California continues to celebrate its position as the fourth-largest economy in the world. Yet even as the state reaches historic economic milestones, 17.7% of Californians still live in poverty.
This contradiction raises an important question: who is benefiting from California’s economic growth?
For many families across the state, rising costs for housing, food, utilities, and childcare mean economic prosperity remains out of reach. At the same time, federal policy changes threaten to weaken the very safety net programs that help families stay afloat. As California navigates these challenges, the state budget plays a critical role in determining whether progress moves forward — or stalls for the communities that need support most.
Federal Cuts, Local Consequences
In his proposed 2026–2027 state budget, Governor Gavin Newsom acknowledges the harmful impacts of the federal spending bill H.R. 1, which threatens key programs like Medicaid/Medi-Cal and SNAP. However, the current proposal primarily addresses the state’s administrative costs associated with these federal cuts, leaving significant gaps in services that support low-income Californians.
Without state action to mitigate these losses, local resources across California will become increasingly strained.
Many Community Action Agencies operate California Advancing and Innovating Medi-Cal (CalAIM) programs that provide holistic services for Medi-Cal clients. Cuts and new eligibility requirements may force providers to serve fewer individuals, reducing preventative care and placing additional pressure on already overburdened healthcare systems.
Food security is also at risk. Community Action Agencies and their partners operate food assistance programs throughout California, often working alongside food banks to meet community needs. If SNAP/CalFresh benefits are reduced without state mitigation, local organizations will be left to absorb increased demand. We saw during the November 2025 federal government shutdown that food bank infrastructure cannot sustain the full scope of lost SNAP benefits.
When federal support shrinks, the need for strong state leadership grows.
Noteworthy Investments — But More Is Needed
There are several positive elements in the Governor’s proposal that reflect California’s continued commitment to supporting vulnerable communities.
The budget includes $24.6 million for the Farm to School Incubator Grant Program, which connects local farmers with school meal programs and helps ensure students have access to fresh, nutritious food while strengthening regional economies.
The proposal also increases funding for Community Schools to $1 billion, supporting integrated services for students and families. Many Community Action Agencies partner with these schools to provide wraparound supports such as nutrition programs, housing assistance, and family services.
Additionally, $9.2 million from Proposition 4 will be directed through the California Department of Community Services and Development to support local energy programs addressing climate risks, safe drinking water, and wildfire prevention.
These investments are meaningful — but they are not enough to meet the scale of need across California.
Where the Budget Falls Short
While some programs see continued support, several critical areas that directly impact low-income families remain underfunded or face reductions.
Food and Nutrition
Despite anticipated reductions in SNAP/CalFresh access due to federal policy changes, the proposal allocates only $8 million for CalFood, a key component of California’s food assistance system. At a time when food insecurity is expected to rise, greater investment is needed to fill the gaps.
Housing and Homelessness
Compared to previous years, the budget significantly reduces funding flowing directly to local communities to address housing instability and homelessness. While the proposal emphasizes centralized state agencies, Community Action Agencies know firsthand that local solutions are often the most effective solutions.
Healthcare Access
Federal cuts to Medicaid/Medi-Cal combined with state policy changes may make benefits harder and more expensive to access for some Californians. Programs like CalAIM could face reduced funding and fewer eligible clients, which would further strain local healthcare networks and emergency services.
Childcare and Early Childhood Education
California’s expansion of Universal Transitional Kindergarten is a significant investment, but greater coordination with Head Start and Early Head Start providers could maximize public dollars while strengthening whole-family support systems.
CalEITC Outreach
The proposal allocates $10 million for California Earned Income Tax Credit outreach and free tax preparation assistance, a decrease from $12 million in 2025–26 and $20 million in 2024–25. These outreach programs help ensure families receive tax credits that are widely recognized as one of the most effective tools for lifting working families out of poverty.
Community Services Infrastructure
Perhaps most concerning, the budget proposes $0 in discretionary General Fund dollars for the California Department of Community Services and Development (CSD). CSD administers the Community Services Block Grant — the primary funding source for the Community Action Network — as well as programs such as LIHEAP, Weatherization Assistance, and CalEITC outreach.
Without flexible funding for CSD, the very infrastructure that delivers services to low-income Californians could be weakened.
Turning Economic Growth Into Opportunity
California’s economic success presents an opportunity. A strong economy means the state has the capacity to invest in solutions that expand opportunity and reduce poverty.
The Community Action Network stands ready to partner with state leaders to strengthen programs that help families build stability — from food access and energy assistance to housing support, healthcare navigation, and tax credit outreach.
These investments do more than provide immediate relief. They build pathways to long-term economic mobility for families and communities across California.
A California for All
Governor Newsom’s vision of “A California For All” recognizes that prosperity should reach every community in our state.
But achieving that vision requires budgets that prioritize equity and protect the systems families rely on.
While the Community Action Network welcomes several investments included in the Governor’s proposal, more must be done to ensure low-income Californians are not left behind. As the state moves toward the May Revision, CalCAPA looks forward to working with the Governor and Legislature to strengthen the safety net and ensure California’s economic success benefits everyone.
True prosperity is measured not by global economic rankings, but by whether families across California can live, work, and thrive.