Who’s On First?

Tracking the Final Steps of California’s State Budget Process

As the fiscal year end draws near, California’s state budget negotiations are rounding the final bend. With July 1 approaching fast, it’s important to understand where we are in the process—and perhaps more importantly, who’s actually “on first” in terms of decision-making.

Key Milestones So Far

The budget cycle traditionally includes three major public-facing milestones:

1. Governor’s Budget (January) – This initial proposal sets the stage. It lays out the administration’s priorities and assumptions about revenues and expenditures.

2. May Revision ("May Revise") – An update to the Governor’s Budget based on the latest economic forecasts, caseload and tax receipts. It can include major changes and tends to generate significant press and public debate.

3. Legislative Budget (June) – Each house of the Legislature weighs in, resulting in what used to be two public versions reconciled through a formal process.

The Olden Days: Conference Committee

Historically, the Legislature convened a Budget Conference Committee to publicly reconcile differences between the Assembly and Senate versions of the budget. This committee provided a structured, visible process for comparing priorities and negotiating a unified legislative package. However, the Legislature has not convened a formal Conference Committee in years. Instead, negotiations between the two houses are handled informally and often out of public view.

At this stage, the Legislature is amending the Governor’s May Revision to reflect its own priorities and policy direction. These amendments form what is commonly called the Legislative Budget or the Two-Party Deal, which is advanced through each house's budget subcommittees or full budget committees before being sent to the Governor's desk.

Where Things Stand Now

The Legislature has passed its version of the budget, and the Governor now has the bill on his desk. But the budget is not yet a done deal. All three parties—the Governor, the Assembly, and the Senate—are actively engaged in final negotiations.

These private talks will lead to a revised and agreed-upon version of the budget, which will be put into print and voted on before the new fiscal year begins on July 1.

Clarity Matters: Say What You Mean

At this point in the process, using the generic term “the budget” can be misleading. Are we referring to the May Revision? The Legislative Budget? Or the final agreement (aka the three-party deal) currently under negotiation?

For stakeholders, advocates, and anyone trying to understand the latest developments, it’s crucial to be specific. Clarity around which version of the budget you’re referencing helps ensure that everyone is talking about the same thing.

More Confusion Ahead

Even after the Legislature passes a final budget and the Governor signs it into law, the process isn’t necessarily over. There is a high probability that the budget adopted in the coming weeks will need to be amended again this summer or in the fall.

Why? Because federal changes to large-scale programs—particularly Medi‑Cal, but likely many other programs as well—are still evolving. The federal reconciliation package known as the “Big, Beautiful Bill” includes sweeping changes to Medicaid and other core safety-net services. Once the full federal picture is clear, the state will likely need to enact a Budget Bill Jr. to adjust appropriations, alongside budget trailer bills to implement necessary statutory changes. For advocates and stakeholders, this means that July 1 is not the end of the road. The “final” budget may be signed, but clarity will continue to be essential as changes unfold.

The California State Budget is always a living, breathing document, evolving to meet the demands of the fourth largest economy in the world and a population as diverse as its needs.

Stay tuned as we await the final print and adoption of California’s 2025–26 State Budget. As always, Full Moon Strategies will be here to help you interpret, adapt, advocate, and respond.