Governor’s Spending Plan Ignores Counties Delivering Critical Services

Sacramento, Calif. – The Governor’s January 2026 Budget Proposal seeks to protect the state coffers from deficits by instead pushing significant fiscal risk and responsibility onto counties — and in doing so, would jeopardize both California’s safety net and its economy.

Despite a minimal deficit based on a projected $42 billion revenue surge, the spending plan ignores the fiscal crisis facing counties, which deliver state services to millions of Californians every day.

In fact, the state’s approach shifts even more costs to counties while adding to its own reserves.

“This budget proposes we all close our eyes and hope this crisis magically disappears — while local communities lose health care, hospitals, food support and public safety,” says California State Association of Counties (CSAC) CEO Graham Knaus.

Federal actions such as H.R. 1 will shift billions of dollars in new Medi-Cal, CalFresh, and indigent care costs to counties — without removing the mandates to deliver these services.

Counties cannot absorb these combined hits alone.

The Governor’s spending plan exacerbates these risks of ignoring H.R. 1 with several poorly thought-out proposals:

• In-Home Supportive Services (IHSS): The budget would remove an estimated $233.6 million in state costs for IHSS recipients whose in-home care hours increase after their services begin. Without further detail, CSAC must assume the costs would then shift to counties.
• Proposition 36: Last year’s $50 million for behavioral health was inadequate and still hasn’t reached counties, and the January proposal offers no funding for Prop 36, instead leaving the counties exposed to uncertain Proposition 47 savings.
• Homeless Housing Assistance and Prevention (HHAP): After zeroing out HHAP funding in the current fiscal year, the governor’s budget adheres to last June’s agreement to fund $500 million in 2026-27 — down from $1 billion in previous years. In addition, there’s still no timeline for distributing the prior HHAP round of $1 billion, which was approved by the legislature 18 months ago.

This is not just a health and social services issue. It is an economic one. 

When H.R. 1 forces counties to backfill the full cost of indigent care, public and rural hospitals are pushed toward closure. Cuts to IHSS pull caregivers out of the workforce. Delays in homelessness and Prop 36 funding drive up public safety risks and health costs. When healthcare fails, kids miss school and parents miss work. The result is a ripple effect that weakens local economies and harms communities across California.

CSAC will advocate throughout the budget process for a spending plan that aligns responsibility with funding and accountability. Counties stand ready to partner with the state, but we cannot be expected to carry California’s safety net on our backs alone.