Overview

The April 24, 2025 Message was updated to reflect additional information on Federal and State impacts as of May 20, 2025 and to include the final Adopted Budget amounts as of September 2025. Otherwise, the discussion was left unchanged to provide the reader with a sense of the County’s budget as it was being finalized.

The Adopted 2025-26 Budget provided for expenses of $1.35 billion offset by revenues of $1.26 billion and $0.09 billion in direct fund contributions while eliminating 54.80 full-time equivalent (FTE) positions to a total of 2,743.76 FTE positions.

The largest fund included in the County budget was the General Fund. The 2025-26 General Fund Budget was balanced with $824.3 million in expenses, $816.3 million in revenues and $8.1 million in planned carryover of prior year fund balance. The budget maintained General Fund reserves at 12.5% or $99.6 million, but below the 15% target and the 28% peer average.

New in the Adopted Budget was the County’s five-year, 2025-2030 Capital Improvement Plan and richer details within each department’s budget, including discussions on emerging issues, highlighting key accomplishments in addition to progress on operational objectives, and discussion of the major changes across all divisions. The budget also included a new Debt Overview intended to summarize the County’s debt including information on liabilities like pensions and claims liabilities.

The Budget was published on April 24, 2025, and presented to the Board of Supervisors on April 29, 2025. While the County had much to celebrate over the past year as seen within the hundreds of departmental accomplishments and completion of operational plan objectives, it faced headwinds in the form of reduced health care funding, delayed disaster reimbursements, state budget uncertainty stemming from larger worldwide economic uncertainty, and uncertainty over shifting priorities in Washington, D.C. and threats to federal funding.

In response, this budget prioritized mandated services, protected essential programs, and made strategic investments in the County’s future. And although it was presented amid the aforementioned headwinds, it did not yet reflect any significant budget impacts from changes in federal policy. The County’s exposure to federal funding and policy risk was significant as nearly half of the budget and 61% of the General Fund Budget is funded with federal and state revenue as shown in Chart 1.

Continued engagement with state and federal partners, local scenario planning, and strategic reserve management would be critical to navigating this uncertain environment. Absent action, federal policy changes could result in multi-million dollar funding losses, operational disruptions, and negative impacts on the health, safety, well-being, and civic participation of tens of thousands of County residents. The County would return to the Board at such a time when a response was required in alignment with development of the Federal budget.

The image below illustrated the County’s budget timelines as compared to the Federal and State budget timelines.

 

Department Accomplishments and Objectives

Included within the Adopted 2025-26 Budget was an expanded discussion of accomplishments for each department and the progress made on operational plan objectives. Details about these accomplishments were provided by clicking on the tile of the completed or proposed operational plan objective or on the departmental accomplishment.

 

Summary of Changes

Some of the major changes in the Adopted 2025-26 Budget included:

  • Reduced Health Services Agency staffing by 65.8 FTE positions, representing approximately 9% of the agency’s workforce, while it prioritized and maintained mandated services.
  • Reduced by $2.9 million total Health Services Agency budget, across the Behavioral Health, Health Centers, and Public Health divisions, primarily due to low behavioral health reimbursement rates, reduced health center visits, increased costs, and the financial impacts of new mandates.
  • Provided $5.3 million in net costs for operating the new Hope Forward | Esperanza Adelante Youth Crisis Center with an 8-chair children’s crisis stabilization unit and 16 bed children’s crisis residential program.
  • Provided $24.2 million for ongoing road and bridge investments, including Buena Vista Road, Soquel Drive/San Jose Road/Porter Street, San Lorenzo Way Bridge replacement, culvert rehabilitation, signal maintenance, vegetation control, and transportation grant matching funds.
  • Funded the General Fund 1% contingency.
  • Maintained General Fund reserves at $99.6 million, or 12.5% of expenses—below the 15% target and 28.1% average reserve in 2024-25 of county peers.
  • Increased Measure K unincorporated area sales tax revenue by $3 million to reflect a full year of receipts.
  • Allocated $6 million from the General Fund for capital investments, including:
    • $3.5 million for road and drainage infrastructure maintenance, including up to $2 million from Measure K District Sales Tax;
    • $1 million from Measure K District Sales Tax for environmental and parks capital projects ($200,000 for each district), including $110,000 allocated by District 1 for East Cliff improvements and traffic dividers, $100,000 by District 3 for the Davenport Sanitation District and Shark Fin Cove Parking Study, $100,000 by District 5 for Green Waste services; and
    • $1 million for repairs and improvements to aging County facilities.
  • Maintained Measure K District Sales Tax Contribution of $1 million for homelessness services and $1 million for housing-related uses, including $400,000 for behavioral health room and board at licensed residential facilities and $399,381 largely to make available a General Fund Contribution for the Health Services Agency.
  • Maintained Measure K District Sales Tax restricted contingency of $1,000,000 to respond to new disasters or any shortfalls of General Fund disaster claims.
  • Returned all CZU Fire rebuild-related services to the Community Development and Infrastructure building permit center.
  • Recognized receipt of a $5 million National Oceanic and Atmospheric Administration (NOAA) grant to serve as the County’s match for the Watsonville Slough Ecosystem Restoration Project.
  • Reflected completion of prior-year road projects, including:
    • $25.5 million in roadway improvements (e.g., Soquel Drive, Green Valley Drive, Holohan Road);
    • $13.8 million in storm damage recovery projects; and
    • $5.6 million in pavement management projects.
  • Reduced sanitation capital project funding following completion of Phase 2 of the Freedom Sewer Rehabilitation and the Davenport Storage Tanks Projects.
  • Applied $6.6 million in anticipated federal reimbursements to annual debt payments and pay down 2024 disaster-related debt.
  • Provided $4.5 million for enhanced fire services in the Pajaro Dunes County Services Area (CSA) 4, including three new fire suppression vehicles.
  • Increased funding by $2.7 million to address rising liability and property claims and insurance costs.
  • Allocated funding for the implementation of the Human Capital Management (HCM) and Payroll System, targeted for completion by Summer 2026.
  • Budgeted negotiated salary and benefit costs based on new agreements with the County’s labor partners.

Additional discussion of budget changes is included in within each department “Budget Summary of Changes” and “Major Changes” section.

Financial Summary

As shown in Chart 2 and further detailed in Table 1, the total County Adopted 2025-26 Budget for expenses decreased by $54.5 million from the 2024-25 Adopted Budget.

The largest revenue changes in the Adopted 2025-26 Budget from the 2024-25 Adopted Budget were the result of:

  • Decrease of $72.2 million in other financing sources due to the completion of 2024 disaster-related financing included in the prior budget.
  • Decrease of $11.9 million in intergovernmental revenues primarily due to lower expected federal disaster reimbursements, the completion of state-funded transportation projects, and reduced Housing for Health funding.
  • Increase of $16.2 million in tax revenues from a full year of Measure K sales tax receipts, normal growth in property taxes, and higher revenue from the Pajaro Dunes CSA 4.
  • Decrease of $6.2 million in miscellaneous revenues due to the completion of the Phase 2 Freedom Sewer Rehabilitation Project.

The largest expense changes in the Adopted 2025-26 Budget from the 2024-25 Adopted Budget were the results of:

  • Decrease of $38.7 million in fixed assets due to the completion in the prior budget of improvements for the South County Government Center and The Hope Forward | Esperanza Adelante Youth Crisis Center.
  • Decrease of $37.3 million in other financing uses resulting from the prior year completed transfers of $11.1 million into the Debt Service Fund for at-risk federal disaster reimbursements and a $10 million General Fund loan to the liability and property internal service fund.
  • Increase of $28.8 million in services and supplies to continue 29 projects from the 2017 storm disasters, 25 storm disaster recovery projects from 2023 storms, 2025 Measure D Plan Resurfacing project, and the final stage of the Soquel Drive Buffered Bike Lane project.
  • Decrease of $10.8 million in intrafund transfers due to administrative changes replacing cost plan transfers with direct charges for facilities and utilities, along with reductions in the Health Services Agency.

Table 2 presented the Adopted 2025-26 Budget by departments illustrating their total expenses, total revenues, and the contributions required to fully finance their operations. The General Fund Contribution and District Sales Tax Contribution represent the amount to subsidize departmental operations whose direct resources are insufficient to finance their total operating costs. Accordingly, in most cases, these are informational only and not a revenue within the department.

The District Sales Tax Contribution reflected the share of General County Revenues from Measure G and K that was allocated for use within and benefiting the unincorporated areas of the County. While shown separately, this amount is considered to be part of the total General Fund Contribution.

The Health Services Agency included a net reduction of 65.8 FTE positions, of which 43.5 FTE positions were reduced in the Behavioral Health Division, 11.3 FTE positions were reduced in the Health Centers Division, 10.0 FTE positions were reduced in the Public Health Division, and 1.0 FTE position was reduced from administrative support across all health services. These reductions reflected the difficult balance between substantial constraints on State and federal revenue sources, including low reimbursement rates and reduced and diverted revenue, combined with cost increases that required protecting the ability to meet mandated services, grant requirements, and patient and community safety. See the Health Services Agency budget for more about these reductions and the applicable department budgets to learn more about their operations or changes to their budget.

Table 3 illustrated the net contribution required from each fund type (or the amount revenues were below total expenses).

Total fund contributions in the Adopted 2025-26 Budget represented the amount by which maximum budget authority was under or, if negative, exceeded available revenues and would be funded from prior year fund balances.

For the General Fund, the $59.4 million in 2024-25 Estimated Actuals contributions from fund balance consisted of $21.17 million transfers out from prior year fund balance and nearly $30 million of budget authority that in January 2025 were estimated to be used but no longer likely to be needed by June 30, 2025, such as General Fund contingencies and professional services, primarily in the health and human services category.

General Fund Budget Changes

As shown in Table 4, the General Fund’s Adopted 2025-26 Budget revenues were projected to decrease by $5.0 million. The single largest change was a decrease of $19.7 million in intergovernmental revenues, including the removal of $13.6 million in federal disaster reimbursements, reductions of $4.9 million in Health Services Agency revenue, and a decrease of $4.3 million in Human Services Department child welfare revenue.

The General Fund expenses were expected to decrease by $40.4 million from the 2024-25 Adopted Budget. This reduction was from a decrease of $25.6 million of other financing uses, attributed to the completion of the $11.1 million transfer out to the Disaster Debt Service Fund for at risk federal disaster reimbursements and the $10 million General Fund loan transfer out to the self-insured Liability and Property Internal Service Fund. Reductions of $7.9 million in other charges reflected decreases in Housing for Health funded services.

Although the total increase of $0.1 million in salaries and benefits was modest, it did account for increased costs related to negotiated salaries and benefits, which were offset by a $5.0 million reduction in the Health Services Agency that resulted from the elimination of 65.8 FTE positions.

General Fund Forecast

As shown in Chart 3, and discussed in the February 25, 2025, Mid-Year Report, the General Fund forecasted actuals as of April 2025 reflected a reduced structural deficit compared to the County’s 2024 forecast. The County’s models did not yet fully capture the extent of the headwinds the County faced, including reduced health care funding from Federal policy changes, delayed disaster reimbursements, state budget uncertainty linked to global economic volatility, and shifting federal priorities and potential threats to federal funding. In addition, the models did not yet account for potential impacts from significant State budget cuts anticipated in the Governor’s May Revision, as indicated in the Governor’s press release on April 16, 2025.

Key drivers of the forecast included:

  • Loss of federal funding estimated between $5 million and $17 million over the next four years.
  • Increased infrastructure and roadway investments, including costs associated with maintaining aging County buildings and facilities.
  • Expanded services required by unfunded mandates such as the CARE (Community Assistance, Recovery, and Empowerment) Act, CalAIM (California Advancing and Innovating MediCal), and other recent legislation.
  • Increased pension costs due to underperformance in the California Public Employees' Retirement System (CalPERS) investment portfolio.
  • Continued stability in property tax and vehicle license fee–in-lieu property tax growth.
  • Lowered projections for future sales tax growth.

Table 5 below summarized the key assumptions included in the County’s April 2025 forecast.

General Fund Reserves

The Adopted 2025-26 General Fund Budget included a reserve level of 12.5% of General Fund operations, or $99.6 million. This amount is below the 15% target funded level.

General Fund Reserves, as illustrated in Chart 4, show how underfunded the County’s 12.5% General Fund reserve was as compared to the average reserve levels of peer counties (28% or $223 million). The chart also illustrates how reserves would decrease if the $54.3 million in reserves designated to support services, including to support Medi-Cal and Medicare populations were used and determined to be unavailable for general use. Under this scenario, the remaining Board established reserves would be insufficient to respond to any new disaster or economic challenge and would only last long enough to cover 2.8 payroll cycles.

Financial Consequences of Climate-Based Disasters

Since 2017, Santa Cruz County had experienced numerous federally declared disasters that caused hundreds of millions of dollars in damage to County infrastructure. Barring a shift in the speed at which local governments were reimbursed for the costs of disaster response and recovery, future County response would be limited by available resources and the pace of infrastructure recovery would be slowed. In addition, recent discussions on delaying federal disaster reimbursement to California local governments would severely impact the County’s financial forecast. In May 2024, the County issued debt to finance $80.3 million in costs paid by the County for the 2020 CZU Fires and 2023 Storms that remained unreimbursed. At that time, the County had $125.3 million in unpaid claims from FEMA and the Federal Highway Administration (FHWA).

The 2024 disaster bond financing was structured with a conservative estimate of federal reimbursements. As illustrated in Chart 5 (as of April 2025), staff expected that by 2029-30, $42.9 million in federal disaster reimbursements would be received and used to pay off debt to equal the County’s planned annual debt service costs. But, if federal reimbursements are not received as projected, annual costs could increase up to $4.2 million as soon as during the 2026-27 fiscal year.

And the $22.4 million of project interest costs from the 2024 bonds were not eligible for federal disaster reimbursement and would be paid from local County resources.

Chart 6, County of Santa Cruz Federal Disaster Claims as of March 2025, illustrated that $89.8 million of total disaster claims remained unpaid. As compared to January 2025, this was a decrease of $1.2 million largely from removing disaster claims deemed to no longer be reimbursable.

Without federal policy stability or continued funding, the County anticipated increased food insecurity and housing instability, delayed access to mental health and substance use disorder treatment, reduced capacity to respond to public health emergencies and natural disasters, greater disparities in health, education, and economic outcomes for vulnerable populations. These impacts also had the potential to further impact non-county anchor institutions such as hospitals, universities, and community-based organization service providers. Federal efforts to restrict body autonomy, voter registration, and election administration were significant concerns that were monitored closely.

Federal Budget Impacts

FEDERAL BUDGET (last updated April 24, 2025)

Santa Cruz County relied on federal funding to provide essential services that protected public health, supported vulnerable residents, strengthened the local economy, and maintained infrastructure. Medi-Cal, CalFresh, Behavioral Health, Child Welfare Services, Housing Assistance, Disaster Recovery, Public Health Emergency Response, Workforce Development, and Transportation Infrastructure all relied on significant federal support and approximately one-third of County residents depended on federally funded health or human services programs.

Shifts in federal policy and budget priorities threatened services provided by the County and its partners, risked community well-being, and could negatively impact the local economy. Reductions in federal funding levels, cost shifts to counties, delayed appropriations, new compliance requirements, and legal challenges exposed the County to significant risks.

Current Impacts

Several federal funding and policy changes were already impacting County residents, with the most significant potential impacts yet to materialize:

  • Passport Identification Restrictions: New guidance from the Department of State would require the County Clerk to destroy passport application forms that utilized a gender “X” marker and replace them with a new form that does not have an option outside of a gender binary. This policy was the subject of ongoing litigation.
  • Voter Eligibility and Elections Administration: Executive Order (EO) 14248, titled “Preserving and Protecting the Integrity of American Elections” would require proof of citizenship to register to vote in federal races and mandated all mail-in ballots must be received by Election Day. As of March 31, 2025, at least two lawsuits had been filed to challenge the order. The federal Safeguard American Voter Eligibility (SAVE) Act intended to require proof of United States citizenship for an individual to register to vote in elections for federal office, and for other purposes. In addition, this legislation required all voter registration to occur in-person, creating a significant workload burden. While the focus of the SAVE Act was to ensure only citizens registered to vote in elections, the passing of this bill would also disenfranchise eligible voters who had undergone legal name changes, had disabilities, and/or lived in rural areas among others.
  • National Initiative to Address: COVID-19 Health Disparities Among Populations at High-Risk and Underserved, Including Racial and Ethnic Minority Populations and Rural Communities (CERI): This $323,000 grant was used by Health Services Agency to increase the accessibility of services and was cancelled by the federal government, resulting in a loss of $78,000 in unspent funds. Additionally, $26k of these grant funds was set aside to support the Microenterprise Home Kitchen Operations (MEHKO) pilot in Environmental Health. With no other funding source to supplant the loss, the MEHKO pilot project was canceled. The Health Services Agency continued to sustain the 1.0 FTE position partially funded through this grant.
  • Immunization and Vaccines for Children – COVID Supplemental Round 4: This $875,000 California Department of Public Health (CDPH) grant was supported by federal pass-through funds from the Centers for Disease Control (CDC) to support access to COVID-19, influenza and other vaccine-preventable diseases and supported 4.7 FTE spread across 16 positions. The cancellation of this grant would result in a loss of $330,000 in FY 2024-25. Public Health would utilize other grant funds to sustain services for the remainder of the fiscal year, impacting availability of grant funds for FY 2025-26.
  • Epidemiology and Laboratory Capacity (ELC) - Enhancing Detection and Enhancing Detection Expansion: This $466,000 CDPH grant supported by pass-through funds from U.S. Centers for Disease Control supported the detection and prevention of emerging infectious diseases. While this grant was fully expended prior to cancellation, the County would not receive new funding.
  • Building Resilient Infrastructure and Community Grant (BRIC22): FEMA had notified the Office of Response, Recovery and Resilience that this grant was cancelled, allowing only $1.1 million to complete Phase I environmental planning to proceed. Phase 2 would have provided over $20 million for wildfire risk mitigation, including home hardening, defensible space and evacuation route fuels reduction. A second BRIC 22 grant in the amount of $420,000 to conduct initial studies for improving the Pajaro levee system near the wastewater treatment plant was also cancelled.

Anticipated Impacts

The County anticipated additional potential risks that could translate into service reductions, delayed initiatives, and local funding and policy pressures. The following were major categories of risk:

  • Behavioral Health Realignment: California was aligning Medi-Cal behavioral health services under new federal waiver authority. The County was consuming staff and consultant resources to plan for this complex system transformation amid uncertain long-term reimbursement structures.
  • Public Assistance Program Changes: Adopted federal changes would reduce funding, limit access, and impose new work requirements for benefits, increasing administrative workload without additional resources. For Medi-Cal alone, an estimated 30,000 individuals—one in three current enrollees—were at risk of losing coverage, and up to $140 million in leveraged funds would be reduced if program eligibility was tightened or existing grants were canceled. Changes in CalFresh administrative requirements and eligibility reviews would increase staff workload without commensurate growth in federal administrative funding. These changes would create fear and confusion, particularly among undocumented and LGBTQ+ residents, deterring them from accessing essential services, and could increase local demand for food banks and emergency assistance.
  • Housing and Homelessness: Federal housing voucher funding had not kept pace with local housing costs. The County's housing programs were experiencing higher administrative costs due to regulatory complexity and landlord participation challenges. Furthermore, the Housing for Health Division and partners provided a range of services including housing assistance for more than 4,000 people that involved at least some level of federal funding. Some of these funds would be at risk, particularly with cuts to federal agencies that oversaw these programs.
  • Disaster Recovery: Changes in FEMA cost-share policies and public assistance eligibility criteria were increasing local match requirements for disaster recovery, including wildfire and storm response efforts. This would put the repayment plan for the 2024 disaster bonds at risk.

State Budget Impacts

STATE BUDGET (last updated May 20, 2025)

On May 14, 2025, the Governor released the May Revision in compliance with the statutory deadline. The May Revision proposed $321.9 billion of state spending, including $226.4 billion from the General Fund. The May Revision proposed $12 billion in reductions or 5.3% from the January proposal. Unlike the last two years, during which the state also faced budget deficits, this year’s approach included a significant number of reductions to ongoing programs that resulted in greater savings in future years. The May Revision did not provide funding for mandated costs for counties to implement Proposition 36 and did not provide funding for the next round of Homeless Housing, Assistance and Prevention (HHAP). Following were the summarized changes of the Governor’s May Revision from the Proposed Budget Governor Gavin Newsom released on January 10, 2025.

May Revision Impacts

$5 billion in total reductions for 2025-26, growing to $14.8 billion by 2028-29 summarized in the following excerpts:

  • Enrollment Freeze for Full-Scope Medi-Cal Expansion for Undocumented Adults, Adults 19 and Older: $86.5 million in 2025-26, growing to $3.3 billion in 2028-29. This freeze on new enrollment to full-scope coverage for individuals, regardless of immigration status, aged 19 and over, was effective no sooner than January 1, 2026.
  • Medi-Cal Premiums, Adults 19 and Older: Implementation of $100 monthly premiums for individuals with certain statuses, those who would eventually qualify for federal funds and individuals enrolled in the Medi-Cal full-scope expansion aged 19 and over, effective January 1, 2027. Estimated General Fund savings were $1.1 billion in 2026-27, increasing to $2.1 billion.
  • Medi-Cal Asset Test Limits: $68.6 million in 2025-26, growing to $765.2 million in 2028-29 for individuals with certain statuses, those who would eventually qualify for federal funds, and individuals enrolled in the Medi-Cal full-scope expansion.
  • Elimination of Long-Term Care Benefits, Adults 19 and Older: $333.3 million in 2025-26, growing to $800 million in 2026-27 for individuals with certain statuses, those who would eventually qualify for federal funds, and individuals enrolled in the Medi-Cal full-scope expansion.
  • Elimination of Dental Benefits, Adults 19 and Older: Elimination of full-scope dental coverage for Medi-Cal members with certain statuses, those who would eventually qualify for federal funds and individuals enrolled in the Medi-Cal full-scope expansion aged 19 and over, effective July 1, 2026. This population would continue to have access to restricted-scope, emergency dental coverage.
  • Elimination of Prospective Payment System Payments to Federally Qualified Health Centers and Rural Health Clinics: $452.5 million in 2025-26, growing to $1.1 billion in 2026-27. This applied for state-only funded services provided to individuals with certain statuses, those who would eventually qualify for federal funds and individuals enrolled in the Medi-Cal full scope expansion. Clinics would receive reimbursement at the applicable Medi-Cal fee-for-service rate and at the Medi-Cal managed care rate.
  • Specialty Drug Coverage for Weight Loss: $85 million in 2025-26, growing to $680 million in 2028-29.
  • Cap In-Home Supportive Services Overtime and Travel Hours at 50 Hours: $707.5 million in 2025-26, growing to $893.4 million in 2028-29.
  • Require Provider Mandates for Quality Incentive Payment Incentive Eligibility: $221.7 million ongoing beginning in 2026-27.

$5.3 billion from internal borrowing solutions for 2025-26 included:

  • Proposition 35 Support for Medi-Cal Rate Increases: $1.3 billion in 2025-26 and $263.7 million in 2026-27.
  • Medical Providers Interim Payment Fund Loan: $3.4 billion due to extending the repayment deadline.
  • Unfair Competition Law Fund Loan: $150 million in 2025-26.
  • Labor and Workforce Development Fund Loan: $400 million in 2025-26.

$1.7 billion in funding solutions for 2025-26 included:

  • Greenhouse Gas Reduction Fund for CAL FIRE Support: $1.5 billion in 2025-26, growing to $1.9 billion in 2028-29.

In addition to these solutions, the May Revision included triggers for two future spending commitments of $456.1 million in 2027-28 contingent upon sufficient resources to support these commitments:

  • California Food Assistance Program Expansion: $117.2 million in 2027-28, growing to $163.2 million in 2028-29.
  • Foster Care Tiered Rate Structure Trigger: $338.9 million in 2027-28, growing to $522.1 million in 2028-29.

The May Revision included other funding proposals that could have been of interest to the County, including:

  • Federal Accountability Workload: $14.4 million ongoing ($13.3 million General Fund and $1.1 million Special Fund) and 44 positions to defend California against adverse federal actions. The anticipated workload included, but was not limited to, defending environmental protections, negative impacts of tariffs, reproductive choice, and termination of federal grants that Congress directed be provided.
  • California Housing and Homelessness Agency: The administration proposed establishing a new California Housing and Homelessness Agency (CHHA) to create a more integrated and effective administrative framework for addressing the state’s housing and homelessness challenges. CHHA would be responsible for coordinating state housing and homelessness efforts, which included addressing the full spectrum of Californians’ housing needs, from efforts to prevent and end homelessness, to supporting low-income renters and first-time homebuyers.
  • Medi-Cal: The May Revision reflected a net $1.9 billion increase in Medi-Cal expenses, which were covered by the Medi-Cal Provider Interim Payment Loan, in 2024-25 compared with the Governor’s Budget. This was in addition to the $2.8 billion General Fund early action appropriation assumed in the Governor’s Budget.
  • Behavioral Health Workforce Initiative: The May Revision included $1.9 billion ($143 million Behavioral Health Services Fund, $808 million Designated State Health Program Funding, and $950 million federal funds) for the Department of Health Care Access and Information to implement the Behavioral Health Workforce Initiative beginning in January 2026.
  • Incompetent to Stand Trial Infrastructure Grant Program: A reduction of $232.5 million one-time General Fund included in the 2022 Budget Act from unspent grant funds for counties to increase residential treatment housing capacity for individuals designated Incompetent to Stand Trial.
  • Child Care Cost-of-Living Adjustment: A reduction of $60.7 million General Fund in 2025-26 and ongoing to suspend the child care cost-of-living adjustment in 2025-26.
  • Streamlining the CalWORKs Program: The May Revision included statutory changes to the CalWORKs program, resulting in efficiencies for families and counties. These changes included: (1) expanding the allowable welfare-to-work activities, (2) making Job Club an optional welfare-to-work activity, (3) simplifying the curing of sanctions, and (4) replacing the county welfare-to-work reporting requirements with administrative data extracts.
  • CalAIM Justice-Involved Initiative: $21.5 million in 2025-26 and $11 million ongoing in increased reimbursement authority, an increase of 65 positions in 2025-26 and ongoing, and a reduction of $6.2 million General Fund in 2025-26, an increase of $3.8 million General Fund in 2026-27, and a reduction of $11 million General Fund ongoing to support full implementation of the California Advancing and Innovating Medi-Cal Justice-Involved Initiative and account for additional federal reimbursements.
  • Safe Battery Energy Storage Systems: $3.7 million Public Utilities Commission Utilities Reimbursement Account (PUCURA) in 2025-26 and 2026-27, and $2.9 million ongoing PUCURA and 12 positions in 2027-28 to support compliance and enforcement of safety standards for large-scale, electric grid connected battery energy storage systems.
  • Community Renewable Energy and Storage: A reversion of $33 million General Fund for programs funding community renewable energy projects at the California Public Utilities Commission.
  • Business and Consumer Services Agency: The administration proposed establishing a new Business and Consumer Services Agency (BCSA) to strengthen the state's ability to protect consumers by providing dedicated leadership and oversight across a wide range of industries. The BCSA would be responsible for regulating over four million licensed professionals and businesses.