The Brief

California budget is $12 billion in the red amid Trump tariffs and rising costsBy Alexei Koseff, CalMatters

Gov. Gavin Newsom addresses the media during a press conference unveiling his revised 2025-26 budget proposal at the Capitol Annex Swing Space in Sacramento on May 13, 2025. Photo by Fred Greaves for CalMatters This story was originally published by CalMatters. Sign up for their newsletters.

Gov. Gavin Newsom today announced that California is facing a $12 billion budget deficit, spurred by soaring costs for social services as the state’s economy teeters from President Donald Trump’s chaotic tariffs strategy.

Unveiling his revised $322 billion spending plan, Newsom repeatedly blamed the tariffs for undermining key industries and eroding financial markets that are crucial to California’s fiscal health — a “Trump slump” that he forecasts will reduce tax revenues by $16 billion next year.

“California is under assault, the United States of America in many respects is under assault, because we have a president that’s been reckless in terms of assaulting those growth engines and has created a climate of deep uncertainty,” Newsom said. “The impacts are being felt disproportionately in the fourth-largest economy in the world.”

But the size of Newsom’s budget proposal remains virtually unchanged from an earlier version in January, when the governor projected a modest surplus, underscoring that runaway expenses for subsidized health care and other state programs are the biggest long-term challenges.

Newsom is proposing to close the deficit by rolling back state-funded insurance coverage for adults without legal immigration status, cutting coverage for weight loss drugs like Ozempic and reducing home health services, as well as sweeping billions of dollars out of speciality funds to backfill core services.

“We’ve got a spending problem,” Newsom acknowledged, defending the potential cuts against anticipated blowback. “We can deny that we have a shortfall. We can deny that we have a deficit. We can deny we have a problem in the system and we could put it off and be irresponsible.”

His approach will force hard conversations about priorities with the state Legislature as they race to reach a budget deal before the start of the fiscal year in July. Senate President Pro Tem Mike McGuire of Santa Rosa and Senate Budget Chairperson Scott Wiener of San Francisco, both Democrats, gave only a tepid initial response, saying in a joint statement that they “remain focused and prepared to protect the people and progress we’ve made over the years.”

Gov. Gavin Newsom addresses the media during a press conference unveiling his revised 2025-26 budget proposal at the Capitol Annex Swing Space in Sacramento on May 13, 2025. Photo by Fred Greaves for CalMatters California’s financial picture was troubled even before the recent turmoil. Newsom and the Legislature took extraordinary steps last summer to close a budget gap projected in the tens of billions of dollars over two years, including more than $28 billion in 2025-26.

The $12 billion deficit in Newsom’s revised budget proposal represents an additional shortfall after state officials agreed last year to sweeping cuts to state agencies and positions, clawing back funding increases for health care providers, eliminating affordable housing programs, delaying money for schools, suspending business tax credits and dipping into reserves.

Newsom seeks major cuts to Medi-Cal

Medi-Cal, the state’s health insurance program for low-income people, has reported a more than $6 billion cost overrun this year — in part because an expansion to include immigrants without legal status brought in more new enrollees than expected — and it needed an emergency cash infusion in March.

That program is targeted for major reductions in Newsom’s budget proposal: a freeze on new enrollment of adults who are in the country illegally, as well as a $100 monthly premium and cuts to long-term care and dental benefits for those who maintain their coverage. The governor estimates those moves could eventually save more than $6 billion annually.

The governor is also proposing to undo a recent rule eliminating asset tests for seniors, a factor that state analysts found has contributed to a 40% growth in senior Medi-Cal enrollment over the past four years.

His plan would borrow billions of dollars from a special fund intended to raise reimbursement rates for Medi-Cal providers and shift more than $1.5 billion out of a fund intended for projects to reduce greenhouse gases to pay for the state’s firefighting operations.

Newsom is also looking to save money by closing another state prison, a cut made possible because California’s incarcerated population has declined by nearly half, to 91,000 people, in the past two decades. It would be the fifth state prison to close during his administration, though Newsom did not specify which one.

The devastating fires that hit Los Angeles in January have introduced new uncertainty for the budget, because the tax deadline for Los Angeles County — where a quarter of all Californians live — was delayed until October.

But the most significant risk to tax receipts is undoubtedly from Trump’s tariffs, which Newsom sued last month to block. Stock market declines are poised to take a bite out of future income tax revenue, because California relies disproportionately on capital gains earned by the wealthiest taxpayers; that accounts for $10 billion of the projected revenue decline. Higher costs from the tariffs are also imperiling major sectors such as manufacturing, agriculture, tourism and shipping in California, whose largest trading partner is China.

Assembly Republican Leader James Gallagher of Chico called Newsom pinning California’s latest budget woes on the tariffs “the biggest load of crap I’ve ever seen from a politician.” Gallagher said in a statement, “We’re in this mess because of his reckless spending, false promises, and failed leadership.”

Next step: Negotiating with lawmakers

Bargaining with legislative leaders will ramp up over the next month, with a June 15 deadline for the Legislature to pass a balanced budget or forgo its pay, though sometimes provisions of an overall deal drag out beyond that.

“Anyone who thinks we’re not going to make cuts this year is not in touch with reality,” Assemblymember Jesse Gabriel, an Encino Democrat who leads the Assembly budget committee, told CalMatters. “Advocates who are proposing major expansions of programs should stop wasting people’s time.”

California’s public universities, however, saw a rosier forecast in the budget announcement — cuts of 3%, far below the initial 7.95% cuts Newsom proposed in January. Lawmakers this year rallied to spare the University of California and California State University from the original, deeper cuts.

That still means $130 million less for UC and $144 million less for CSU, which is particularly reliant on state funding and says it faces larger class sizes, fewer course options and likely layoffs as a result.

Another spending proposal was spared: a $420 million annual increase of California’s film and television tax credit, more than doubling the pot of available subsidies and boosting the amount that individual productions can receive. It’s a priority for Newsom, with the strong backing of many Los Angeles-area legislators, especially as the region seeks a comeback after the fires.

“I want to get the economy moving again,” Newsom said. “Revenue doesn’t come from trees, it doesn’t come from printing presses.”

Trump’s effort to slash federal spending is another looming question mark. Congressional Republicans have floated shifting more of the cost of social safety net programs to the states, though they are struggling to reach a budget agreement.

If they ultimately push through major changes to federal funding, lawmakers could be back in Sacramento later this year or early next year revising the state budget once again.

“Ninety percent of the ball game is in Washington,” Gabriel said. “It’s frustrating to me that this is beyond our control.”

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

Gov. Gavin Newsom announced Friday that he has requested a yearlong extension of FEMA funding for L.A. fire survivors. Without the extension, the money will run out July 9.

Now the decision on FEMA support lies with the federal government.

The funds have allowed many survivors to afford temporary housing and other daily needs. Most have yet to return home — 2 in 3 survivors who were living in Altadena or Pacific Palisades at the time of the fires are still displaced, according to the latest survey of more than 2,100 survivors by the nonprofit Department of Angels. Nearly 40% of respondents reported they will either soon run out of temporary housing insurance coverage or have already.

The situation is particularly dire for low-income households: Nearly 80% of respondents making $50,000 or less said they didn’t think they could afford housing for three months once coverage ended.

“The data is clear: This recovery is not over,” said Angela Giacchetti of the Department of Angels at a news conference organized by the Eaton Fire Collaborative in Altadena on Thursday. “If you are a survivor, you know this in your bones. For many families, it has barely begun. People have just begun to stabilize. We need federal support that reflects the scale of this disaster and systems that survivors can actually navigate and access over time.”

FEMA assistance isn’t reaching most survivors

The FEMA Individuals and Households Program can provide funding for survivors of disasters to pay for temporary housing, repair their homes, and respond to other challenges that insurance may not cover. It can also help cover costs if a survivor has no insurance.

Gil Barel has been relying on FEMA funds to pay rent on a small back house for herself and her son for the last year. She said they still haven’t been able to return to their rent-controlled Pasadena apartment because of smoke damage, though she still has to pay the rent for it.

Gil Barel is paying rent on a smoke-damaged apartment in Pasadena while FEMA funds have helped her cut the cost of temporary housing.

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Barel doesn’t know what they’ll do if the FEMA funding runs out.

“ I'm really stressed out,” she said. “I think I'm just kind of trying to put that thought aside and hope for the best.”

But in the 15 months since the fires, most survivors have not accessed FEMA funding. About 60% have received no FEMA assistance beyond the initial $770 payments dispersed in the immediate aftermath of the fires, according to the Department of Angels survey.

Many have faced denials, according to disaster case manager workers with Catholic Charities of L.A. and lawyers with Legal Aid Foundation of L.A.

That’s the situation for Gayle Nicholls-Ali and her husband, Rasheed, who lost their Altadena home of 15 years in the Eaton Fire. They’ve relied on their insurance to pay for a rental in Montrose, but that’s rapidly running out. And because they have that insurance, FEMA has denied further support.

Gayle Nicholls-Ali and her husband, Rasheed, lost their home in the Eaton Fire. They plan to rebuild, but the cost is a major hurdle.

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“A lot of our ALE [Additional Living Expenses insurance] is going to run out before we even are able to get into a house,” Nicholls-Ali said.

Without FEMA or insurance support, they’ll have to find a way to pay rent on top of a mortgage. They also face a big gap in the cost of their rebuild versus how much their insurance covers. Nicholls-Ali said without the help of FEMA and other sources of funding, recovering feels further out of reach.

Funds for long-term recovery still in limbo

FEMA funding extensions have been routine in past disasters, including the 2023 wildfires in Hawaii and after devastating flooding in North Carolina in 2024.

But the agency has faced significant cuts during the second Trump administration, and there are indications that disaster aid is becoming increasingly political. For example, President Donald Trump has approved aid for just 23% of requests from states with a Democratic governor and two Democratic senators, compared to 89% for states that with Republican governors and senators, according to an analysis by Politico.

The state has also not received more than $33 billion for long-term recovery, which can help pay for infrastructure upgrades and repairs, as well as help rebuild schools, parks and homes. That money was requested by state and local leaders shortly after the January 2025 fires and hasn’t been appropriated by Congress.

This story first appeared on The LA Local.

Rabbi Amy Bernstein says the wind-whipped fire in January 2025 that scorched much of the Pacific Palisades, destroying her home and damaging her synagogue, “blew everything open” for the community’s faith leaders.

“If our hearts must break, let them break open,” said the rabbi, who leads Kehillat Israel where 300 families out of 900 lost their homes. “This tragedy has really pushed us closer to one another. We’re working to change the things we need changed.”

Faith leaders both in the Pacific Palisades and in Altadena and Pasadena — devastated by the pair of fires that tore across Southern California — have relied on interfaith and community partnerships to rally congregants who are picking up the pieces 16 months later.

They’ve had to learn on the fly about insurance coverage and local land use regulations while still trying to keep their scattered flock together and raising money for basic needs. Pastors in Altadena have had to fight to protect the rights of Black people who decades ago found pathways to home ownership in that community despite redlining — but now risk losing their land to outside developers who sense an investment opportunity.

And throughout this span, faith leaders have had to cater to the emotional and spiritual needs of their communities and think about how they want to rebuild their sanctuaries that were lost or damaged in the fire. More than a dozen houses of worship burned to the ground or were damaged.

Interfaith relationships have become stronger after the fires

This would have been difficult for faith leaders to handle but for the interfaith relationships that became closer and stronger after the fires, said the Rev. Grace Park, associate pastor at Pacific Palisades Presbyterian Church, which burned down.

Methodists, Presbyterians, Catholics, Jews and yogis have not just found common ground in human suffering and loss, but have learned how to lean on one another in a time of dire need, she said.

“It’s a sense of mutual affection and respect, learning from each other and leaning on one another,” Park said. “We’re sharing the joys and the deep valleys of what it means to lead through a time of tragedy.”

Brother Satyananda, a senior monk at the Self Realization Fellowship, lost his living quarters and belongings in the fire. Much of the campus, started by Paramahamsa Yogananda who brought ancient spiritual practices from India to the West, fortunately survived the fire.

Satyananda recalls one day when Bernstein picked up on his sadness and offered him “motherly compassion.”

“We share the same profession where we’re tuned to people in need,” he said. “Now, our relationship has changed because we’re tuning into each other. There’s a greater level of trust.”

Pastor BJ King, who leads LoveLand LifeCenter, worked with the late Rev. Cecil B. Murray to heal communities and build interfaith coalitions after the 1992 Los Angeles riots.

“Back then, there was a choice whether or not to get involved,” he said. “But with these fires, there is no choice. It has affected everybody.”

Pastors have had to acquire new skills

King’s congregation has switched to online services after their leased church building in Altadena suffered smoke damage. Twelve families lost their homes. In addition to helping meet people’s basic needs, King has created a program organizing gatherings to connect therapists with those in need of mental health.

“Many people didn’t even know they needed that,” he said.

One of the most powerful roles faith leaders have played after the fire is to “continue to talk with power, people in charge,” said Pastor Jonathan DeCuir, who leads Victory Bible Church in Pasadena. He and others in the region have continued to meet with local officials and even conferred with Gov. Gavin Newsom to keep things moving for their communities.

DeCuir chairs the board of a nonprofit called Legacy Land Project, which provides financial aid, legal support and guidance on building contractors, as well as medical care to those affected by the fires.

The disaster has brought a level of camaraderie that DeCuir says he has never seen among the region’s clergy.

“Denominational lines have been crossed,” he said. “Even if we have different theological stances or approaches to ministry, we are all now looking at how to care for our people and community. If we don’t come together, Altadena will never ever be the same. The people won’t be there anymore. That, to me, is terrifying.”

While a church is more than a building, physical churches do appear as “beacons of hope” in traumatized communities, said Pastor Mayra Macedo-Nolan, executive director of Clergy Community Coalition in Pasadena. Her group has lobbied for houses of worship to be prioritized on the same footing as businesses in the rebuilding plan.

“When people start seeing churches rebuilding in Altadena, they’re going to feel like it’s going to be OK because the churches are coming back,” she said.

Reimagining a purposeful future

Pastor Jonathan Lewis, fourth from right, holds a groundbreaking service at the site of the burned Fountain of Life Nazarene Church to mark the beginning of its rebuilding in Altadena, Calif., April 26, 2026.

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Members of the congregation join in prayer during the groundbreaking ceremony at the site of the burned Fountain of Life Nazarene Church, marking the beginning of its rebuilding, April 26, 2026, in Altadena, Calif.

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Pastor Jonathan Lewis poses for a photo with his congregation during a groundbreaking service at the site of the burned Fountain of Life Nazarene Church, marking the beginning of its rebuilding, April 26, 2026, in Altadena, Calif.

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On April 26, the Altadena Fountain of Life Church broke ground to build a new sanctuary after their house of worship, which had stood for over three decades, was destroyed in the fire. Pastor Jonathan Lewis, who ministers to about 75, hopes the church will be ready in time for Easter next year.

“It’ll be a Resurrection Sunday for our church, too,” he said.

Alexis Duncan, who grew up in Altadena attending that church, came to the groundbreaking with her 6-year-old daughter. She lost both her home and her church building.

“It means everything to me that they’re rebuilding because I want the church to be there for my daughter as she grows up,” she said. “This new beginning gives me and my family hope and the encouragement to come back.”

Some churches like Altadena Community Church, a United Church of Christ congregation, are pausing to rethink their future purpose. The Rev. Michael Lewis, who took over in February after the previous pastor retired, said the congregation is looking into several possibilities for the one-acre lot, including affordable housing.

“We know that a church is not intended to be a landlord and the pastor is no property manager,” he said. “But, we’re also thinking about who is able to return to Altadena? How will this rich, economically diverse community that was scattered by the fire come back?”

The church has been around since the 1940s. A haven for actors, poets and musicians, the former sanctuary also served as a vibrant performance space. Lewis said they hope to incorporate a performance stage into the new facility.

“It’ll look different from what we had before,” he said. “Once we figure out how to build community, we can decide what physical structures will help us support that community.”

As for Kehillat Israel, on May 15, members will carry their Torah scrolls back to their sanctuary, marking one of the first returns by a house of worship to the Palisades since the disaster.

Judaism has had “a long history of starting over,” Bernstein said.

“It’s encoded in our cultural approach to the world, that there are things that can always be taken away from you,” she said. “But what you become can never get taken away.”

The sky above Los Angeles State Historic Park in Chinatown will be dotted with color Saturday with the annual Kite Festival.

The festival had its beginnings as a joyful protest in 2021, back when a proposal for a Dodger Stadium gondola included cutting through the airspace above the park. Organizers say last year’s Kite Festival drew a crowd of about 7,000.

“The Kite Festival, [for] some people, it’s their favorite day in Los Angeles,” said Sue Bell Yank, executive director of Clockshop, the nonprofit arts org that runs the festival. “It’s the time when they really feel connected to their city. More so than any other time.”

This year’s programming includes a kite-making station where you can build your own flying art for a donation of $5, along with art workshops and the unveiling of a large floating, inflatable sculpture by Guatemalan kite artist Francisco Ramos.

An international team of disease detectives is now racing to connect with the more than two dozen passengers who disembarked the MV Honius cruise ship on the Atlantic island of St. Helena before the hantavirus outbreak was identified.

These individuals have flown across the world, including to the United States.

The risk of further spread of this virus is low since it requires close and prolonged contact with an infected individual — and those infected seem to transmit the virus for only a brief period of time. But public health officials want to make sure the outbreak is contained.

Here's how authorities are using the practice of contact tracing to contain the outbreak and keep the hantavirus from spreading.

Contact tracing 101

The concept of modern contact tracing dates to the 1930s and was part of an effort to stop the spread of syphilis. It involves locating the close contacts of anyone who may have been infected. "By identifying people who are at risk of infection," says Preeti Malani, an infectious disease physician at the University of Michigan, "you try to get ahead when people don't have symptoms yet with the goal of preventing the infection from continuing to propagate."

This is a well-tested approach for containing an infectious disease. "It's the oldest tool in the epidemiologic toolbox," explains Malani. "We thought about this a lot early in the pandemic with COVID. But we also do contact tracing for sexually transmitted infections, for things like meningitis and even measles."

Malani likens contact tracing to monitoring ripples in a pond, "trying to prevent those outer rings from propagating by isolating individuals and by identifying individuals who might be at risk of infection."

The idea that "there's a time period where people don't have symptoms but could be harboring the virus, that's what contact tracing helps identify," says Malani.

It starts by pinpointing someone with an infection or suspected infection of the disease in question — in this case, hantavirus. Epidemiologists then look to see with whom they've recently had close contact since these individuals are more likely to have been infected.

This hunt for those with the greatest probability of infection is important. "Otherwise, it becomes an impossible web to contain because everyone is connected to everyone," says Boghuma Titanji, an infectious diseases doctor at Emory University. "So you have to stratify by high, intermediate and low-risk contacts."

The next step involves public health agencies ordering precautions for those who are infected or who may be infected but aren't showing symptoms yet. Such measures may include quarantine, so that an individual doesn't come into contact with even more people — who may then become infected.

One challenge that hantavirus presents is that its incubation period can last up to several weeks. In other words, "people take a long time to become symptomatic after they've been exposed," says Titanji. "Some of these primary contacts would have to be monitoring themselves for symptoms for up to 45 days to be at the tail end of that very long incubation period."

Aboard and ashore

The work isn't high-tech but it is painstaking, requiring officials to reconstruct the many interactions someone may have had over days or weeks.

Onboard the cruise ship, "you might have an individual who is a source of an infection," says Titanji, laying out a hypothetical example. "And then they were sitting at a dinner table with one individual who then goes back to their cabin and shares a bed with their partner who has a conversation with someone else on the deck."

Once someone disembarks the ship, the number of potential interactions can grow quite quickly. This is why officials were concerned when a KLM flight attendant fell ill after being aboard a flight with one of the infected cruise ship passengers. Fortunately, the flight attendant ultimately tested negative for hantavirus.

Titanji is heartened by what she's seen playing out so far. "It seems like the international collaborative effort has been really robust and the mechanisms for containment are in place and underway," she says.

Public health officials argue that contact tracing is a powerful approach that will reduce further spread. "We can break this chain of transmission," said Abdi Mahmoud, the director of the World Health Organization's health emergency alert and response efforts, at a press conference on Thursday.

He has good reason to be confident. Contact tracing was vital during the fight against COVID-19 and helped end the Ebola crisis in Liberia, containing the epidemic there more than a decade ago. Some of the contact tracing even involved hours-long hikes through the jungle to a remote village.

Authorities are hoping for similar success with this hantavirus outbreak.
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