Subcommittee #1 (Education)
Pérez (D-Pasadena) Chair, Ochoa Bogh (R-Yucaipa), and Archuleta (D-Pico Rivera)
Misguided Borrowing Maneuver for School Funds. The Senate Democrats’ budget plan for TK–12 education would use a misguided accounting maneuver first employed by the Department of Finance in 2024-25. The maneuver delays recognizing the funds paid to schools until future years and instead uses the state’s cash reserves to cover the balance, essentially creating an interest-free loan. This will result in billions of dollars in hidden debt, putting pressure on future General Fund resources. The nonpartisan Legislative Analyst’s Office strongly criticized the first use of this scheme in 2024-25 and described it as setting a bad precedent. Unfortunately, that appropriate concern foretold the Democrats’ repeated use of misguided borrowing.
Supporting Access to Higher Education. In a December 2025 budget letter, Senate Republicans named access to higher education as one of their top budget priorities. Senator Rosilicie Ocho Bogh (R-Yucaipa), along with her Democratic colleagues on Subcommittee #3, voted to reject Governor Newsom’s proposed $435 million cut to the Middle-Class Scholarship program for 2026-27. That proposed cut would amount to roughly half the funds and would reduce aid to 350,000 students from 35 percent of their unmet college costs to 17.5 percent. Senate Republicans will continue to advocate for keeping these scholarship funds in the budget.
Key Topics to be Heard Next Week: Subcommittees are not likely to meet again prior to budget enactment. A full Budget Committee hearing is likely to be held on June 11th or 12th to adopt the legislative Democrats’ version of the budget prior to the June 15th constitutional deadline.
Subcommittee #2 (Resources, Environmental Protection, and Energy)
Reyes (D-Colton) Chair, Choi (R-Irvine), Blakespear (D-Encinitas), and McNerney (D- Pleasanton)
Wildfire Preparedness and Fiscal Accountability Remain Senate Republican Priorities. The subcommittee voted on various proposals to enact Senate Democrats’ version of the 2026-27 budget. Senate Republicans supported targeted investments focused on wildfire resilience, improving preparedness, expediting vegetation management projects, infrastructure modernization, habitat restoration, deferred maintenance, and operational readiness.
Significant Concerns Surrounding Greenhouse Gas Funds. At the same time, Senate Democrats continued defending long-term spending commitments tied to the Greenhouse Gas Reduction Fund (GGRF) under the rationale that “a deal is a deal,” despite growing concerns about the program’s long-term sustainability. The California Air Resources Board’s evolving regulations are intended to reduce emissions over time, the very purpose of Cap-and-Invest, but lower emissions also mean lower auction revenues. Even as the Newsom administration acknowledges projected GGRF revenue shortfalls, Democrats advanced proposals expanding funding flexibility and protecting ongoing spending commitments tied to the program. Senate Republicans raised concerns that the GGRF is increasingly being treated as a permanent funding source for expanding programs and ongoing state obligations, rather than a targeted emissions-reduction program.
Key Topics to be Heard Next Week: Subcommittees are not likely to meet again prior to budget enactment. A full Budget Committee hearing is likely to be held on June 11th or 12th to adopt the legislative Democrats’ version of the budget prior to the June 15th constitutional deadline.
Subcommittee #3 (Health and Human Services)
Menjivar (D-San Fernando Valley) Chair, Grove (R-Bakersfield), and Weber Pierson (D-San Diego)
Senate Democrats Approve $2.3 Billion Annual Tax on California Businesses. The subcommittee voted 2-1 to impose an additional monthly payroll tax on employers with more than 500 employees. Senator Shannon Grove (R-Bakersfield) voted No in strong opposition. The permanent tax, dubbed by Democrats as the “Medi-Cal Fair Share Charge,” would require the state to collect $285 per month for each employee who is enrolled in Medi-Cal. This tax is estimated to generate $575 million in 2026-27 and $2.3 billion annually. The revenues would be used to further expand Medi-Cal, which has doubled in size under Governor Newsom to an astounding $217 billion program. Instead of reigning in out-of-control Medi-Cal spending and reducing labor costs on employers, the Democrats happily add new burdens that will drive more businesses out of California.
Key Topics to be Heard Next Week: Subcommittees are not likely to meet again prior to budget enactment. A full Budget Committee hearing is likely to be held on June 11th or 12th to adopt the legislative Democrats’ version of the budget prior to the June 15th constitutional deadline.
Subcommittee #4 (State Administration and General Government)
Hurtado (D-Bakersfield) Chair, Niello (R-Fair Oaks), Cabaldon (D-Yolo), Smallwood-Cuevas (D-Los Angeles)
Housing and Homelessness Funding Prioritized. Budget Subcommittee #4 met to finalize issues for inclusion in the Senate Democrats’ version of the 2026-27 budget. Senate Republicans were encouraged to see housing and homelessness funding prioritized in the Senate budget, including $500 million for Cal-Home and an additional $500 million for the Homeless Housing and Prevention Program, bringing total HHAP funding to $1 billion in 2026–27. Cal-Home funding was a key Senate Republican budget priority, making its inclusion a welcome addition.
Billions of Dollars in Tax Increases Approved. However, Senate Democrats approved the Governor’s proposals to raise taxes on Californians by $6.6 billion cumulatively through 2028-29 by taxing digital software and limiting business tax credits. This is a significant expansion of the state’s tax base that will increase costs for families and small businesses, discourage investment, and weaken California’s economic competitiveness.
Governor’s Legacy Funding Undecided. Finally, the subcommittee failed to reject the Governor’s absurd request for $20 million General Fund to celebrate the legacies of California’s living governors. By leaving the proposal open, the subcommittee allowed it to remain under consideration in final budget negotiations between legislative Democrats and the Governor.
Key Topics to be Heard Next Week: Subcommittees are not likely to meet again prior to budget enactment. A full Budget Committee hearing is likely to be held on June 11th or 12th to adopt the legislative Democrats’ version of the budget prior to the June 15th constitutional deadline.
Subcommittee #5 (Corrections, Public Safety, Judiciary, Labor, and Transportation)
Richardson (D- San Pedro) Chair, Seyarto (R-Murrieta), and Durazo (D-Los Angeles)
Senate Budget Makes Significant Progress Improving Access to Justice. After years of strong advocacy for a robust and fully funded judicial branch, Senator Kelly Seyarto (R-Murrieta) noted optimism about the progress reflected in the Senate’s version of the budget, which includes at least $3 billion in lease-revenue bond authority for courthouse construction and $20 million to fund 26 new judgeships that were established and allocated to counties in 2023. The most recent update to the Judicial Needs Assessment Report shows a need for 98 new judgeships. Funding these 26 judgeships and the courtrooms they need will close about a quarter of the gap between judicial workload and the judges available to address that workload.
Wasteful Funding for High-Speed Rail Continues. After discussing the status of the California High-Speed Rail (HSR) Project during a May 7th hearing, including an exploding price tag of up to $231 billion and downsizing many project elements, Senate Democrats continued to throw good money after bad by recommitting $770 million ($423 million bond funds; $246 million federal funds). Despite no viable path for the HSR to reach southern California, $423 million of this funding is to prepare the Los Angeles Union Station for high-speed rail service. The remaining federal taxpayer funds come from federal grants for specific construction projects within the Merced-to-Bakersfield segment. Despite a failure to resolve bipartisan concerns voiced about the project during the prior oversight hearing, Democrats continued to approve this funding, despite Republican calls to stop wasting taxpayer dollars and end the project.
One-Party Rule Bad for Transparency. The subcommittee voted on 217 issues in the areas of transportation, labor, public safety, and the judiciary, including six that had not been discussed in public at all and 211 that had been discussed, to varying degrees, in previous subcommittee hearings from February through May. This has been the practice of legislative Democrats during budget deliberations for the past decade. While voting on hundreds of issues at once in blocks may be an efficient use of time, it has the unfortunate effect of shielding the ruling party from public scrutiny of many of their votes.
Key Topics to be Heard Next Week: Subcommittees are not likely to meet again prior to budget enactment. A full Budget Committee hearing is likely to be held on June 11th or 12th to adopt the legislative Democrats’ version of the budget prior to the June 15th constitutional deadline.