State Sen. John Laird is trying to build a different kind of state budget.

If you think the mechanics of budgeting are a dull topic for conversation, or that a projected $20 billion budget shortfall the year after next is a depressing topic for conversation, you have not talked about the mechanics of budgeting with State Sen. John Laird, D-Santa Cruz, who loves this stuff—and who sounds rather optimistic. 

As the State Senate Budget Committee chair, Laird is deep in it. Gov. Gavin Newsom’s revised budget is expected in mid-May, and negotiations between the governor, Assembly and Senate continue until the June 15 deadline for the Legislature to approve a budget for fiscal year 2026-27. 

“It will be a very intense month where we negotiate every part of the budget,” Laird says. He’s already working some 12-hour days (but if he looks for pity, his husband reminds him that he wanted this role). “I am, believe it or not, enjoying the role,” Laird says. “It’s not always appreciated that the budget is where a lot of the action is and it’s a statement of our policy preferences.”

Laird has so far focused his energy on the mechanisms of how the budget works, what he refers to as “global architecture.” The Senate’s budget framework, released on April 16, benefits from a rosy forecast for a short-term revenue surge, $15 billion more than originally projected thanks largely to AI, and would produce a balanced budget the next two years (instead of a $3 billion deficit next year and $20 billion the year after). 

“That presents a real political problem in that when you have a surge in revenues, nobody understands why we are making cuts in the following year,” Laird says. 

In his framework, he hopes to address some of that uncertainty, primarily by remaking technical elements of the California budget in more lasting ways. The proposal would reform the Rainy Day Fund, increasing the maximum size of the fund from 10 percent of the state budget to 30 percent. It would change the split between Rainy Day Fund deposits and debt repayment deposits from 50/50 today to 60/40, helping bolster the fund for bad years. 

The proposed framework projects a reserve of $39 billion in 2026-27, a far better cushion than the original projection of -$465 million. 

That might all sound well and good, but how to get there is politically volatile; some elements require a constitutional amendment (subject to voter approval), others two-thirds support in the Legislature. And there are $5 billion proposed in cuts, and those line items are TBA. “We are not in public detailing the cuts,” Laird says. “If you start to talk about them, everybody focuses on that.” 

Instead, he is focused on the architecture issues—the tedious part—and bridging various perspectives. “If the governor says, ‘I’m not doing revenue, over my dead body’”—that’s a rough paraphrase—“then we have to come back and make some cuts that we don’t want to make,” Laird says. 

So he is looking for alternative approaches to generating revenue. 

That includes a penalty for large employers with 1,000 or more employees if those companies’ employees are enrolled in Medi-Cal; the public health plan is the fastest-growing slice of California’s budget. 

Forty-two percent of working-age Medi-Cal enrollees are working, but aren’t getting health insurance through their employer, leading to greater participation in subsidized public insurance that simply cannot keep up (and that is to say nothing of federal cuts that Laird hopes are reversed depending on the outcome of the midterm elections). The fee would generate an estimated $5 billion to $8 billion per year.

Ultimately, Laird sees the state budget as a proxy for people’s philosophies, and negotiations over the budget as a way to bring people together despite their differences, even if those differences appear to be not over which line items to cut or keep, but over philosophical approaches to raising revenue.

If he succeeds, it will be pretty wonky stuff but also a meaningful contribution. Now in his second term in the State Senate, following three terms in the Assembly (during which time he wrote 82 bills that became law), Laird will term out on his time in the Legislature come 2028; remaking the budget architecture could be legacy-building material. 

Sara Rubin is the Weekly’s editor. Reach her at sara@montereycountynow.com.