CA lawmakers close to reaching budget deal but Newsom indicates he isn't satisfied

SAN FRANCISCO (KGO) -- California state lawmakers are close to reaching a budget deal, but Governor Gavin Newsom has indicated he isn't satisfied.

The state is facing a $12 billion deficit, which is about five percent of the $322 billion spending plan.

A variety of factors have caused this deficit: rising healthcare costs, state overspending, economic uncertainty from tariffs and cuts in federal funding.

RELATED: After 2 years of shortfalls, Gov. Newsom proposes $322B budget with no deficit

And the clock is ticking; the deadline for the budget to be finalized is next week.

"I've been involved in many public budget processes... this time is the most frustrating that I have ever experienced," said State. Sen. Roger Niello, R-Roseville.

"We face very difficult decisions in this budget and it's never easy with a deficit that we face," said State Sen. Scott Wiener, D-San Francisco.

A deficit, state budget watchers say, could worsen.

"Program costs, however, have continued to outpace revenues at the same time that we face the threat of significant reductions in federal support," said Erika Li, Chief Deputy, California Department of Finance.

Republicans claim that this spending plan will hurt California in the future.

"It's only balanced because we are borrowing money and we're using reserves that are supposed to be for dire emergencies and we are having neither of those," said State Sen. Kelly Seyarto, R-Murrieta.

As if the deficit wasn't enough, closed-door negotiations between leaders late Tuesday only added to the budget bitterness.

"My first brief on today's budget was before I received the committee's report, and it was in the newspaper," said Niello.

Under this proposed budget, the University of California and California State systems are averting funding cuts under this plan.

It also adds $100 million for the implementation of Prop 36, the anti-crime initiative voters approved last fall.

On the chopping block? State funding for cities and counties to deal with homelessness.

And the most controversial for progressives, the deal halts new enrollment for undocumented adult immigrants in Medi-Cal starting in January.

MORE: Gov. Newsom proposes pausing expansion of health care to undocumented, low-income immigrants

"So savings because people will lose coverage. Revenue because those who choose to and can afford a $30 premium will bring the additional revenue?" said State Sen. Caroline Menjivar, D-San Fernando Valley.

Newsom is giving an ultimatum about the state's environmental regulations that could threaten the deal. In a statement, his spokesperson told ABC7 News: "The Governor's signature is contingent on finalizing legislation to cut red tape and unleash housing and infrastructure development across the state - to build more, faster."

The next fiscal year officially starts next Tuesday, on July 1.

Now all of these budget details could be reevaluated later this year or early next year, especially depending on how much California loses in the federal tax bill Congress is currently negotiating.