Prevention Institute calls for the FY 2026–27 California state budget to protect health equity and racial justice investments

Prevention Institute joins our partners across California in urging Governor Newsom and the Legislature to strengthen and maintain investments essential to community health, safety, and wellbeing as they finalize the state budget for FY 2026-27. The Governor’s May Revision (May Revise) includes some new and sustained investments in programs like wildfire recovery, education, and food assistance, and introduces two new revenue proposals. However, the state can, and should, do more to invest in and support our communities, especially given its $16.8 billion revenue surplus.

As final negotiations are underway for FY 2026-27, we call on our state leaders to protect and equitably invest in programs that are vital for California’s racially and economically diverse communities.

Read more on the proposals and programs we are tracking along with opportunities to get involved below.

Generating new revenues in California

With economic burdens impacting Californians’ ability to meet their basic needs, raising state revenues is key to ensuring we maintain essential programs that protect Californians. We applaud Governor Newsom’s proposals to establish two new revenue policies: one to establish a tax on digital software sales and another to limit California’s generous corporate tax credit law, helping ensure that the most profitable corporations in California pay their fare share. These revenue proposals are projected to bring in billions of dollars in revenue over the next few years.

• We join labor, climate, and social justice organizations in encouraging the Governor and Legislature to consider additional revenue strategies; including closing the water’s edge loophole, (AB 1790 - Connolly), which could raise up to $3 billion per year by stopping corporations from shifting profits to offshore tax havens to avoid state taxes. Revenue solutions like addressing the water’s edge loophole are necessary to balance our budget, especially as the state continues grappling with federal funding cuts brought on by H.R. 1.

Protect Medi-Cal access and honor the #Health4All commitment

Access to health care helps lead to better health outcomes, from prevention of illness to increased lifespan. Medi-Cal, California’s Medicaid program, provides health care coverage to nearly one-third of California’s residents and has been shown to be an effective tool in preventing poverty for residents who rely on the program. H.R. 1 has gravely disrupted our state’s health care system, and the May Revise lacks proposals to protect health care access to communities most vulnerable to cuts. Instead, the May Revise proposes to implement changes to Medi-Cal that would disproportionately impact low-income and vulnerable immigrant communities in California, reversing years of progress in making our state’s health care system more equitable. Governor Newsom proposes to instate harmful barriers to Californians seeking access to Medi-Cal, including lowering the program’s asset limit test and imposing a $50 monthly premium for certain immigrants. We join fellow health and immigration rights advocates in the call to protect  access to Medi-Cal.

• Follow Health Access and the California Immigrant Policy Center to stay updated on the #Health4All Campaign and for opportunities to protect Californians’ immigrant community access to Medi-Cal and other critical safety net programs.

Maintain funding for stable, safe, and affordable housing

The May Revise maintains its focus on reorganizing the state’s housing and homelessness infrastructure, proposing a new California Housing and Homelessness Agency, while neglecting any new or ongoing funding for existing programs. While Governor Newsom allocated $500 million to the Homeless Housing, Assistance and Prevention Program, this represents a steep budget cut from the $1 billion allocated in previous rounds. The May Revise also maintains the proposed changes to state law included in the January Proposal that would strengthen local accountability in the implementation of state funding. While advocates recognize the importance of reforming local procedures that administer housing and homelessness programs, those reforms cannot replace sustained investments in the programs and services communities rely on.

• Follow housing justice advocates including Housing Now! California and Housing California to learn about advocacy opportunities to secure funding for vital housing and homelessness programs.

Protect Greenhouse Gas Reduction Fund investments for critical community infrastructure

On May 29, the California Air Resources Board approved an overhaul of California’s cap-and-trade program, now known as Cap-and-Invest, which sells allowances to companies to permit carbon dioxide emissions into the atmosphere. The sales of these allowances generate billions of dollars for the Greenhouse Gas Reduction Fund (GGRF), which fund critical housing, transit, and environmental programs. In an effort to alleviate rising gasoline prices, air regulators have approved free allowances to major polluters, allowing them to exceed emissions limits without purchasing pollution allowances. This decision puts approximately $2 billion in GGRF revenues at risk. The scheme would trigger steep budget cuts for key GGRF-funded programs that help build housing and transportation infrastructure, including the Affordable Housing Sustainable Communities Program (AHSC) and the Transit and Intercity Rail Capital Program. We applaud the advocacy efforts of organizations and advocates across the state, including our partners at the Kennedy Commission, to protect these programs.

• Follow advocates working to protect AHSC and other GGRF investments, including Kennedy Commission and the Transbay Coalition.

Sustain momentum towards racial equity

Over the last six years, the state has made significant progress in advancing racial equity in government through the establishment of the California Racial Equity Commission and the release of its Racial Equity Framework last December. The Framework is a landmark resource that provides recommendations for government entities to embed racial equity in their practices. As a recent research brief prepared for the Commission states, the work to operationalize racial equity in government will be a long-term endeavor—one that will outlast the Commission when it sunsets in 2030. As the state contends with the acute issues highlighted in this statement, we call on Governor Newsom and legislators to reaffirm their commitment to centering racial equity in policy and budgetary decisions. This includes codifying racial equity strategies like AB 1823 (Jackson), and investing in the long-term infrastructure necessary to make government more effective in addressing race-based inequities in both health and socioeconomic outcomes.

As the Governor and Legislature work to finalize the budget in June, we call on them to uphold California’s role as a national leader in advancing and investing in health equity and racial justice, and to deliver a budget that advances a thriving future for California.