California Gov. Gavin Newsom on Wednesday called for his state to scale back healthcare for illegal immigrants in an effort to help balance the state budget that went from having a small surplus in January to being $12 billion in the red by May.

The move to limit healthcare for undocumented migrants is a reversal of Newsom’s promise to deliver “universal healthcare for all,” regardless of immigration status. It comes after the Trump administration announced it was investigating a state program that has provided cash assistance to some illegal immigrants who are older or have disabilities and are not eligible for federal aid. 

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Newsom said making changes to the state Medicaid program, known as Medi-Cal, would help with the deficit. 

Fact sheets on the proposal provided by his office said that he would freeze enrollment in his 2025-26 budget for “undocumented adults” to receive the full scope of the state’s Medicaid program. The changes would apply only to new applicants over 19 years old. Existing enrollees would not be kicked off their plans, and the freeze would not apply to people enrolled in limited plans, like ones that specifically cover emergency or pregnancy services. The freeze would begin next year. 

Republicans in the state have blamed ballooning costs on the state allowing illegal immigrants to become covered under Medi-Cal. 

California became the first state in the nation to offer healthcare to all income-eligible immigrants one year ago. In 2015, Democratic Gov. Jerry Brown signed a bill that offered medical coverage to all children younger than 19.

Medi-Cal is also facing shortfalls due to increases in pharmaceutical drug prices as well as an influx of new seniors added.

The proposed changes were included in Newsom’s revised budget that he rolled out Wednesday morning. 

Newsom also plans to cut spending for a program providing in-home domestic and personal care services for some low-income residents and Californians with disabilities by capping workers’ overtime and limiting travel hours at 50 hours per week. That is expected to reduce spending by nearly $708 million for the upcoming fiscal year. 

Newsom spent the majority of his amended budget presentation blaming California’s fiscal woes on President Donald Trump’s tariffs and suggested the state had suffered unjustly. 

“We don’t live in Plato’s Republic,” Newsom said. “California is under assault. The United States of America, in many respects, is under assault because we have a president that’s been reckless in terms of assaulting those growth engines. Best to call this a Trump Slump.”

Newsom’s Department of Finance estimated that Trump’s tariffs will deal a $16 billion blow to state revenues, though the office did not break down which tariffs the calculations were based on. The governor also said the wildfires in Los Angeles, which ravaged entire neighborhoods, took an economic toll on the state. The fires also forced state and federal officials to delay tax deadlines in the county. 

State budgets are built on forecasts of economic conditions, both at the federal and state levels, that affect tax revenues. California relies heavily on income tax from the top 1% of its residents, whose money is often tied to the stock market, which has been on a wild ride since Trump’s second term began. As a result, California is left in a vulnerable position as it stares down its multibillion-dollar deficit. 

The state is expected to lose $7.8 billion in tax revenue from personal income tax, capital gains, and corporate revenue due to the effect of tariffs on California taxpayers, the governor’s office said. 

“This extraordinary loss of essential revenue is exacerbated by the unpredictable and chaotic approach to imposing tariffs, which has made it extremely difficult for California and its agencies to effectively budget, plan for the future, and properly serve Californians,” Newsom’s office said. 

California has sued to block Trump’s tariffs. On Tuesday, Newsom and Attorney General Rob Bonta announced the state would file a new motion for a preliminary injunction to stop Trump’s tariffs as part of California’s lawsuit challenging the president’s use of emergency powers. 

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The governor’s office said the tariffs are projected to cost California consumers $25 billion and result in the loss of over 64,000 jobs, at a minimum. It added that the total cost of Trump’s tariffs is projected to be upwards of $40 billion.

“As the largest economy in the nation, California has the most to lose from President Trump’s weak and reckless policies,” Newsom said.