SACRAMENTO, Calif. – On Friday, California’s legislature is set to vote on a budget plan aimed at halting enrollment in a state-sponsored healthcare program for immigrants lacking legal status to help mitigate a $12 billion budget gap.

This proposal is a reduced version of the one Democratic Governor Gavin Newsom put forward in May. Faced with the largest state budget in the nation, California is contending with a deficit for a third consecutive year. This fiscal shortfall has compelled Democratic leaders to scale back numerous liberal policy initiatives, including a significant expansion of healthcare for low-income immigrants living in the state without legal status.

The vote takes place amidst heightened tensions in Los Angeles linked to President Donald Trump’s intensified immigration enforcement in Southern California. As demonstrators have filled the streets, occasionally clashing with law enforcement over several days, Trump stated the protests turned violent, prompting the deployment of over 4,000 National Guard troops and 700 Marines, despite opposition from local and state officials. The protests have largely remained peaceful, and California has filed a lawsuit against the federal government to challenge the troop deployment.

The decision to freeze Medicaid enrollment highlights Democratic state leaders’ struggle to protect progressive priorities against budget challenges. Illinois and Minnesota, also led by Democratic governors, are on track to end health care access to low-income adults without legal status after facing budget shortfalls.

It is not the state’s final spending plan. Newsom and legislative leaders are still negotiating solutions before the start of the new fiscal year on July 1. Lawmakers must pass a balanced budget by Sunday or else they would forfeit their salaries. Democratic state leaders are also bracing for potential federal cuts to health care programs and other broad economic uncertainty such as federal tariff policies that could force them to make even deeper cuts.

Republican lawmakers say the Legislature’s budget doesn’t do enough to rein in costs ahead of future deficits.

“We have a structural deficit of ongoing programs continuing to increase at a greater rate than revenues are increasing,” state Sen. Roger Niello said. “So far, there’s nothing seen to reverse that.”

Freezing access and adding premiums

The state has more than 1.6 million people without legal status enrolled in its health care program this fiscal year, according to the budget.

Under Newsom’s plan, low-income adults without legal status would no longer be eligible to apply for Medi-Cal, the state’s Medicaid program, starting in 2026. Those who are already enrolled wouldn’t be kicked off their plans but would have to start paying a $100 monthly premium in 2027. State officials said the plan would help curb future spending and save $5.4 billion by fiscal year 2028-2029.

Lawmakers mostly agreed on the plan to halt enrollment for adults without legal status, but their proposal also includes a provision to allow people to reenroll within six months if they lose coverage for missing payment. The monthly premium would also lower by roughly a third to $30 and would only apply to adults between 19 and 59 under the Legislature’s plan. The proposal would save roughly $3.8 billion by fiscal year 2027-2028.

The proposals would likely result in people losing coverage because they can’t afford the premiums and send more people into emergency rooms, advocates said.

“This is no way to respond to concerns about the health and safety of communities that power our economy and contribute billions in state taxes,” said Masih Fouladi, Executive Director of the California Immigrant Policy Center.

Democrats divided

California was among one of the first states to extend free health care benefits to all low-income adults regardless of their immigration status, an ambitious plan touted by Newsom to help the nation’s most populous state inch closer to a goal of universal health care. But the cost ran billions more than the administration had anticipated and is projected to keep growing.

California provides free health care to more than a third of its 39 million people.

Several Democrats said the Medicaid enrollment freeze does not align with California values, adding the Legislature is breaking promises to taxpayers.

“People have already a decreased amount of trust in government and when we continue to go back on our words, it makes it even harder,” State Sen. Caroline Menjivar, a Democrat, said of the proposal at a hearing this week.

Democratic state Sen. Akilah Weber Pierson defended the budget proposal, saying that the plan is not cutting benefits to people who are already enrolled as Legislature also avoided more devastating cuts in social services. Lawmakers rejected the governor’s plan to cut funding for a program providing in-home domestic and personal care services for some low-income residents and Californians with disabilities. They also rejected a proposal that would have cut funding for Planned Parenthood’s budget by a third.

“No one who is currently covered will lose their health care coverage,” she said.