County staff warn governor's budget and federal health negotiations could strain local services

Alameda County legislative staff told the Personnel Administration & Legislation Committee on Jan. 12 that both federal and state budget developments could create near‑term operational and fiscal pressure for counties.

On the federal front, a staff member (Emily Bauke Da Silva) said the current continuing resolution runs through Jan. 30 and that the House and Senate have limited time to finish appropriations or adopt another CR. Staff noted the House passed an initial bipartisan spending package that the Senate is expected to consider and that remaining accounts could be addressed either by piecemeal packages or additional short‑term CRs. John Assini summarized recent House action on health care, saying, “The House passed legislation that would extend the ACA's premium tax credits for 3 years, by a vote of 230 to 196,” and added the measure is unlikely to advance in its current form in the Senate; bipartisan Senate negotiations are exploring a shorter extension with policy changes including contributions tied to health savings accounts and revised eligibility rules.

On the state side, Amy Costa of Full Moon Strategies reviewed the governor’s proposed 2026–27 budget, which she reported as roughly $348.9 billion all funds with approximately $248.3 billion in general fund expenditures and a reported operating budget shortfall in the budget year (staff cited a $20.9 billion operating deficit). Costa told the committee the administration projects multiyear out‑year deficits and that the budget includes few new spending proposals because of revenue concentration and uncertainty.

Costa emphasized specific county exposures: staff flagged an estimated statewide impact from HR1 of about $1.4 billion in the budget year (with no significant county backfills included in the governor’s proposal), uncertainty over MCO tax timing pending CMS approval, and a proposal shifting IHSS growth‑per‑case costs to counties beginning in a future year. She also highlighted CalFresh changes tied to federal policy under HR1, noting the governor’s proposal includes a $38.2 million general fund increase to partially offset a federal administrative cost‑sharing reduction and that counties could face approximately $149 million in increased costs beginning October 2026.

Committee members asked whether a federal shutdown was likely; staff said it remained possible but their current read was that short‑term CRs were more probable than a full shutdown. No public comments were received during this update.

The committee will continue to monitor federal and state budget developments and will discuss HR1 impacts in a joint meeting with the Health and Social Services Committee taking place after the PAL session.