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.

Take accountability and move forward.

Those were the two points Los Angeles Fire Chief Jaime Moore hit repeatedly when speaking with LAist’s Larry Mantle this week.

On taking accountability, Moore said hazardous conditions and decisions made before the Palisades Fire erupted a year ago meant “our firefighters never had a chance” to arrest the fire that killed 12 people and destroyed thousands of structures.

On moving forward, he emphasized that reform is already in the works.

“Things have changed since the Palisades Fire, and we're going to continue making big changes in the Los Angeles Fire Department,” said Moore, who was selected for the LAFD top job by Mayor Karen Bass in November.

Here are three takeaways from the interview, which aired on AirTalk on Tuesday.

1. Staffing decisions hampered fire response

The LAFD uses a so-called pre-deployment matrix to set firefighter staffing levels ahead of high-risk weather.

According to the department’s after-action report, however, staffing levels on the day the Palisades Fire began fell short of the LAFD standard for extreme weather conditions. The National Weather Service had warned of low humidity, high winds and dry vegetation, what it calls a “particularly dangerous situation.” It’s the highest level of alert the agency can give.

Despite the high risk, the LAFD report said the decision not to deploy more firefighters in advance was in part made to save money.

Moore said Monday that the department has updated its policies to increase staffing for especially hazardous conditions, but he said he doesn’t believe additional resources would have stopped a fire of the magnitude that leveled the Palisades.

To suppress that kind of fire, he said, the department would need to pre-deploy resources across the city’s vast geography — to places like Baldwin Hills, Franklin Canyon, the Hollywood Hills, the Palisades, Porter Ranch and Sunland-Tujunga.

Moore said the department has already made new policies to call for more resources when the Weather Service issues a “particularly dangerous situation” alert.

2. LAFD is mostly an urban firefighting department

Moore referenced a key finding of the after-action report regarding a lack of training in wildland firefighting, which contributed to confusion and struggles to effectively utilize resources during the fire.

Wildland fires pose a number of challenges that are different from what firefighters face in urban environments. Those include the need to coordinate a large number of resources over vast areas, all while dealing with fast-moving flames that can rapidly tear through dry plants and structures.

The department found in its report that fewer firefighters were trained in fighting these wildland fires in recent years and that “leaders struggled to comprehend their roles.”

Some leaders in the department had “limited or no experience in managing an incident of such complexity,” the report said. And some reverted to doing the work of lower positions, leaving high-level decision-making positions unfilled.

“What we're doing now is really furthering that training and reinforcing that education with our firefighters so that they could be better prepared,” Moore said on AirTalk.

3. Changes to the after-action report

Early versions of the after-action report differed from the version released to the public in October, a fact that was first reported by the Los Angeles Times. The Times also reported that Battalion Chief Kenneth Cook, who wrote the report, wouldn’t endorse the final version because of the changes.

Moore acknowledged to the L.A. Board of Fire Commissioners at a Jan. 6 meeting that the report had been watered down.

“It is now clear that multiple drafts were edited to soften language and reduce explicit criticism of department leadership in that final report,” Moore told the commissioners. “This editing occurred prior to my appointment as fire chief, and I can assure you that nothing of this sort will ever again happen while I am fire chief."

Some changes were small but telling. A section titled “Failures” later became “Primary Challenges.”

Moore told LAist that changes between versions “ made it easier for the public to understand,” but an LAist review found the edits weren’t all surface-level.

In the first version of the report, the department said the decision not to fully pre-deploy all available resources for the particularly dangerous wind event “did not align” with their guidelines for such extreme weather cases. The final version said that the initial response “lacked the appropriate resources,” removing the reference to department standards.

The department also removed some findings that had to do with communications.

One sentence from the initial version of the report said: “Most companies lacked a basic briefing, leader’s intent, communications plan, or updated fire information for more than 36 hours.” That language was removed from the final report.

LAist has asked the Fire Department for clarification about why these assertions were removed but did not receive a response before time of publication.

Fans who want a chance to buy tickets to the 2028 Olympic Games have until March 18 to enter the draw, which opens at 7 a.m. Wednesday.

Locals will get the first bite at the apple. A pre-sale for people in L.A., Orange, Riverside, San Bernardino, and Ventura counties will run April 2-6. Certain Oklahoma residents where some Olympic competitions are taking place also will be eligible for the pre-sale.

The first round of ticket sales for all fans will launch April 9. The first round will include tickets to the Opening and Closing ceremonies.

Those selected to buy tickets will get an email with a time slot. After the first round, LA28 says there will be rolling ticket drops. Each person who registers will be able to buy a maximum of 12 tickets.

"Fans are encouraged to register today for the best choice of tickets and events, as capacity may be filled or limited in subsequent drops," the private Olympics organizing committee said in a press release.

Registering once will enter applicants into all future draws to purchase Olympic tickets until they've maxed out ticket purchases, according to LA28.

At a press conference Tuesday outside the L.A. Memorial Coliseum, Olympics organizers also provided more details on ticket prices for the first time. One million tickets will sell for $28 a pop and around a third of tickets will be under $100, according to LA28 Chair Casey Wasserman.

That means the majority of tickets to the Olympic Games will run into triple digits. If the World Cup is any indication, some tickets could get astronomically pricey.

Tickets to the Paralympic Games will go on sale next year.

The L.A. County Board of Supervisors took a step toward banning ICE from unlawfully operating on county-owned property and to post signage designating those spaces as “ICE Free Zones.”

The board unanimously approved the motion at Tuesday’s meeting, directing staff to draft the policy.

The draft could include requirements for county employees to report to their supervisor if they see unauthorized immigration activity on county property.

The city of Los Angeles passed a similar order last July, which strengthened protocols that prohibit ICE from operating on city-owned property. The agenda staff report points to an “ICE Free Zone” ordinance passed by the city of Chicago in October.

Supervisors Lindsey Horvath and Hilda Solis co-authored the motion.

Horvath said the county will not allow its property to be used as “a staging ground for violence caused by the Trump administration."

Solis added that their action as a board could have a ripple effect on other city councils and local governments.

“Even though it's taken us this long to get here …I think it's really important for our communities to understand what we're saying is you don't have the right to come in and harass people without a federal warrant,” Solis said. “And if you use our property to stage, then you need to show us documentation as to why.

First Assistant U.S. Attorney Bill Essayli said in an X post that the county cannot exclude federal agents from public spaces.

"Anyone who attempts to impede our agents will be arrested and charged, including county employees," Essayli said in the post. "We have already charged more than 100 individuals for similar conduct."

Since June, ICE raids have ramped up across the nation, heavily targeting certain immigrant communities like those in Los Angeles.

The motion directs the draft to include language that prohibits all types of ICE operations on county land, including staging and mobilizing without a warrant.

The motion cites an incident on Oct. 8, when county officials say federal agents raided the Deane Dana Friendship Park and Nature Center in San Pedro, arresting three people and threatening to arrest staff.

The motion also requires that the county post 'Ice Free Zone' signage on all of its properties.

Sergio Perez, executive director of the Center of Human Rights and Constitutional Law, told LAist the policy is enforceable under Fourth Amendment case law.

“You have to make sure that when you post that signage … that means that you routinely, or semi-routinely, assess who's coming in to the property, so that you can control access,” Perez said. “But if ICE shows up with a warrant, with a subpoena, then all bets are off, and they can enter into the property and do what they need to do.”

Perez said the county has moved “incredibly” slow on this issue.

“It's embarrassing that the county is moving six months later, given how we've been facing violent, aggressive, invasive and illegal raids now for so long here in Southern California,” Perez said, adding that local governments have not been fast or creative enough in protecting immigrant and refugee communities.

The Coalition for Humane Immigrant Rights, one of the region’s largest immigrant advocacy groups, supports the motion.

"We do not want our county resources being used for federal immigration enforcement activities, which disrupt, uproot, and terrorize our communities,” Jeannette Zanipatin, policy director for CHIRLA, said in a statement. “It is important for all public spaces to be really safe for all residents.”

County staff have 30 days to draft a plan to implement the new policy.