California's $12 billion budget deficit is primarily caused by an economic downturn influenced by President Trump's tariffs, devastating wildfires in Los Angeles, and rising health care costs, including expansions in health benefits for undocumented immigrants.

Governor Newsom has proposed freezing Medi-Cal enrollment for undocumented immigrants starting in 2026 and imposing a $100 monthly premium for existing Medi-Cal enrollees beginning in 2027 to help address the budget deficit.

Current Medi-Cal beneficiaries will not be impacted by the proposed freeze on enrollment and the $100 monthly premium for undocumented immigrants applies only to new enrollees starting in 2026 and existing undocumented enrollees beginning in 2027.

Critics, including the California Immigrant Policy Center, argue that the proposed freeze on Medi-Cal enrollment for undocumented immigrants goes against the state's pivotal values in supporting immigrant communities.

Since January 2025, California's economic outlook has worsened significantly, shifting from a projected roughly balanced budget to a $12 billion deficit due to factors like tariffs, wildfires, and rising costs in health care.