The Brief

Following weeks of negotiations, Gov. Gavin Newsom and Democratic legislative leaders have agreed on a $351.7 billion budget next year that raises some taxes, sets aside $6.4 billion for the year after and softens or delays billions of dollars in planned social service cuts.

The budget, Newsom’s last, will leave the California budget balanced for two consecutive years and reduce future year deficits significantly, state leaders say. Lawmakers are poised to adopt the deal on Monday.

“This budget demonstrates responsible choices that protect our fiscal strength while continuing to invest in what matters most,” Newsom said in a statement.

The state faced a steep funding cliff in January amid ballooning costs of Medi-Cal, the state’s healthcare program for low-income Californians, and the threat of losing tens of billions of federal dollars under President Donald Trump’s budget bill.

But since then, tax revenue has grown faster than expected, thanks to the artificial intelligence-driven economic boom. The final budget agreement largely relies on that windfall and new taxes Newsom has championed, along with delayed healthcare cuts and suspended payments to K-12 schools and state reserves to balance the books and slash future deficits.

The Newsom-backed tax measures, which the Legislature approved earlier this month, will apply a sales tax to everyday computer software, cap business tax credits and raise the tax rate on commercial healthcare providers.

The budget deal also requires the next governor to consider penalizing big corporations for having employees on Medi-Cal — an idea from Senate Democrats — unless Congress repeals Trump’s Medi-Cal cuts before then. Sen. María Elena Durazo, a Los Angeles Democrat and a member of the legislative Latino caucus, said the plan does not go far enough to discipline companies that pay low wages.

“Another cycle of large corporations paying nothing while their underpaid workers stay on Medi-Cal, and we foot the bill as taxpayers,” Durazo said during a Monday hearing.

“This is a budget that bought time. Medi-Cal delayed, not resolved, not restored.”

While Newsom proposed deeper cuts in May, the final budget softens the blow and includes new spending. It delays most cuts to Medi-Cal services and preserves funding for in-home care for low-income Californians. It gives counties $900 million in homelessness funding, almost double the $500 million Newsom wanted. It also adds 22,700 state-funded child care spaces to address the need to care for children three and under.

Newsom and lawmakers couldn’t settle on a full spending plan for the Greenhouse Gas Reduction Fund, the state’s main source of cash for climate programs, punting negotiations to the summer. They did agree to tap the fund for electric vehicle incentives and to backfill the fire department budget.

The holdup is largely due to the new climate rules Newsom’s administration adopted in May, which could cut the fund in half, sparking a fight between Senate Democrats and Newsom over funding priorities.

Republicans blasted the budget deal, criticizing Democrats for passing policies through the budget process without much advance notice. The process allows state leaders to fast-track complicated policies instead of facing scrutiny in months of public hearings.

“It’s an abuse of the process that we have unfortunately got all too accustomed with,” said Sen. Roger Niello, a Roseville Republican, on Monday.

Delaying most Medi-Cal cuts

The deal includes $300 million to subsidize private healthcare to lower costs for low- to middle-income Californians, a Newsom priority. The governor proposed it in May to erase premiums for lowest-income residents and reduce out-of-pocket costs for middle-class households.

It also includes $250 million in grants to public hospitals and up to $140 million for those in “significant financial distress.” Several hospital advocates, including the California Association of Public Hospitals and Health Systems, had advocated for $500 million in funding as hospitals risk scaling back services or closing altogether due to the lost federal funds.

The state also agreed to give counties $200 million to more frequently verify low-income people’s eligibility to receive health and food benefits, which the Trump administration requires. But the budget deal leaves out $125 million the Legislature wanted to give counties to set up an indigent care system to care for those falling off of Medi-Cal.

Counties urged state leaders to pursue an alternative before the legislative session ends in September. Otherwise, “counties will be forced to cut core services — threatening public safety, slashing behavioral health and public health services, and driving up homelessness,” according to a joint statement from the California State Association of Counties and other county associations.

Newsom agreed to scrap his proposed cuts to the In-Home Supportive Services program, which provides in-home care to roughly 900,000 low-income Californians, after the Legislature’s opposition.

They also agreed on a less restrictive Medi-Cal asset test for seniors and those with disabilities than Newsom proposed: In addition to the income tests, starting July 2027, individuals must own $21,000 in assets or less ($31,000 for couples) to qualify for Medi-Cal. The current ceiling is $130,000 for individuals and $195,000 for couples.

While Newsom wanted to increase the monthly premium for undocumented adults enrolled in Medi-Cal from $30 to $50, the final deal leaves the decision to the next governor.

The deal preserves immigrant healthcare by delaying many cuts: By January, the state will start transitioning roughly 2 million Medi-Cal enrollees — most of whom are undocumented immigrants — to a fee-for-service system by Jan. 1, 2027.

The change will allow the state to continue receiving funding for Medi-Cal and save $470 million next year, but those immigrants will lose access to benefits such as case management, housing assistance and medically tailored meals.

Starting July 2027, the state will limit state-funded healthcare coverage for roughly 150,000 immigrants, including refugees, asylees and human trafficking survivors, to emergency and pregnancy care only. The budget plan also delays other cuts, including dental benefits for undocumented Medi-Cal enrollees and clinic reimbursements for Medi-Cal services, until July 2027.

“While we are relieved this agreement spares immigrant communities from losing access to doctors, dentists and trusted community providers this year, our work is far from over,” said Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network.

Newsom gets wins school chiefs overhaul

The deal largely preserves Newsom’s May spending plan for K-12 education.

It increases special education funding by $2.4 billion and gives school districts and community colleges higher cost-of-living increases to provide 14 weeks of pregnancy leave for their employees, something teachers unions have championed for years.

But the latest spending plan also withholds $3.9 billion in constitutionally guaranteed funding from K-12 schools, an accounting mechanism Newsom wanted to use in case the state overcommits with a revenue forecast that is too optimistic. If the state collects more tax revenue in the next year than projected, the budget deal requires the state to use a portion of that to pay down what it owes the schools.

Disappointed education advocates criticized state leaders for shortchanging school districts. The California Teachers Association, the state’s largest teachers union, accused state leaders of violating the state Constitution and said it would consider suing.

“At a time when both public schools and the voting rights of our communities face growing attacks from the federal government, California lawmakers should be standing up for our students and exercising the democratic principles that have made California the nation’s progressive leader,” CTA President David Goldberg said in a statement.

The deal also allows Newsom to radically diminish the authority of the elected state superintendent of public instruction, shifting K-12 school governance to a new education commissioner appointed by the governor. Starting Jan. 15, 2027, the superintendent will become one of 13 members on the State Board of Education led by the commissioner.

Newsom proposed the idea in January to make education governance more coherent, gaining support from a wide array of education advocates. California is one of nine states that still elect a schools chief, whereas other states allow the governor to appoint them.

The CTA, some senators and candidates running for superintendent were skeptical of the promised outcome and slammed Newsom for jamming the policy through the budget process, especially when voters in November are already set to vote for a superintendent whose duties will be significantly pared down.

California voters have rejected four ballot measures to abolish the superintendent role, according to the nonpartisan Legislative Analyst’s Office.

“To me, it feels very deeply democratically cynical,” said Sen. Chris Cabaldon, a Napa Democrat, during a May hearing of the proposal. “That the voters four times before have said no to making these reforms. That we're just gonna try to do it without them and leave in place the shell of what the constitution requires, in order to get around that.”

New EV incentive

While state lawmakers punted most of the climate money negotiations, they agreed with Newsom to allocate $1.25 billion in the greenhouse gas fund for the state’s fire department.

They also agreed to set aside $356 million for zero-emission or hybrid vehicle incentives, with $115 million coming from the climate fund. That includes $85 million over the next five years to help low-income Californians replace old gas-powered vehicles with cleaner ones.

Roughly $135 million is reserved for electric trucks and buses. Another $135 million will help first-time buyers of new light-duty electric vehicles priced at $50,000 or less and used ones at $25,000 or less.

The deal allows the California Air Resources Board, the state’s climate regulator, to set the incentive amount.

Lawmakers also agreed with Newsom to fund the state’s community air protection program established in 2017 to reduce the harm of air pollution, most of it from the state general fund.

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

After months of hand-wringing, Los Angeles and LA28 have come to a tentative agreement on how Olympics organizers will reimburse the city for its expenses for the 2028 Summer Games.

According to the deal, the private Olympic organizing committee will pay upfront for the estimated cost of services that are not eligible for federal reimbursement, like trash pick-up and traffic control. Under another proposal, the city would also be able to tap an LA28 contingency fund if it isn't fully repaid by the federal government for policing costs at Olympic venues.

The agreement is nearly nine months overdue and still needs approval by Mayor Karen Bass and the City Council.

The 2028 Olympics are intended to be privately financed, and an existing city agreement with LA28 states that the Olympics organizers, not L.A., will pay for extra costs for public services in support of the Games. But L.A. is the financial back-stop for the Olympics, meaning if LA28 goes in the red, taxpayers will pick up the bill.

Beyond that, the city services agreement presents another area where L.A. could incur additional unexpected expenses for hosting the Games. L.A. City Councilmember Monica Rodriguez warned LA28 CEO Reynold Hoover earlier this year that a bad deal could "bankrupt" the city.

Jacie Prieto Lopez, an LA28 spokesperson, and Paul Krekorian, who leads the city's office of major events, said in statements that the freshly inked agreement would help deliver a fiscally responsible Games.

"Mayor Bass’ priority is that the 2028 Olympic and Paralympic Games be fiscally responsible, protect taxpayers, and benefit Angelenos for decades to come. This agreement helps deliver that commitment," Krekorian said.

But the contract between the two parties doesn't fully resolve one of the biggest areas of financial risk for the city: the enormous cost of security for an event as extensive and high-profile as the summer Olympics and Paralympics.

Organizers are counting on the federal government to pay for public safety at Olympic venues that are considered part of a "national special security event." That includes costs for LAPD staffing. LA28 has not included security costs in its $7.1 billion budget — a fact that City Attorney Hydee Feldstein Soto criticized earlier this year.

The federal government has so far allocated $1 billion for security costs for the Olympics. Exactly where those federal funds will go has not yet been determined, and there's no guarantee they will cover all of L.A.'s policing costs.

To address this, city officials have also proposed an amendment to a 2021 agreement between the city and LA28. That amendment would establish that if L.A. is not reimbursed by the federal government for all its eligible expenses, it could dip into LA28's contingency fund of $270 million before the private organizing committee could use those funds for any legacy projects.

But that bucket of money will first be used for any costs that Olympics organizers still owe if they run out of revenue — meaning if the Olympics don't turn a profit, the city's access to that money will depend on how much is left for the taking.

Civil rights attorney Connie Rice, who has been tracking the city's negotiations with LA28, told LAist the agreement was a "PR document" not a deal. She pointed out that if the federal government does not pay up for security spending as expected, L.A. could be in trouble.

" It leaves the taxpayers with a GoFundMe strategy," she said.

The city services agreement lays the groundwork for more negotiations between LA28 and the city. Each venue will require its own agreement, to be negotiated by July 1, 2027. Venues in the city of L.A. include Dodger Stadium, the L.A. Convention Center, L.A. Memorial Coliseum and the Venice Beach Boardwalk.

The City Council's ad-hoc committee on the 2028 Games will meet Tuesday afternoon to vote on the agreement.

If you've traveled by plane, you can probably picture this scene: Passengers line up to present their IDs to an airport officer, put their carry-on luggage on a conveyor belt and walk through a scanner.

But one detail at Kansas City International Airport is a bit unique. The uniformed officers who scan IDs and screen carry-on bags wear badges and U.S. flag patches, but they're not Transportation Security Administration (TSA) officers — they're private contractors. It's a distinction many passengers don't seem to notice.

"It's news to me," said Natasha Greenway, holding the handle of her son's stroller before catching a flight to Philadelphia.

"I didn't even notice," says Kim Eckels, who was traveling to Portland, Ore., with her family. With a laugh, she added, "I taught my kids not to question anything going through security. Just keep your mouth shut and go."

That attitude is shared by many travelers, who can be forgiven for not realizing that the officers politely but firmly guiding them through the screening process work not for the government but for VMD Corp., based in McLean, Virginia. As more airports consider going private rather than using federal officers, companies like VMD are eager to show they can keep passengers safe — and satisfy the TSA's oversight and standards.

Passengers move through the main security checkpoint at Kansas City International Airport on June 3.

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"We do have TSA" at the airport, noted Gabe Murphy, VMD's program manager at Kansas City International.

Private employees are responsible for everything from checking IDs to screening passengers and baggage. But Murphy said the TSA also has a security team there whose job is to "basically audit us and make sure that we're following all the processes and procedures that are outlined by TSA."

Using the acronym for standard operating procedure, he added: "Their SOP is our SOP."

Why are some commercial airports using private security?

The federal-private divide dates to the creation of the TSA in the wake of the terrorist attacks of Sept. 11, 2001. In the process, the government gave airports a choice of staffing checkpoints with federal security officers or opting out, using private firms under the Screening Partnership Program (SPP).

Nearly 25 years later, the TSA screens passengers and bags in most U.S. airports. The largest holdouts are Kansas City and San Francisco International Airport. Other SPP airports are scattered around the United States, from Sarasota, Fla., and Atlantic City, N.J., to Tupelo, Miss., and Yellowstone, Montana.

Kansas City International Airport.

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A Transportation Security Administration K-9 unit makes its rounds at Kansas City International Airport on June 2.

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But more airports, such as Hartsfield-Jackson Atlanta International Airport, are considering going private. Changes like that would bring a major shift, said Tina Won Sherman, director of the U.S. Government Accountability Office's (GAO) Homeland Security and Justice team. She said that the SPP hit a plateau years ago.

"It's really remained a small number: 20 privatized airports, where there are currently 440 federalized airports across the country," Sherman said.

The Trump administration wants to boost private involvement. It rolled out a new version of the SPP called TSA Gold+ last month, saying it will announce the first airports joining the program later this year. The administration has said privatizing airports would save tens of millions of dollars, prompting pushback from the American Federation of Government Employees (AFGE) union, which warns that the plan would undermine federal officers.

The federal law that created the Transportation Security Administration requires that private contracting companies pay their employees at least as well as commensurate federal workers. TSA officers have long struggled with some of the lowest wages in the federal workforce, but that situation improved markedly in 2023, thanks to an omnibus budget bill. Officers also benefited from the TSA's collective bargaining agreement with the AFGE union in 2024, but the Trump administration has sought to revoke that contract.

Scott Barnhart trains his dog, Si, an explosive detection canine, at Kansas City International Airport on June 3.

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Sherman notes that details of how Gold+ would work are still emerging. But, she added, if dozens of small- and medium-sized airports join, it would raise questions about how the TSA handles oversight of everything from technology standards to screeners' efficiency, at a much larger scale. They are questions she'll be watching closely for answers.

"It's critical, absolutely critical, for TSA to make sure that security is upheld at the highest standard that it can be," Sherman said.

What do passengers say?

On a recent Tuesday, an informal survey of passengers in the Kansas City airport found that like many Americans, most weren't aware the SPP program existed until the recent partial government shutdown triggered long lines at federally run airports, while private facilities ran more smoothly.

Just inside a security checkpoint, Eric Sauter sat down for a haircut in a shop next to a shoeshine stand. He lives in San Diego but travels about 150 days a year for business, including frequent visits to Kansas City. As a barber buzzed around his head, Sauter said he didn't realize this airport uses private security until he visited in early spring.

Eric Sauter, a frequent flyer, gets his hair cut at The Director's Cut: Take Two, a barbershop at Kansas City International Airport, on June 2.

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"Everyone was really worried about the travel in and out," Sauter said. "I experienced no issues. And I did learn through reading in the news after the trip that they have the private TSA agents here."

One of the few obvious differences between TSA and VMD officers is that the private company's workers wear shirts that are gray, not the TSA's deep blue — the color the comedian Julio Torres famously associates with airports, as well as law and order. But most people NPR spoke to said they didn't notice the difference.

Inside the large atrium at the Kansas City airport, Carissa Brownlee said that she got through the line quickly and that she was more focused on making her flight than noticing the officers' uniforms.

"I think as long as the agents are friendly and kind and not in a bad mood, everything goes smoother," Brownlee said.

Contractors integrate with government agencies

The Kansas City airport's security installation is similar to what's found in dozens of U.S. airports, although some equipment was upgraded recently to avoid snags as the city braced for World Cup travelers.

There's a new scanning system, for instance, that lets people keep their arms at their waists as they pause between two white panels, rather than the more complicated spinning scanner used in many airports.

"They're much quicker and much more efficient, which will be nice here in a few weeks when we really start to see heavier throughputs," VMD's Murphy said.

After moving through the main checkpoint, passengers pass a desk staffed by local police officers.

"It's a city requirement," Murphy said. "If there is an unruly passenger or upset passenger or if there's a loaded firearm or a prohibited item that we identify," an officer can handle the situation immediately rather than coming from another terminal.

Once inside the terminal, travelers might encounter police and TSA K-9 units, which often stop to let passing families and children visit with the dogs. In the bowels of the airport, multiple levels of VMD employees analyze checked bags and suitcases for potential red-flag items at computer terminals. If necessary, they do so by hand.

During NPR's visit, about 10 new VMD employees had just begun their training.

"It's probably altogether about two months of training — more, depending on their skill level," for new employees, according to Kim Fisher, the airport's head security-training instructor.

"This caught my eye because I've always had interest in security," said new hire Jada Price, 19. When asked whether she plans to be working at the airport for decades to come, she doesn't hesitate: "I 100% plan to be, yes."

Four of the new hires said they moved to Kansas City for the opportunity. Part of the reason, they said, was the promise of job stability.

That point was repeatedly brought up at a recent congressional hearing on modernizing the TSA. Industry veterans said airport security officers must be paid to do a critical job, whether Congress can agree on a budget or not.

Sherman, of the Government Accountability Office, said fair and stable wages are key to sustaining morale and letting officers focus on important work.

"You're relying on these individuals to make sure that whether you're in Washington, D.C., or you're in Kansas City or anywhere else across the country, that you're receiving the same level of security," she said. "And that the individual that's providing it is doing that to the best of their ability."

As security officers and airports prepare for potential changes from the privatization push, a different change is looming for VMD. The company's $803 million proposal to handle security at San Francisco International Airport was recently accepted, a decision that was affirmed by the Government Accountability Office.

As part of the transition, Fisher, who also heads training programs at more than a dozen VMD-operated airports, was heading to San Francisco to work with existing employees there.

"It's going to be business as usual for us," she said, "just on a bigger scale."
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