California governor Gavin Newsom on Friday signed a $321-billion budget that rolls back several progressive initiatives, including a major healthcare expansion for low-income undocumented immigrants, in a bid to bridge a $12-billion budget deficit.This marks the third consecutive year that America’s most populous state has been forced to cut or delay programmes backed by Democratic leaders amid declining revenues and economic uncertainty. The budget was passed by lawmakers earlier in the day following a consensus between Newsom and legislative Democrats.However, the budget agreement could be void if lawmakers fail to pass related housing legislation by Monday. That bill is aimed at making it easier to build housing across the state.Despite the cuts, state leaders say the budget protects critical safety net programmes. The deficit will be managed primarily through the use of state reserves, internal borrowing from special funds, and delayed payments, rather than by introducing new taxes.“It’s balanced, it maintains substantial reserves, and it’s focused on supporting Californians,” Newsom said in a statement.The state also faces looming risks from potential federal policy changes, including those related to tariffs and immigration enforcement, which could cut state revenues by as much as $16 billion, Newsom warned in May.Senate president pro tempore Mike McGuire acknowledged the difficult decisions involved in finalising the budget. “We’re not going to please everyone, but we’re doing this without any new taxes on everyday Californians,” he said.Republican lawmakers criticised the budget process, saying they were excluded from negotiations and that the plan fails to address long-term fiscal sustainability.“We’re increasing borrowing, we’re taking away from the rainy day fund, and we’re not reducing our spending,” said Republican senator Tony Strickland. “This budget also does nothing about affordability in California.”