Latest state budget raises taxes on Californians, ignores voter priorities

As Californians grapple with an affordability crisis touching nearly every aspect of daily life, they deserve a state budget that addresses their struggles.

Unfortunately, this year’s budget bill does the opposite. It raises taxes on families and businesses, further driving up the cost of living. That’s why I opposed it.

Families are already stretched thin by the high cost of housing, groceries, gas, electricity and healthcare. Yet Sacramento continues to favor government spending over real relief.

Despite historic revenue gains exceeding $60 billion above initial projections, the budget relies on accounting gimmicks, new tax hikes and withdrawals of more than $14 billion from the state’s Rainy Day Fund to achieve balance.

At a time when healthcare costs are skyrocketing, the budget imposes new taxes on health plans that will increase premiums by $1.5 billion annually. This will add an average of $400 per year for a family of four and more than $10,000 annually for businesses with 100 or more employees.

The budget also introduces a new sales tax on digital software and software-as-a-service products. This will hit businesses and individuals relying on tools like Microsoft Office, Adobe, QuickBooks, Slack and Workday.

The tax is projected to raise hundreds of millions for the state but will inevitably be passed along to consumers through higher prices, making California even less competitive and affordable. It also breaks new ground by taxing services – previously limited to tangible goods – setting a troubling precedent.

Voters made their priorities clear in November 2024. Proposition 35 dedicated Managed Care Organization (MCO) tax revenues to improving Medi-Cal provider reimbursement rates and healthcare access. Instead, these funds are being redirected to backfill the General Fund. Californians voted for better healthcare, not another budget-balancing maneuver by the governor and supermajority.

A similar disregard appears with Proposition 36. Voters approved it to enhance accountability for drug and theft crimes while expanding treatment for addiction and mental illness. Last year’s budget offered only partial funding for implementation; this year provides none. Courts, probation departments and treatment providers now lack the dedicated resources needed to deliver on the voters’ will.

The budget also fails to address other critical needs. It provides no meaningful funding for fraud prevention in major programs like Medi-Cal, CalWORKs, In-Home Supportive Services or childcare – despite persistent concerns about improper payments. Employers also continue to face burdens from the state’s unemployment insurance debt with no substantial relief.

These choices reveal a clear pattern: Sacramento is protecting existing spending priorities rather than tackling our most pressing challenges – affordability, accountability and long-term fiscal health.

California families make tough tradeoffs every day to balance their own budgets. State government should meet the same standard of responsibility. A truly responsible budget would focus on lowering costs, strengthening public safety, honoring voter-approved initiatives and ensuring taxpayer dollars are spent transparently and effectively.

This budget falls short. Californians deserve better – one that truly reflects the priorities and values they have expressed at the ballot box.

Assemblyman Josh Hoover represents the 7th Assembly District in Sacramento County, which includes the cities of Citrus Heights, Folsom and Rancho Cordova and the unincorporated communities of Carmichael, Fair Oaks, Foothill Farms, Gold River, Mather, McClellan Park, North Highlands, Orangevale and Rosemont. You can follow him on X @joshua_hoover or contact his office at [email protected].