The Brief

Progressive California Democrats, who have long fought and failed to raise taxes on the rich, are renewing their push this year in light of a specific threat: The seismic federal cuts to Medi-Cal, the state’s health care program for the poor.

President Donald Trump’s H.R.1, signed into law last July, is estimated to strip tens of billions a year in state Medi-Cal funding and cause 2 million low-income residents to lose coverage. It has prompted progressive lawmakers and health care advocates to call for higher taxes on corporations or billionaires to keep those at risk of losing benefits on the program.

“We know that you are not responsible for these awful cuts, but now the responsibility does lie in your hands,” Judy Mark, executive director of Disability Voices United, an advocacy group for people with disabilities and their families, told state lawmakers at a January rally. “You have the power to increase our revenue so that we don’t have to make such devastating cuts.”

Progressive lawmakers have introduced at least two proposals to tax corporations, including one that would direct funds toward Medi-Cal. Separately, health care advocates are backing a controversial ballot measure to tax billionaire wealth to replace lost federal dollars.

There’s one glaring problem: Any solution to backfill the Medi-Cal funding could add to the state’s already gigantic structural budget deficit, not reduce it.

The deficit could reach $30 billion in future years — so large that the state is already struggling just to sustain the reduced level of care under H.R.1, let alone paying the federal government’s share.

Backfilling the Medi-Cal cuts would make the gap larger, said Keely Martin Bosler, former state finance director with more than two decades of experience in state fiscal policy. To “maintain the same insured level of coverage, those costs are on top of the deficits that exist, and so that would be significant.”

California, in its fourth consecutive year projecting a deficit, will likely see bigger shortfalls in future years as spending continues to outpace revenue. Even if the state spends nothing to backfill federal cuts, the deficit could reach $22 billion in fiscal year 2027-28, according to Gov. Gavin Newsom’s January budget proposal.

Democratic lawmakers, who already cut certain Medi-Cal benefits and froze new undocumented adult enrollment last year to close a $12 billion budget hole, acknowledge that the state should now combine sustainable revenue increases with ongoing program cuts to address the sizable deficit as recommended by the nonpartisan Legislative Analyst’s Office.

Yet it’s likely that no meaningful revenue increases will materialize this year.

The Fair Games Coalition, made up of community leaders, labor organizations and advocates, announce the launch of the Overpaid CEO Tax Initiative in West Hollywood on Jan. 14, 2026.

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Genaro Molina

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Newsom, in his last year as governor, has opposed any wealth tax over concerns that it would drive high-income earners out of California and dampen the tax base. Passing any tax increases would also require a two-thirds vote in each legislative chamber, a high bar even with a Democratic supermajority.

“I don’t think anything is going to happen this year,” said Senate Revenue and Taxation Committee Chair Jerry McNerney, a Stockton Democrat. “So why look at options that are doomed to fail in the first place?”

A $44 billion problem

The state is constitutionally required to direct roughly 50 cents of each dollar in excess general fund revenue toward K-14 education and reserves. That means the state would need roughly $44 billion in new revenue annually to close a $22 billion budget hole.

Existing legislative proposals don’t come close to raising that much.

Progressive Democrats are consolidating behind a pair of tax proposals, including one that would close the “water’s edge” loophole, which allows multinational corporations that opt in to only pay taxes on income made within borders of California. That allows companies to establish subsidiaries offshore to avoid paying taxes on their profits, said bill author Assemblymember Damon Connolly, a San Rafael Democrat.

Connolly told CalMatters his bill would raise $3 to $4 billion annually. But the revenue could swing, and corporations could still find new ways to reduce their California taxes, according to an LAO evaluation of different tax options.

Acknowledging that the amount wouldn’t close the entire structural deficit, Connolly said it’s “a step in the right direction.”

“It’s only one part of the equation. It’s certainly the time to look at potential revenue solutions but also obviously roll up our sleeves and take a hard look at the budget,” Connolly said. He did not specify which areas he’d consider cutting, saying only that protecting health care is where state lawmakers should “draw the line.”

Another bill by Assembly Health Committee Chair Mia Bonta, an Oakland Democrat, would require businesses whose workers rely on Medi-Cal and food stamps to contribute to a fund to “prevent loss of or to restore” health care coverage under H.R.1. There are no details yet on how much the charge would be.

And there’s the 2026 California Billionaire Tax Act proposed by the SEIU-United Healthcare Workers West, which would apply a 5%, one-time tax on billionaires’ wealth and use most of the revenue to backfill federal health care cuts. The initiative would establish a special fund that would exempt the revenue from constitutionally required deposits into education and savings.

Supporters estimate it would generate $100 billion over five years. SEIU-UHW spokesperson Suzanne Jimenez told CalMatters that it would allow the state to temporarily continue providing Medi-Cal coverage at the same level while giving state leaders time to figure out how best to sustain it.

But even if voters approve the tax measure, critics say the funds could get locked up in court from lawsuits by billionaire taxpayers or by education groups, who might argue it skirts the state’s constitutional requirements to benefit schools. And it’s unclear how the state would sustain the funding after the money runs out: An LAO analysis estimates that the measure could drive away billionaires and reduce income tax revenue the state could collect in future years.

“The first step is to pass the billionaire tax so that we have five years to work on that plan. And then, right after Election Day, we will be ready to work with the next governor to figure out a long-term solution,” Jimenez said.

Taxing the rich frenzy faces an uphill battle

While they might do little to address the state’s structural deficit, proposals to tax the rich shrewdly tap into the public anxiety with “rather extraordinary disparity in the distribution of income and wealth,” said Kirk Stark, a professor of tax law and policy at UCLA.

“I think that targeting the rich is understandable, but I don’t think that it’s really the kind of policy that can be expected to durably address very long-term structural fiscal imbalance,” he said.

More than 60% of California’s likely voters support higher taxes on the state’s wealthiest to help with the state’s budget deficit, according to a February survey by the Public Policy Institute of California.

The sentiment especially speaks to progressives, who have made fighting income inequality a core belief. But even the popular idea faces an uphill climb: Some Democrats contend that raising taxes on the state’s highest earners risks driving them away, especially since the state heavily relies on their income tax.

Janitors, nurses, teachers and labor organizers rally at the state Capitol in Sacramento to launch UnRig California on March 11, 2026. The initiative is a multiyear campaign aimed at reforming the state’s economy and tax code.

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Miguel Gutierrez Jr.

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“The wealthiest Californians are also the most mobile Californians,” said former Assembly Budget Chair Phil Ting, a San Francisco Democrat. “They could easily decide to go domicile in some other parts of the country.”

It also could deter businesses and billionaires from moving to California. “Does it signal that California is not a friendly, accommodating jurisdiction for people who want to amass billions upon billions of dollars of wealth?” Stark said.

Other ideas to address the state’s budget needs more systemically could pose even bigger political risks, especially as the state’s revenue is booming thanks to an AI-driven economy.

Stark said the state should examine its three primary revenue sources: income tax, sales tax and property tax. Since taxing income could dampen the incentive to work, and sales tax could discourage consumption, the state’s property tax — capped at 1% of the property value by Proposition 13 in 1978 — “jumps out as a tax reform that needs to happen in California,” he said.

“Not something that’s going to be just a one-time hit on the elite, but a fundamental, structural reconsideration of how the state of California taxes the value of land and structures.”

But any proposal to reform Prop. 13 would likely ignite a fierce political battle, just like the patchwork of ballot initiatives over the past half-century to amend Prop. 13 by carving out tax breaks or loopholes to hike taxes.

It’s even harder now with affordability being top of mind for Californians, Ting said.

“People are very cost-sensitive because they feel that their groceries are going up, their gas is going up, rent is going up, it’s a very difficult time to introduce even further costs in taxes to middle-class Californians.”

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

On a tour of Orange County’s voting headquarters on Wednesday, Registrar Bob Page demonstrated the careful, multi-step process through which voters’ ballots are validated and counted.

As the federal government raises the specter of unsubstantiated voter fraud, Page’s message was clear: “ I want voters to know that we're doing everything we can to make sure they can vote safely and securely."

More than 380,000 Orange County ballots have been returned as of Oct. 27, Page said. That’s about 80,000 more ballots than was received around the same time in 2022, the last mid-term elections.

Orange County Registrar of Voters Bob Page addresses the media and other members of the public in attendance as part of a tour of the voting operations on Wednesday, less than one week before Election Day.

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The journey of a ballot in Orange County

Collecting, and counting, all those ballots takes time. Page explained that two-person teams are dispatched to collect dropped-off ballots every day during election season.

The ballot drop-off boxes in Orange County are made of steel, weigh more than 1,000 pounds and are bolted to the concrete, Page said.

The ballot retrieval duos are required to follow a strict process to ensure the chain of custody remains secure, including taking photos showing they’ve picked up the ballots, properly locked the retrieval door and that the internal fire suppression canister is intact.

The locations of the two-person teams are GPS-tracked by separate teams, which also review the photo evidence before giving the ballot retrieval duos the green light to go to their next stops.

An overhead camera shows the process that occurs after the signatures on a ballot have been verified and the ballot is then ready to be counted.

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Kavish Harjai

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LAist.com

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Signature verification

Once a ballot reaches the Registrar of Voters’ office, the next step is ensuring the signature on the envelope matches the voter's signatures in their registration file.

“If we do challenge [a signature], we’re required under state law to send a first-class letter notice to that voter,” Page said, adding that state statute affords voters until the day before Thanksgiving this year to correct errant signatures.

Page said three election workers must agree that enough of a discrepancy exists before the decision to challenge a signature is made.

Around 1.9% of the nearly 718,000 vote-by-mail ballots returned in the June primary election in Orange County were rejected, largely due to signature mismatch or because they weren’t received in time, according to the California Secretary of State.

Verified ballots are then separated from their envelopes and sorted before they’re prepared to be scanned and, finally, counted. The equipment used to tally votes isn’t connected to the internet, and access to the room the equipment is housed in is limited, according to Page.

Threats from the federal government

On Wednesday evening, a federal judge denied an emergency request from the Department of Justice to segregate 20,000 ballots across California that the federal government said were sent to “likely” noncitizens.

More than 1,750 of those people identified were in Orange County, according to a letter Bill Essayli, top federal prosecutor for the Central District of California, delivered to the county registrar’s office Monday.

The Department of Justice said it will appeal the ruling from U.S. District Court Judge David Carter, who, in his decision, said the federal government’s attempted move could “wreak havoc and disrupt the election that is already underway.”

California Attorney Gen. Rob Bonta called the ruling an “important victory,” but warned “the fight is not over.”

On Wednesday, before the ruling came down, Bonta released resources about election integrity in the state, including guidance for local election officials if law enforcement attempts to “access election sites where ballots are cast, processed, or counted.”

Page said he’s fielded more questions from the public this year about the potential for law enforcement to interfere in the election. He said he will have open lines of communication with partners with the California Governor’s Office of Emergency Services and  Orange County Intelligence Assessment Center should the threat arise.

What’s on your ballot?

Our LAist Voter Game Plan is here to help guide you through the Nov. 3 election with guides to races across Los Angeles and Orange counties — and that long list of state propositions — to help you cast a ballot that’s in line with your own personal beliefs and values.

But the one thing we don’t do? We don’t tell you how to vote. That part is left up to you.

You can find it all at LAist.com/Vote.

The U.S. Justice Department has issued subpoenas to California officials in an escalation of its scrutiny of local election administration.

The Associated Press obtained copies of three subpoenas sent Oct. 21 to employees of the Los Angeles County Registrar-Recorder, ordering them to appear in court on Nov. 4, the day after the election. The documents request any records, documents and communications related to letters sent in July and October by federal officials to state election officials outlining allegations of noncitizens on the state’s voter rolls. The subpoenas also seek information relating to the office’s “methods for screening for unlawful voting by aliens” and anything about efforts to prevent noncitizen votes from being counted.

The subpoenas were being issued by all four U.S. attorneys in California, according to a person familiar with the matter who insisted on anonymity to discuss an ongoing investigation.

Dean Logan, the Los Angeles County registrar, said, “threats and intimidated have no place in elections.”

Subpoenas come amid ongoing court battle

The Trump administration has sued to force California to set aside up to 20,000 ballots it suspects went to noncitizens and not count them until citizenship can be verified. A district court judge on Tuesday rejected that request, then on Thursday appointed a special master to evaluate the administration’s claims.

U.S. District Judge David O. Carter did not specify the exact scope of special master Daniel B. Garrie’s responsibilities, but said he would be tasked with “developing the factual record” for the court.

In a Tuesday court hearing, Carter said he wanted to vet the federal government’s list of over 20,000 alleged noncitizen voters since there has been extensive debate over its reliability and both sides have agreed that it includes an unspecified number of citizens.

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Carter also said at the hearing that a special master could investigate California’s claims that it cannot logistically separate the ballots in time for the county election certification deadline on Dec. 3. The federal government has contested that assertion.

It is not clear what would happen if a special master did find a substantial number of noncitizen voters on the federal government’s list or whether it would affect the certification of California’s election results. The 20,000 people on the DOJ’s list constitute only a small fraction of California’s 23 million voters.

Trump administration appeals to higher court

Meanwhile, the Trump administration asked a federal appeals court to quickly weigh in.

The Justice Department said in a late Wednesday filing that it’s essential the 9th Circuit Court of Appeals issue a ruling as soon as possible due to “irreversible ballot processing occurring on an ongoing basis.”

Carter’s decision was the latest legal setback for President Donald Trump in his efforts to expand federal control over state-run elections in the midterms that will decide control of Congress for the rest of his term. The Justice Department has made similar demands in other states, including Washington. Noncitizen voting has been a central focus of Trump’s political messaging for years, although available data indicates it is exceedingly rare.

Trump blasted Carter’s ruling against the federal government on Thursday morning before heading to a campaign rally in South Carolina.

“California is very corrupt. The elections are extremely corrupt. The judge should not have done that but we’ll appeal that, of course,” he told reporters. Trump added without evidence that there are “hundreds of thousands” and then amended it to “millions, in my opinion” of “bad ballots” in California.

Carter, an appointee of Democratic President Bill Clinton, argued that the Justice Department’s demands were a clear violation of the National Voter Registration Act, which prohibits changes to voter rolls or election procedure within 90 days of an election.

A number of US citizens were included in the Justice Department’s list of names

Both sides agree that an unspecified number of citizens were inadvertently included. Carter argued that separating the ballots at this point would risk disenfranchising citizens and “wreak havoc” on the election certification process.

Over 500,000 votes have already been processed in Los Angeles County alone, according to court filings. The system also protects voter privacy: Once a vote is processed, it cannot be traced back to the person who cast it.

Carter is to rule on the government’s renewed request for a preliminary injunction, which would bar the state from counting the ballots until the litigation is resolved. He said he will do so after a Nov. 13 evidentiary hearing with input from the special master.

He said that if the federal government suspected noncitizens were voting, it could continue to prosecute those cases criminally. Federal authorities have charged over two dozen foreign nationals in California as part of a statewide sweep targeting people officials allege have illegally registered or voted in U.S. elections.

Appeals panel judges have said they wouldn’t support setting aside ballots this close to midterms

The appeal will be the second time that the 9th Circuit Court of Appeals will consider the case.

The first time was just last week when the Justice Department argued before an appeals court panel that a fast ruling on its request was needed to stop any counting of the ballots.

Although the panel ruled it was premature for an appeals court to get involved before a lower-court ruling, two of the three judges wrote separate concurrences making it clear they wouldn’t support setting aside ballots at this late date. They questioned the accuracy of the federal government’s list of alleged noncitizen voters and argued that to set aside votes risks disenfranchising citizens.

One judge dissented, arguing that federal law bars noncitizens from voting and requires California to vet the potentially illegal ballots before counting them. The failure to do so, he wrote, would cause irreparable harm to the election.