Legislative Leaders, Governor Newsom announce 2026-27 balanced budget agreement that ensures $0 deficit, while funding health care and key services

What you need to know: Senate President pro Tempore Limón, Assembly Speaker Rivas, and Governor Newsom announce a balanced budget agreement  – with zero deficit this year, and next — that maintains California's progress, prepares for the future, and protects vulnerable communities from assaults on the state. 

SACRAMENTO – Senate President pro Tempore Monique Limón, Governor Gavin Newsom, and Assembly Speaker Robert Rivas today announced a three-party agreement on California's 2026-27 state budget, delivering a balanced spending plan with zero deficit that protects Californians while maintaining the state's long-term fiscal stability amid continued economic uncertainty, including the withholding of state funding.

The agreement builds on California's strong fiscal foundation by preserving reserves, maintaining responsible budgeting practices, and continuing strategic investments that strengthen communities, grow the economy, and expand opportunity across the state.

“In January, California was faced with a difficult fiscal outlook that prompted the legislature to take a hard look at the financial future of the Golden State. Despite continued funding cuts from the federal administration, California was able to mitigate the impacts to programs that millions rely on. This budget agreement reflects our commitment to protect core programs and address our short and long-term financial future by building up our rainy day fund and making balanced budget choices. I am also proud that the Senate led on securing critical funding for childcare slots, safeguarding access to healthcare, and laying the foundation to ensure large corporations pay their fair share for healthcare. Thank you to the Governor and Speaker of the Assembly for their partnership to deliver a strong foundation for our future.” 
 

Senate President pro Tempore Monique Limón 

Commitment to help Californians 

The budget agreement reflects the Legislature and the Governor’s longstanding commitment to balanced budgets that protect Californians while preparing the state for future economic uncertainty. 

Governor Newsom’s administration has prioritized building reserves, reducing long-term liabilities, and making historic investments in education, public safety, housing, healthcare, climate resilience, infrastructure, and economic opportunity.

Earlier this week, legislative leaders and Governor Newsom announced two major agreements that form key pillars of the broader budget package: 

• The historic Veterans and Affordable Housing Bond Act of 2026 to help fund housing construction, preserve affordable housing, and expand homeownership opportunities including assistance for veterans, middle- and lower-income households, affordable rental housing, and interim and supportive housing for people experiencing homelessness.
• The Save for California's Future Act, a constitutional amendment that strengthens the state's Rainy Day Fund and modernizes California's fiscal safeguards to better prepare for future economic uncertainty. The Save for California’s Future Act will also help protect schools and businesses by reducing unemployment insurance trust fund liabilities and potential costs for employers. 

"A balanced budget isn't an end in itself—it's how we deliver for Californians. This budget demonstrates responsible choices that protect our fiscal strength while continuing to invest in what matters most. In California, we support working families, create more opportunity, and build safer, healthier communities. That's how we keep California the engine of America's economy and a place where everyone has the opportunity to succeed.”
 

Governor Gavin Newsom 

 

“Working families deserve a budget that has their back — and that’s exactly what California is delivering. We’re protecting health care, preserving food programs, investing in housing at record levels and building reserves to fight back no matter what Trump and Republicans throw at us. While Washington’s agenda drives up prices and guts critical programs, California is focused on what matters: Real solutions that put affordability first.” 
 

Assembly Speaker Robert Rivas

The State Senate Stands Up for California Communities

As previewed in the Senate’s budget plan released earlier this year, this 3-party agreement includes funding for: 

• Laying the foundation for the Fair Share from Big Corporation program to reduce the taxpayer subsidies for big corporations with employees enrolled in taxpayer-funded Medi-Cal instead of company-provided health plans. This program is expected to generate billions for healthcare.
• Adding 22,770 new child care spaces in 2026-27 to ensure California families have access to safe and affordable childcare.
• Delaying cuts to healthcare programs that would otherwise raise the cost of care for millions of Californians.
• Protecting the state’s air quality in frontline communities by funding the Community Air Protection program.
• Investing in affordable housing programs to ensure our most vulnerable keep a roof over their head.
• Increasing access to justice through judgeships and courts. 

The balanced budget agreement also:

• Maintains a balanced budget – not just for the coming fiscal year, but the following year as well – by setting aside more than $6 billion in anticipated revenues in a holding account.
• Continues investments in public safety and efforts to improve community safety across California.
• Adds billions in funding for TK-12 schools, community colleges, and higher education.
• Improves school support and accountability by moving management of the Department of Education into the Executive Branch and strengthens the State Superintendent's role to foster alignment of education policies across public education from TK through college.
• Limits large corporate tax breaks for the state’s largest corporations.
• Advances critical state housing finance reforms to accelerate affordable housing construction, reduce costs, and make state housing investments go further, while strengthening accountability for state homelessness funding.
• Continues investments in behavioral healthcare and implementation of Proposition 1.
• Supports healthcare access for Californians.
• Maintains California's leadership on climate resilience, clean energy, and wildfire preparedness.
• Invests in infrastructure, economic growth, workforce development, and affordability.
• Provides new investments to safeguard and speed up elections – increase staffing, voter outreach and education, and combat mis- and disinformation.

The agreement also reflects California's continued commitment to responsible fiscal management, preserving the state's ability to respond to future economic conditions while protecting the essential programs Californians rely upon.

The Governor, Senate, and Assembly will continue working together through the constitutional budget process in the coming days.

To read the full summary, please click here.