Assembly Budget Committee advances three‑party 2026–27 budget package after daylong hearing

The Assembly Budget Committee on June 29 heard an overview of the three‑party 2026–27 budget agreement and the 19 trailer bills that implement it, with Department of Finance officials and the Legislative Analyst’s Office laying out the plan’s fiscal structure and program changes.

Jessica Holmes of the Department of Finance told the committee the budget totals $351.7 billion in expenditures and maintains robust reserves, including a $4.5 billion economic uncertainty balance and roughly $28.8 billion in total reserves. The package, staff said, reduces long‑term structural deficits identified in the Governor’s budget and balances program reductions with revenue adjustments.

Holmes described key trailer bills that implement the agreement. SB111 is the budget bill junior that amends AB109 to reflect the final deal; SB112 addresses technical corrections and current‑year shortfalls. Education spending in SB126 increases K‑12 funding with a 2.87% COLA plus an additional $1.1 billion “super COLA,” $5 billion in one‑time discretionary Prop‑98 block grants, and paid pregnancy disability leave for educators. SB131 expands higher education financial aid and requires the CSU Chancellor’s Office to set campus enrollment targets and, when warranted, require turnaround plans.

Health and human‑services provisions described by Finance staff include targeted Medi‑Cal changes in SB164 (including phased transitions and timing for certain program changes), $300 million to lower Covered California premiums, and dedicated one‑time funding for public hospitals and distressed hospitals. The package preserves funding for programs advocates said would be most affected by federal changes (referred to in hearings as HR 1), and includes a $900 million allocation for the Housing and Homelessness Assistance Program (HAP) in 2026–27.

The committee’s education chair asked about the Prop‑98 “settle‑up” mechanism. Finance and LAO staff confirmed the current settle‑up estimate is about $3.94 billion and explained the statutory certification process that finalizes the calculation in the spring following the fiscal year. The budget package includes language directing the first 33% of certain new revenues to reducing that settle‑up balance.

Members pressed staff about program design and local impacts. Assemblymember Rogers asked how CSU turnaround plans would affect underenrolled rural campuses; Finance staff said the trailer bill is designed to require data collection and allow the Chancellor's Office to tailor plans based on campus data rather than mandate an identical approach for every campus. Assemblymember Quirk Silva and staff discussed HAP allocation and accountability provisions; staff said application streamlining and allocations through counties and continuums of care are intended to reach smaller jurisdictions.

Public testimony spanned education governance (AB181), health coverage for immigrant populations, indigent care and NextGen 911 funding, support for EV incentives and grid support, and concerns about Prop‑98 withholding and skilled‑nursing workforce funding. Dozens of organizations thanked the Legislature for preserving programs and delaying proposed cuts while urging additional long‑term funding solutions for indigent care and specific program components.

The committee did not take final votes in the hearing; members were prepared to debate and vote on the package on the Assembly floor the following day. The chair closed the hearing by thanking staff and the administration and noting the floor would consider the budget and associated trailer bills.