Story perspectives

Newsom pushes 7.25% cloud tax, slashes health funding

5/16/2026

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Summary

Story summary

Governor Gavin Newsom introduced a 7.25% sales tax on cloud-based software to raise about $1.1 billion.
His $349 billion budget eliminates deficits for two years while cutting $1.1 billion from health and social services, reducing Medi-Cal for immigrants and risking 1.3 million uninsured by 2030.
The plan withholds $3.9 billion of school funding and provides $500 million for homelessness and $300 million for ACA premiums, which officials say are insufficient.

History

Historical Context

June 1978 voters approved Proposition 13, capping property taxes at 1 % of assessed value and slashing local collections by about 60 % in its first year. The revenue loss, noted by Jerry Brown, led officials—including Governor Gavin Newsom—to create special levies such as a 7.25 % cloud-software tax, while the Howard Jarvis Taxpayers Association later estimated the measure cut statewide taxes by $528 billion.

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Story summary

Governor Gavin Newsom introduced a 7.25% sales tax on cloud-based software to raise about $1.1 billion.
His $349 billion budget eliminates deficits for two years while cutting $1.1 billion from health and social services, reducing Medi-Cal for immigrants and risking 1.3 million uninsured by 2030.
The plan withholds $3.9 billion of school funding and provides $500 million for homelessness and $300 million for ACA premiums, which officials say are insufficient.

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