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The legislature has returned to Sacramento for the final year of the 2024-2026 legislative session. The first two weeks have been off to an interesting start, with the Governor presenting the 2026 State of the State and the Director of the Department of Finance presenting the Administration’s initial 2026-27 January Budget.
This session has also kicked off with changes to legislative leadership. As all are aware, on November 17, Senator Monique Limon was sworn in as the new Senate Pro Tempore. This came with changes to committee chairs and composition. Notably, Senator Akilah Weber Pierson has been named chair of Senate Health Committee. The full list of changes can be viewed, here. Additionally, the Senate has stood up a new committee: Senate Privacy Committee, mirroring the Assembly.
There are a couple of key deadlines to be aware of in the near-term. February 20 marks the last day to introduce bills. As a reminder, many bills from last year’s session remain in play as two-year bills, subject to other constitutional or rule-based deadlines. The legislature will meet on bills and in budget subcommittees until March 20, when they break for spring recess. The complete legislative calendar can be found, here.
2026-2027 California Budget
This year, Governor Newsom opted to deliver the State of the State on January 8, with Director of the Department of Finance, Joe Stepinshaw, presenting the 2026-27 January State Budget, on Friday, January 9. Key materials and links to view both presentations are available below.
The total 2026-27 balanced budget is $348.9 billion, with $248.3 billion in General Fund (GF). The budget as presented shows a modest shortfall of $2.9 billion in 2026-27, with projected “out-year” deficits of approximately $22 billion in 2027-28. The Governor and Director Stepenshaw have characterized the budget as a “workload budget” with no significant new initiatives. One important note is the Legislative Analysist Office (LAO) released their budget report which highlights a much more significant deficit of $18 billion. The LAO notes a multiyear budget deficit problem and raises concerns that the Governor’s initial budget proposal includes no solutions to address this ongoing deficit.
California’s 2026‑27 Governor’s Budget, as presented, holds overall health and human services spending roughly flat in real terms while using one‑time and special funds (notably Medi‑Cal provider taxes and Proposition 1 behavioral health revenues) to manage a multi‑year General Fund deficit, protecting core Medi‑Cal and safety‑net programs but relying on delaying, resizing, or shifting health‑related commitments rather than launching major new health initiatives. Total Health and Human Services spending is about 343.6 billion dollars in 2026‑27, including 94.4 billion dollars from the General Fund, reflecting continued caseload and cost growth even as revenues soften, and Medi‑Cal remains the largest driver with projected 2026‑27 spending of about 222.4 billion dollars total funds, 48.8 billion dollars General Fund, up roughly 2.4 billion dollars General Fund from revised 2025‑26 levels because of federal changes and underlying cost growth. The budget does not propose broad new Medi‑Cal expansions or benefit restorations and instead focuses on sustaining existing eligibility and benefits, including adjustments to anticipated coverage losses stemming from federal legislation such as H.R. 1, while continuing CalAIM as a core delivery‑system strategy with whole‑person care, enhanced care management, and community supports built into the baseline rather than expanded dramatically.
Much more significant work and details will unfold in the coming months. ACHD will be monitoring the budget discussions closely and are hopeful that the May Revise, presented by May 14, will carry more cognizable solutions to these pressing budget concerns.
Helpful Links & Resources:
· Department of Finance: Governor’s Budget Summary
· LAO Analysis
· State of the State Address
· California Budget Presentation
Rural Health Transformation Fund Update:
While many may be surprised, California did receive $233,639,308 through CMS’s Rural Health Transformation Fund (RHTP). This number exceeds what California anticipated to draw down by nearly $30 million. We expect more announcements on the fund to come in the next several weeks. Below are the relevant links and details currently available. Please note that the fund is not provider specific, but rather about supporting rural health broadly.
· CMS Award Press Release
· CA Application Details
· HCAI Website on RHTP
· Subscribe to HCAI RHTP Email Updates, here.
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