Assembly Budget Committee reviews final three‑way budget agreement, highlights shifts in education, health and climate funding

At an informational hearing of the Assembly Budget Committee, Jessica Holmes of the Department of Finance presented the administration’s summary of the final three‑party budget agreement reached with the Legislature and the governor’s office. Holmes said the deal reflects an effort to protect core safety‑net programs while responding to ongoing revenue uncertainty.

Holmes told the committee that “California was and continues to face uncertain economic and fiscal times,” and that the agreement includes a mix of one‑time and ongoing reductions to balance the budget while preserving priority investments. Among the items the Department of Finance highlighted were a $1 billion shift tied to fire protection activities, major Proposition 98 allocations for K‑12 and community colleges, targeted one‑time assistance for housing and homelessness programs, and program changes in Medi‑Cal and public health.

Why it matters: the agreement would change near‑term funding for education, public safety and health programs and includes policy trailer bills that could alter program eligibility, benefit design and administrative authority. Committee members said they welcomed protections of many programs but warned about out‑year pressures and federal policy risk.

Key provisions and figures cited by the Department of Finance

- Natural resources/fire protection: a $1,000,000,000 allocation to support CAL FIRE fire protection activities in 2025–26, and accelerated climate bond funding for forest and vegetation management. - Education (Proposition 98): the 2025–26 minimum guarantee was presented at about $114.6 billion with total Proposition 98 appropriations of roughly $118.0 billion; the budget includes $2.1 billion ongoing for universal transitional kindergarten for all 4‑year‑olds in 2025–26 and certain one‑time settle‑up obligations. - Higher education: one‑time deferrals of 3% baseline funding for UC ($129.7 million, one time) and CSU ($143.8 million, one time), with provisional authority for short‑term no‑interest cash loans to the campuses. - Human services and homelessness: one‑time allocations for programs including Home Safe and Bringing Families Home; funding to continue implementation of a foster care tiered rate structure and support for foster family agencies. - Public safety: $100 million one‑time General Fund to support Proposition 36 implementation over multiple departments. - Health/Medi‑Cal: a package of targeted general fund adjustments, including measures the administration says will achieve savings (for example, changes to drug benefit coverage and steps to secure rebates for certain members). - Other: trailer‑bill language to effect statutory changes for cannabis regulation and fee shifts intended to sustain enforcement without fee increases to licensees; transportation investments such as a Clean California cleanup and employment pathways program.

Committee response and next steps

Committee members thanked staff and the Department of Finance but repeatedly warned about out‑year fiscal risk and asked for clarity on specific trailer‑bill provisions. The Department of Finance and legislative staff said additional trailer bills and technical language remain forthcoming and that floor votes are expected later in the week.

Ending: The hearing was informational; no committee votes were taken at this session. Members indicated they would continue to review trailer‑bill language and fiscal details before floor action.