Newsom May Revision Drops Mid-May 2026 — FQHC Watch Items: H.R. 1 Absorption, MCO Tax, Prop 35 Allocations, Worker Reqs Cost

California Governor Newsom's FY2026-27 May Revision is expected mid-May 2026, his last gubernatorial budget. The January proposed budget projected a $2.9B deficit and $1.1B in net Medi-Cal cost pressure from H.R. 1 absorption. Items every CA FQHC executive should track in the May Revision: (1) Final UIS PPS-to-FFS transition codified for July 1, 2026, (2) MCO Tax permanence framework via Prop 35 allocations to FQHC PPS supplemental rates, (3) work/community engagement requirements ($102.4M cost reduction via Jan 1, 2027 effective date — administrative cost shift to counties), (4) federal admin match cut from 50% to 25% (Oct 2026), and (5) any capacity expansion for the $233.6M Rural Health Transformation funding. The May Revision typically signals where the Legislature has political room to push back vs. accept cuts. CPCA + CCALAC + Health Access advocacy posture for the May 2026-July 2026 budget cycle is the single most consequential window of the year for FQHC revenue.