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California’s State Budget Revision: What’s Included for Healthcare?

On May 13, 2022, Governor Newsom presented a revised FY2022-2023 state budget proposal to the Legislature, also known as the May Revision. The purpose of the May Revision is to update the Governor's January budget with additional proposals or changes based on the latest economic forecasts and state revenue projections.

It is the second year in a row California has a substantial surplus, driven largely by income tax revenue from the state’s highest earners. State lawmakers and Governor Gavin Newsom will have a $97.5 billion surplus this year, half of which must be earmarked for education and other constitutional requirements. After mandatory budget allocations, the Governor has a $52 billion General Fund surplus to distribute in the May Revision.

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Importantly, part of the surplus spending would include significant healthcare-related investments, such as $1,500 bonuses for hospital and nursing home employees. Other healthcare-driven investments proposed in the $300.6 billion spending plan are:

$933 million to provide $1,500 “retention bonuses” to workers in hospitals and nursing homes, which were hit hard by the pandemic and continue to face staffing shortages

$304 million to boost insurance premium assistance for roughly 700,000 Californians on eligible Covered California plans

$125 million to expand access to reproductive care. This includes funding for the anticipated flood of new patients from other states in search of abortion care and services.

$300 million to improve public health infrastructure at the state and local level. Local health jurisdictions would receive a minimum base allocation to support workforce expansion, data collection and integration, and partnerships with healthcare delivery systems and community-based organizations

$1.2 billion in 2021-22 and $760.8 million in 2022-23 to bolster the COVID-19 response. Of this amount, $1.1 billion would fund the SMARTER Plan for the next phase of California’s pandemic response. The SMARTER Plan includes a range of services, from testing, vaccination, and therapeutics to education, outreach, and unanticipated emergency responses

An additional $85 million to increase Children and Youth Behavioral Health Initiative grants to schools, cities, counties, tribes, and/or community-based organizations. These grants would support programs that teach wellness and mindfulness practices to teachers and students. Grants could also be used to expand parent support and training programs to help parents address their children’s behavioral health needs

An additional $65 million to increase access to behavioral health services for students, increasing the total funds for the Student Behavioral Health Incentive Program to $194 million

The May Revision includes an additional one-time $41.8 Million Opioid Settlements Fund in 2022-23, allocating additional funding to the following programs:

$29.1 million for substance use disorder provider workforce training, increasing the total program funds to $51.1 million

$10 million for the naloxone distribution project targeting unhoused populations, increasing the total program funds to $15 million

$2.7 million for a public awareness campaign targeted towards youth opioid education and awareness and fentanyl risk education at the California Department of Public Health, increasing the total program funds to $40.8 million

The revised budget will ultimately be determined by state legislators who decide how to spend Californians’ tax dollars. Over the past several weeks, Governor Newsom and top state lawmakers have been negotiating the details of May Revision.

The Legislature must be signed by the governor by June 30, 2022, in order to take effect by the next fiscal year that starts on July 1, 2022.    


Gabriela Villanueva is CAP’s Government and External Affairs Analyst. Questions or comments related to this article should be directed to