Santa Clara County Executive James Williams sums up the biggest issue facing California’s sixth-largest county in 2026 in three words: “budget, budget, budget.”
The past year ushered in a new age of fiscal challenges for the county as President Donald Trump and a Republican-controlled Congress passed legislation last summer that triggered unprecedented cuts to the federal Medicaid program. Known as Medi-Cal in California, the program provides health insurance to low-income and disabled individuals.
As the operators of the second-largest county health and hospital system in the state, Trump’s landmark tax-and-spending bill has left a giant hole in Santa Clara County’s growing budget for the coming years.
2025 saw the county act swiftly to respond to the challenge, placing a general sales tax increase on the November ballot to backfill a portion of the lost revenues, which make up roughly a third of the budget. Voters ultimately approved the sales tax increase, which will take effect in April. But the projected $330 million it will raise annually will only plug part of the $1 billion annual gap, placing budget challenges — and health care — at the forefront of the county’s priorities.
Williams said in an interview that budget constraints will “tremendously” impact policy decisions the Board of Supervisors might want to pursue this year to ensure that baseline services are preserved. In addition to the fiscal challenges stemming from the federal government’s actions, the county is also impacted by “an extraordinary set of policy challenges” as well, according to Williams.
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The county executive said they plan on innovating locally, advocating for more funding from the state and pursuing litigation where necessary. The county sued the Trump administration nine times in 2025 on a range of executive orders, such as the president’s attempts to revoke birthright citizenship to pulling federal funding from local governments that have deemed themselves as “sanctuaries” for immigrants living in the country illegally.
Supervisor Otto Lee, who is the president of the Board of Supervisors, said in an interview its lawsuits against the federal government are critical to protecting both residents’ rights and key funding streams.
“It’s one of those things in life that we just have to continue pressing on to make sure that we can sustain our work as a county,” he said. “Without the federal funds, without the state funds, we are not able to do our main core job.”
While the budget will dictate many of the county’s policy actions in 2026, Lee — who will be serving as president of the board for the second year — said he would like the county to focus more on emergency preparedness, working more deeply with San Jose officials to tackle the unsheltered homeless crisis and ensuring schools have clean drinking water.
Supervisors Sylvia Arenas, who serves as the vice president of the board, said her priorities focus on “building on the momentum of the Latino Health Assessment.” The county released the detailed report last year, which found that while Latinos, who make up one in four residents in the county, often face worse health outcomes than their white and Asian counterparts.
“We have a real opportunity to turn data into action by addressing persistent social determinants that has led to Latinos having a two-year shorter life expectancy than their counterparts,” Arenas said in a statement. “Increasing health access this year is vital as we face the realities of H.R. 1 and support the growing number of families relying on the county’s safety‑net programs.”
Some of the county’s policy work in the upcoming year, however, may depend on what kind of funding it receives from the state. Gov. Gavin Newsom released his annual budget proposal earlier this month that aims to close a projected $2.9 billion shortfall, which doesn’t seem promising for the county’s fiscal challenges.
Williams called the initial proposal a “status quo budget,” saying that it is “basically non-responsive to the attack that H.R. 1 has brought on Californians.”
The county executive said the proposal “dumps the burden” of the Medicaid cuts onto California’s 58 counties.
“One of the things that was disappointing about the governor’s initial budget proposal is there was nothing in there to respond to the devastating impacts on our public hospital systems across the state,” Williams said. “It is absolutely incumbent on the legislature and the state government to step up and ensure that all Californians retain access to these critical services.”
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