California Dream we all desire feels unaffordable and unattainable. The Senate Foundation for the Future plan addresses this by making targeted investments in affordable housing, homeownership programs and ensures critical resources for local governments to reduce and prevent homelessness. As Chair of Budget Subcommittee #4, I will continue to fight for ways to reduce costs for Valley communities and working families throughout California.”
Senator Laura Richardson, Chair of the Senate Budget Subcommittee No. 5 on Corrections, Public Safety, Judiciary, Labor, and Transportation: “For last several months, Members of the Senate Budget Sub-Committee #5, have circumspectly reviewed the Governor’s budget in relation to the funding demands, while simultaneously working to identify areas where different approaches could produce greater results and financial saving solutions. I commend the state employee’s from the guards and healthcare providers in the prisons, to the judges, attorney’s and administrative support in our courthouses, to our California Highway Patrol, Department of Motor Vehicle and Cal Trans workers, who came to testify about the effectiveness of delivering service priorities that Californians desperately need which now guide the roadmap for recommendations to follow.”
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