County committee hears federal, state budget woes as LAO warns $18 billion FY2026–27 shortfall

Alameda County officials on Monday received federal and state legislative briefings that flagged near‑term uncertainty for health coverage subsidies and a large projected state budget shortfall that could ripple to county services.

At the Personnel, Administration and Legislation Committee meeting, CJ Lake delivered the federal legislative update, saying negotiations over whether to extend enhanced Affordable Care Act premium tax credits remain unresolved ahead of the end‑of‑year deadlines. "Many Democratic senators continue to push for an extension of the ACA enhanced premium tax credits, arguing that any lapse will significantly increase the cost of premiums for millions of Americans," Lake said. He told supervisors a White House framework to limit subsidies to enrollees up to 700% of the federal poverty line was floated and quickly criticized by congressional Republicans.

Amy Costa of Full Moon Strategies briefed the committee on the Legislative Analyst Office's fiscal outlook for the 2026–27 budget cycle. "The LAO is estimating an $18 billion budget deficit for budget year 2026–27," Costa said, attributing the shortfall to structural spending growth — particularly in health and human services — and constitutional obligations such as Proposition 98 school funding and the state's reserve rules under Proposition 2.

The LAO forecast, Costa said, assumes rising Medi‑Cal and CalFresh costs and that some administrative savings assumed in the enacted budget may not materialize. "A lot of that is actually in the health and human services world," she said, noting the state could face further budgetary pressure from federal changes and provider‑tax adjustments.

Supervisor Jenna Bass asked whether the county could expect revenue bills in the legislature or whether revenue measures would more likely proceed via ballot initiatives. Costa said legislative measures face a two‑thirds threshold and that initiatives — including proposals to extend earlier ballot measures or a billionaire tax — appear more likely to be pursued to replace lost provider‑tax revenue. "There are certainly ballot initiatives in circulation right now aimed at this very kind of issue," she said, adding that any new revenue would likely arrive after the FY2026–27 budget deadline.

Jessica Blake Marrath, interim policy director with Alameda County Health, told the committee that county staff are coordinating with the chief administrative officer on next steps. "We've been in conversation with the CAO and with SSA to collaborate on a comment letter," Marrath said, referring to county plans to respond to federal proposals that affect benefits and access.

Why it matters: County leaders said the combination of federal uncertainty over ACA subsidies and the state's projected fiscal gap could affect local Medi‑Cal enrollments, county health budgets and human‑services programs. The committee did not take formal action; staff said they will continue monitoring federal and state developments and return with comment materials or further analysis as needed.

The committee chair adjourned the meeting. The CAO's office and county health staff said they will circulate a draft comment letter to the committee in the coming weeks and will monitor legislative and administrative developments.