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May Revision boosts reserves but leaves counties facing Medi-Cal, eligibility and HR 1 costs
Summary
County lobbyist Amy Costa told Alameda County supervisors that the governor's May Revision adds significant reserves and includes several revenue proposals but does not cover many county requests; county staff warned Medi-Cal redeterminations and HR 1 will increase local costs and administrative workloads.
The Alameda County Board of Supervisors' budget work group heard a detailed summary of the governor's May Revision on May 18, 2026, including new revenue proposals and large reserve increases that leave counties to absorb significant programmatic costs.
Amy Costa of Full Moon Strategies, who represents Alameda County in Sacramento, told the board the May Revision shows about $16.5 billion in upward revenue revisions since January and includes several proposed taxes that would require two-thirds legislative approval: an extension of a net operating loss limit estimated at roughly $850 million, a digital/software tax estimated at about $450 million, and a managed care organization (MCO) tax estimated at about $575 million. Costa said the governor's plan also proposes large reserve increases across the Budget Stabilization Account, the Prop 98 reserve for K'14 education, and the state economic uncertainties fund that together approach $30 billion.
Costa said the May Revision contains limited new funding for items counties requested. Examples cited included CalFresh administrative support (the administration proposes $30 million vs. a $103 million request) and no new funding for some behavioral-health asks. She said the administration's multiyear forecast projects out-year deficits even after the May Revision and that revenues concentrated in capital gains and tech-sector gains pose downside risk if markets correct.
County staff and presenters emphasized programmatic impacts that do not line up with the reserve increases. The presenters highlighted proposed Medi-Cal changes and HR 1-related policy shifts that the administration projects will raise state costs and lead to increased county workload for eligibility redeterminations, projected disenrollments, and administrative changes. Amy Shrago of the County Administrator's office told the group that the county is preparing for an increased caseload and higher demand for indigent care, and that these pressures will fall disproportionately on safety-net hospitals and behavioral-health providers.
Why it matters: the combination of larger state reserves and restricted new county dollars creates a tension for local government: counties must prepare for immediate operational pressures from eligibility and program changes even as statewide budgets emphasize savings and reserve-building. Costa and county staff urged continued advocacy in Sacramento for county funding to meet increased administrative workloads and safety-net needs.
What happens next: legislative subcommittees in Sacramento began meeting on the May Revision immediately following its release; the constitutional deadline for passing a state budget is June 15, though practical enactment often occurs closer to July 1. County staff told supervisors they will continue to monitor negotiations and provide regular updates to the board.
