SACRAMENTO, CA — Following the release of Governor Newsom’s 2026-27 revised budget proposal, the California Budget & Policy Center (Budget Center), a nonpartisan research and analysis nonprofit, responded with the following statement from its executive director, Chris Hoene:
“Governor Gavin Newsom’s final state budget plan is an opportunity to cement his legacy and approach to governance. The decisions made in the coming weeks will determine whether people with low incomes, children, immigrants, seniors, veterans, and people with disabilities have access to the health care, food assistance, and other supports that support their wellbeing — and test state leaders’ commitment to a ‘California for All.’
“We applaud the governor’s support for revenue solutions, including the digital software tax and proposal to permanently cap business credits. This is a positive step toward addressing the state’s long-term revenue imbalance and reducing inequitable tax breaks that disproportionately benefit large, profitable corporations. The need for a cap underscores the inequities in California’s corporate tax code.
“The governor promoted California’s economic dominance while, in the same breath, making it more difficult for Californians with low incomes to access health care by reinstating harmful Medi-Cal asset limits, expanding work requirements, and increasing Medi-Cal premiums for certain immigrants. The governor also walks back promised child care spaces, ignores affordable housing needs, and fails to meaningfully boost county budgets to ensure they can administer new federal requirements and keep people enrolled in vital programs.
“On top of these new state cuts, Californians are already facing mounting affordability and inflationary pressures alongside unprecedented federal cuts. The 2025 federal megabill, H.R. 1, delivers massive federal tax giveaways to the wealthiest households and most profitable corporations while slashing funding for Medi-Cal, CalFresh, and other essential supports that millions of families and low-wage Californians use to access life saving health care and food assistance.
“Under the governor’s current proposal, up to 2 million Californians could still lose health coverage, and more than 3 million households are at risk of losing all or some of their nutrition assistance as a result of federal cuts. Some of the Governor’s proposed cuts would add to rather than mitigate that harm.
“In terms of future budget years, California’s projected structural budget imbalance is not a spending problem — it’s a revenue problem rooted in a decades-old tax and governance structure. The Legislative Analyst’s Office’s latest report confirms that 70% of recent spending growth was simply keeping up with inflation and an aging population, not building new programs. The remaining 30% reflects smart policy choices: modest but meaningful investments in Californians’ well-being.
“While the governor’s proposal to partially cap business credits is welcomed, highly profitable corporations — including, for example, Alphabet, Nvidia, Apple, and Salesforce — continue to be showered with billions of dollars in tax breaks they can use to avoid paying state taxes. State spending on corporate tax breaks should be taken out of the state’s ‘shadow budget’ and instead evaluated regularly, similar to how state leaders evaluate spending that supports the health and well-being of Californians.
“In the near term, the governor and Legislature should also close the Water’s Edge loophole, which allows large multinational corporations to shift state profits to offshore tax havens, which would raise up to around $3 billion annually.
“We look forward to working with state leaders to ensure large, profitable corporations pay their fair share and contribute to the state’s infrastructure, communities, and workforce that make their success possible.
# # #
About the California Budget & Policy Center:
The California Budget & Policy Center (Budget Center) is a nonpartisan research and analysis nonprofit advancing public policies that expand opportunities and promote well-being for all Californians.
