The Brief

California’s life sciences industry is sounding the alarm over a proposal from Gov. Gavin Newsom that would permanently cap corporate tax credits.

The proposal is projected to contribute a few billion dollars in revenue to California annually, but opponents say the state’s life sciences industry would be seriously threatened by having their tax subsidy reduced.

Tax credits allow businesses to reduce costs by lowering their final tax bill (as opposed to a deduction, which lowers the overall taxable income). The proposed change, which would go into effect in tax year 2027, would limit the credits businesses can claim each year. The proposal was designed to ensure "that larger corporations pay a minimum level of tax,” while not having a negative effect on small businesses, according to the Finance Department.

The proposal is the latest attempt to get corporations to pay more taxes in California, where voters will likely be considering a ballot initiative to tax billionaires in November. The life sciences industry, which says its annual economic impact is nearly $400 billion, is speaking out about the proposed cap. The tech industry is concerned. Dozens of lawmakers are urging the state’s top lawmakers to reject the new limit.

“The answer to the state’s long-term budget challenges is not to weaken the sectors driving California’s economy and generating state revenues,” 50 assemblymembers wrote to Assembly Speaker Robert Rivas and Senate Pro Tem Monique Limon on May 22.

The current state corporate tax rate is 8.84%, down from 9.6% in 1980 and 9.3% in 1987. California has been either the fourth or fifth largest economy in the world over the past few years; in 1985, with a higher tax rate, it ranked seventh in the world by gross domestic product. Corporations have also been paying less in federal taxes since 2017, when President Donald Trump slashed the federal corporate tax rate from 35% to 21%.

The proposed tax credit cap would largely reduce the state’s research and development credit and would affect the largest corporate taxpayers — fewer than 100 — in California, according to the Legislative Analyst’s Office’s analysis of the proposal.

Rowan Isaaks, the LAO economist who did the analysis, testified at a recent budget subcommittee hearing. He told CalMatters that lawmakers’ questions and comments indicated skepticism about whether the tax credits were actually incentivizing new research. “These companies were gonna do this R&D anyway,” he said.

The life sciences industry is opposed 

California’s life sciences industry disagrees, saying the proposal would add to its existing challenges. Representatives say it’s the latest regulatory and policy curveball the state keeps throwing at businesses.

Though California led the nation in venture capital funding for life sciences in 2025, “our global biomedical leadership is not guaranteed,” Sam Chung, senior vice president for government relations for industry group California Life Sciences, told CalMatters. “All these bills take a chunk of flesh out of our leadership.” (He is also concerned about proposed legislation that would change California antitrust law, which he said could have big consequences for the industry.)

Drug development requires lots of time and money, Chung said. If California reduces the tax credits biotech companies have long relied on, companies may relocate to other states with more generous credits, he said. He’s also worried about competition from China, and of some U.S. venture capitalists’ interest in Chinese biotech.

Darien Shanske, a UC Davis law professor who helped draft the proposed billionaire tax and has floated a similar limit on business tax credits, said he doubts other states’ tax credits outweigh California’s — even if the credits are reduced by this proposal. He also cited the state’s other benefits, including its education system, which is supplying the researchers the industry needs.

As for California’s argument that the proposal protects smaller businesses, Chung said businesses of all sizes are important, adding that mergers and acquisitions are the “lifeblood” of drug development.

“Scientists who develop something need big companies’ backing,” Chung said. “It’s a very symbiotic relationship. Everyone needs to work together to get to the finish line.”

The life sciences industry is also facing uncertainty over federal funding under the Trump administration.

At a time when research grants from the National Institutes of Health have been cut or are at risk, “to not have that, and then not have support from the state as well, is kind of a double whammy,” said Tim Scott, president and chief executive of another industry group, Biocom. The proposal would not eliminate tax credits, just cap them.

Scott, a biotech entrepreneur, told CalMatters that reducing R&D tax credits could threaten hiring. The life sciences industry — including biotech, pharmaceuticals and medical devices and equipment — employs more than 336,000 people directly and 1 million people directly and indirectly, according to a 2026 report by California Life Sciences.

“That R&D tax credit keeps those jobs here, it keeps the facilities being built here, and without it it becomes much more problematic,” he said.

The industry report showed that the Bay Area had 107,000 direct industry jobs in 2025, while San Diego and Los Angeles had about 54,000 each and Orange County had about 47,000.

Opponents say businesses can probably afford it

Proponents of the cap point out that what has been a “very generous” R&D tax credit wouldn’t be going away. California’s standard corporate tax rate is 8.84% of a company’s net income; the tax credit cap would be $5 million or 50% of that, whichever is greater. The cap would not apply to net operating losses.

“This tax break in particular is the second largest-corporate tax break (the state provides),” said Shanske, the UC Davis law professor. He said under the current system, companies have been able to “stockpile” the credits for research done long ago to the point where they can avoid paying tax to California.

“If you imagine that there’s a program where the state actually wrote a check to the biggest, richest companies in the state, I think there’d be an outcry,” Shanske said. The LAO analysis estimates that “check” the state writes is about $3.5 billion a year, based on how R&D tax credits currently work.

The May budget revision assumes the cap would raise $850 million in 2026-27, and $1.7 billion to $1.8 billion annually between 2027-28 and 2029-30.

Isaaks, the LAO economist, said a possible alternative would be for legislators to restructure R&D credits to make them more targeted.

What will state lawmakers do?

Businesses wrote to lawmakers that sectors such as semiconductors, software, clean technology, aerospace, advanced manufacturing and artificial intelligence also rely on R&D credits — which has been limited to $5 million for tax years 2024 to 2026, also at the governor’s request because of budgetary concerns.

“The contradiction underlying this proposal is difficult to ignore,” they wrote. “The May Revision itself reflects revenues significantly higher than previously projected, driven in substantial part by California’s innovation economy and the economic activity generated by research-intensive industries.”

In their letter to Rivas and Limon, 33 Democrats and 17 Republicans in the state assembly said “limiting incentives for research and development may generate short-term budgetary gains, but risks long-term economic consequences.”

Nick Miller, a spokesperson for Rivas, said the Assembly is taking a close look at the governor’s proposals. Limon’s office referred CalMatters to state Sen. John Laird, chair of the Senate Budget and Fiscal Review Committee.

“California's innovation economy is enormously important, but we're also facing significant fiscal challenges,” Laird said in an emailed statement. “Our job is to carefully weigh those considerations as we work toward a balanced budget.”

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

California librarians were stunned when a last-minute budget change stripped K-12 schools of a trove of research materials, potentially leaving thousands of students without resources to do reports, projects or homework assignments.

Without notice to schools or librarians, the Legislature last week canceled $5.5 million that pays online fees for the Encyclopedia Britannica, New York Times, PBS videos such as Ken Burns documentaries, scientific journals and thousands of other online materials used by students and teachers. The cut goes into effect on July 1, 2027.

“We had no idea this was coming,” said Greg Lucas, head of the California State Library, which helps oversee the program for California’s 10,000 public schools. “This will have a huge impact on California students.”

The program, called Compass, is an online database of research and curriculum materials that have been vetted by teachers and librarians. Compass is also available through public libraries, but the vast majority of users are at K-12 schools. Since the program launched in 2018, it’s received nearly 1 billion hits.

Students use Compass for classroom assignments as well as for recreation. Many of the materials are available in multiple languages. Among the more popular features are National Geographic Kids; Pebble Go Science, which includes hundreds of science activities for pre-kindergarten through second grade; and Alexander Street, which offers videos of cultural performances such as the Joffrey Ballet and the Royal Shakespeare Company.

Compass is especially important at a time when fewer schools have libraries — and librarians — to help students with research. Although nearly 90% of schools have physical space on campus for books, magazines and other research materials, only about a quarter of those spaces are staffed by librarians. The rest are staffed by volunteers, classified employees or not at all. California ranks 49th nationwide in school librarian staffing, with nearly 10,000 students for each librarian, according to research by the Institute of Museum and Library Services.

Compass is available free to all schools in California. If schools were to subscribe individually to Compass materials, they’d spend more than $216 million annually, according to a State Library report. A typical medium-sized school district might pay $100,000 or more for the services, an expense lower-income districts are less likely to have money for.

Losing the service raises concerns about internet access

Without access to Compass materials, students would likely rely on free resources online. But those materials tend to contain advertisements or track user data, a violation of state student privacy laws. They also are less likely to be vetted for accuracy, a particular danger in the age of artificial intelligence.

“Losing Compass is catastrophic for the state of California,” said Kate MacMillan, library services coordinator for Napa Valley Unified. “This service is a lifeline. I can’t believe the Legislature would let this happen.”

Funding for Compass was in earlier versions of the budget the Legislature debated over the past few months. But the final version eliminated Compass funding after July 1, 2027. Instead, it directs $5 million of the funding toward the state’s new dyslexia screener, and $60,000 for technical support of an online lesson-sharing platform called California Educators Together.

Legislators and staff members on the budget education committees contacted by CalMatters did not comment on why the money was cut.

Meanwhile, librarians are launching an aggressive campaign to save the program. They’re emailing Newsom and the Legislature, and trying to bring attention to the issue.

Connie Williams, a retired school librarian and former head of the California School Library Association, said that losing Compass will exacerbate disparities in the state’s education system. Lower-income schools will lose crucial learning resources, while higher-income schools will be able to pay the subscription costs themselves, without state assistance.

“The disparity will be overwhelmingly glaring,” Williams said. “We’re leaving students at the mercy of whatever is free on the internet.”

It’s especially galling, she said, that this move comes as the state is promoting media and digital literacy in schools. In 2023 California enacted a law requiring schools to teach media literacy in all subjects, with a focus on teaching students to recognize fake news, determine if an information source is trustworthy and generally think critically about what they view and read online.

“We want students to think critically, put away their phones, know how to do research,” Williams said. “And we’re grabbing away some of the best learning tools we have.”

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

In a sharp rebuke to President Donald Trump, the Supreme Court ruled Tuesday that the Constitution guarantees automatic birthright citizenship to virtually all children born in the United States.

Chief Justice John Roberts wrote the court's 6-3 opinion.

The decision firmly rejected the executive order that Trump issued on the first day of his second term. It sought to bar citizenship for babies born in the U.S. to parents who either entered the country illegally or who are living and working here legally with temporary visas. The executive order never went into effect because every lower court judge who reviewed it concluded, in the words of one judge, that it was "blatantly unconstitutional."

Trump has long maintained that the Constitution does not guarantee birthright citizenship. But as Chief Justice Roberts observed, the men who wrote the Fourteenth Amendment to the Constitution after the Civil War defined citizenship in broad terms on purpose, rejecting the views of those who wanted to limit citizenship. The resulting language of the amendment says, "All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States."

Trump maintained that the provision was meant to apply only to former slaves, but "wasn't meant for the entire world to occupy the United States." That interpretation, however, has not been embraced by the courts or the legal norms of the country for 160 years. Indeed, Chief Justice Roberts' opinion for the court pointed to the court's landmark ruling well over a century ago in the 1898 case of Wong Kim Ark, born in San Francisco in 1873 to Chinese immigrants. Back then, no documentation was required for immigrants entering the United States, and his parents ran a business in San Francisco until they ultimately returned to China. In 1895, their son visited his family in there, but was denied re-entry upon his return to the U.S., on the grounds that he was not a citizen. He challenged that denial and won in the Supreme Court.

By a 6-to-3 vote, the justices interpreted the words, "subject to the jurisdiction thereof," to mean that all children born in the U.S. were automatically granted citizenship — with three limited exceptions, only one of which exists today — for the children of foreign diplomats.

The decision in the Wong Kim Ark case was so widely accepted that even in periods of great hostility to immigrants, the notion of birthright citizenship remained untouchable. So much so that in World War II, when Japanese citizens were held as enemy aliens in detention camps in the United States, their newborn children were automatically granted American citizenship because they were born on U.S. soil. In addition, Congress subsequently codified that legal understanding.

The ACLU's Cecillia Wang, herself a birthright citizen born to Chinese parents, argued the birthright case in April before the Supreme Court. As she put it, the men who wrote the Fourteenth Amendment deliberately chose to confer automatic citizenship on the child, not the parent, the idea being that "in America we do not punish children for the sins of their fathers, but instead we wipe the slate clean. When you're born in this country, we're all American, all the same."

Dissenting from Tuesday's decision were Justices Clarence Thomas, Neil Gorsuch and Samuel Alito.

This is a developing story and will be updated

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The Supreme Court yet again loosened campaign finance restrictions on Tuesday by striking down limits on how much political parties may raise and spend on candidates.

By a 6-to-3 vote along ideological lines, the court ruled the law, which had been enacted in 1974, violates political parties' First Amendment rights. Justice Brett Kavanaugh wrote the majority opinion.

At issue in the case was a post-Watergate law that Congress passed to limit the amount of money individuals can give to political parties. The law, the Federal Election Campaign Act, also limited how much money political parties can spend on their candidates. Other types of organizations, like political action committees and Super PACs, have no limits on the amount of money they can raise and spend on elections. But unlike parties, they cannot coordinate with candidates.

Tuesday's decision means that parties get the best of both worlds. They can both coordinate with candidates and raise unlimited funds.

Republicans, including Vice President Vance and the National Republican Senatorial Committee, challenged the law as an unconstitutional violation of political parties' First Amendment right to raise and spend money on their candidates.

Backed by the Trump Justice Department, they contended that the only justification for imposing a fundraising limit on parties is to prevent corruption, but they maintained that there is no evidence that the law has prevented corruption.

This decision overturns a 2001 Supreme Court case that declared the limits on party spending to be constitutional. It's the latest in a series of rulings since then that have unraveled campaign finance regulations.

The saga began in 2010, when the court ruled in Citizens United that corporations have a First Amendment right to unlimited spending on elections. The following year, the court dismantled Arizona's public election financing scheme, which gave money to less-funded candidates in order to equalize spending between politicians. And in 2014, the court struck down limits on how much money an individual can donate in national elections. All of these decisions were ideologically split votes, just like Tuesday's ruling, and in each case, the court overturned the regulations for burdening the First Amendment right to spend on elections.

The practical implications of Tuesday's ruling are unclear. Lawyers for the Democratic Party, who intervened in the case in support of the campaign finance restrictions, argued that they are necessary to prevent quid pro quo corruption. Authorizing unlimited coordinated expenditures would "fundamentally reshape the campaign finance regime," they wrote. "The potential for actual or apparent corruption is obvious."

Further, in previous decisions, the high court cited these anti-corruption protections as reasons why other campaign finance regulations could be rolled back without worry.

But the Republicans who brought the case argued that the risks of corruption are low. "It doesn't make any sense to think of a party as 'corrupting' its candidates," lawyers for the Republicans argued in a brief submitted to the court, "because the very aim of a political party is to influence its candidate's stance."

This is a developing story and will be updated

Copyright 2026 NPR

The Supreme Court once again leaped into the culture wars on Tuesday, ruling that states may ban transgender girls from participating in sports at publicly funded schools.

Justice Brett Kavanaugh, who has long coached his daughters' and other girls' basketball teams at school, wrote the court's majority opinion.

The court's decision follows last year's ruling, which upheld state laws that make it illegal for doctors and other health professionals to provide gender-affirming care for minors. Since then, a total of 25 states have criminalized or banned gender-affirming care for minors. And in some states, bills have been introduced to ban gender-affirming care for adults, too.

At the heart of Tuesday's case is Title IX, the landmark civil rights law that bars sex-based discrimination in education programs that receive federal money. Enacted in 1972, the law has revolutionized women's sports by requiring equal treatment for male and female athletes, including proportional scholarship funding and equal facilities.

But in recent years, 27 states have barred trans women and girls from participating in girls' sports. The issue has become the newest flashpoint in both politics and law — especially after 2024 when the Trump presidential campaign aired attack ads on the subject more than 15,000 times, putting Democrats on the defensive.

Supporters of the ban on trans athletes say the laws are needed to prevent athletes whose assigned sex at birth was male from having an unfair advantage in women's sports. Opponents of the transgender bans say they discriminate based on sex, in violation of both federal law and the Constitution's guarantee to equal protection of the law. And for athletes at every level, the issue is deeply personal, with tennis greats Billie Jean King and Martina Navratilova on opposing sides, for example, along with hundreds of other high-profile athletes.

On Tuesday, the Supreme Court tried to thread the needle, ruling that since Title IX explicitly allows sex-segregated athletic teams, states are free to limit team players to their sex at birth.

The two cases before the court were factually quite different. One involved Lindsey Hecox, a trans college student barred by Idaho law from trying out for the Boise State University varsity women's track team. She challenged Idaho's ban on trans athletes, contending it violated her right to equal protection of the law under the Constitution. Ultimately, after dropping out of school, she won her case in the lower courts, but upon returning in 2025, she decided not to play varsity sports.

This is a developing story and will be updated
Copyright 2026 NPR