Prison closure, Ozempic limit, cap-and-what? 5 takeaways from Gavin Newsom’s budget
Good morning and welcome to the A.M. Alert!
BUDGET CUTS
Gov. Gavin Newsom on Wednesday outlined his administration’s latest version of the 2025-26 budget plan, better known as the May revise. He blamed President Donald Trump and called for changes to the state’s Medi-Cal program to help address the state’s roughly $12 billion estimated shortfall.
Here are some other takeaways worth noting:
1. Prison closure
Newsom called for closing another prison by October 2026; his administration said the move would save the state about $150 million annually. But which one does it want to close?
“It has yet to be determined,” a Governor’s Office spokesperson said in an email.
A spokesperson for the California Department of Corrections and Rehabilitation also did not specify which one but said the state “would support the affected local community and workforce with an economic resiliency plan, and workers would be offered transfers to nearby facilities.”
2. Limit on Ozempic coverage?
Newsom’s budget plan calls for eliminating Medi-Cal coverage for Glucagon-Like Peptide-1 drugs, like Ozempic, for weight loss, effective Jan. 1. It would still be covered when prescribed to treat diabetes, according to a Governor’s Office spokesperson.
The proposal estimates the action would save $680 million by the 2028-29 budget year.
3. Cap-and-what?
The plan would change the name of the state program that generates money by charging entities for their emissions above a certain level. The revised budget calls for extending the program and changing its name to the Cap-and-Invest program. The administration also wants to use the program’s proceeds for the state’s controversial high-speed rail project.
4. Proposition 36 funding?
Newsom declined to set aside more money for counties to implement Prop. 36, the highly popular state initiative voters approved in November that added tougher penalties for drug and theft crimes. Both Republican and Democratic lawmakers have called for hundreds of millions of dollars to support it.
5. Food assistance on the horizon?
Uncertainty remains around a food assistance program for Californians, 55 years and older, regardless of their immigration status. Newsom’s administration has moved the target date for expansion back and forth in recent years. The latest budget, proposes that the expansion be subject to the availability of state funding in the spring of 2027.
IN NON-BUDGET NEWS
Via David Lightman ...
Central Valley Reps. Adam Gray, a Democrat, and David Valadao, a Republican, have teamed up to push legislation that would help expand access to telehealth in rural areas.
Their bill would allow funding for federal telehealth grant programs through 2030.
“In rural areas like the Central Valley, access to telehealth may be the only way folks can see a medical provider,” said Gray, D-Merced. His area has a huge physician shortage.
Valadao, R-Hanford, called telehealth a “lifeline.”
“With too few doctors, long wait times, and clinics often hours away, families are still struggling to get the care they need,” he said.
QUOTE OF THE DAY
“Best to describe this as a Trump slump, all across the United States.“
— Newsom while presenting a revised version of his administration’s budget. The governor blamed Trump’s policies for economic uncertainty that has led to lower projected state revenues.
Best of The Bee:
California faces $12 billion budget deficit. What Gavin Newsom wants to cut via, Nicole Nixon and Kate Wolffe
Gavin Newsom blames Donald Trump for California budget woes — what he said, via Lia Russell
State worker payroll freezes in Gov. Gavin Newsom’s revised California budget, via William Melhado
Gavin Newsom floats pause on undocumented adults in California accessing Medi-Cal, via Lia Russell
Trump wanted to end Social Security taxation. Republicans in Congress have other ideas, via David Lightman
This story was originally published May 15, 2025 at 4:55 AM with the headline "Prison closure, Ozempic limit, cap-and-what? 5 takeaways from Gavin Newsom’s budget."
