The Brief

Facing a long horizon of budget deficits, California officials stretched and scrimped and massaged the numbers to stabilize the state’s finances last year. But an unforeseen economic downturn, spurred by President Donald Trump’s chaotic tariffs strategy, has knocked California out of fiscal balance once again.

Gov. Gavin Newsom is now forecasting a $16 billion, or 4%, decline in tax revenues in his revised budget proposal, according to a memo provided by his office in advance of the announcement Wednesday. That plan is the opening salvo in negotiations with the Legislature, ahead of the start of the fiscal year in July.

It’s a sharp turnaround from January, when Newsom projected a modest surplus in his $322 billion spending plan. The memo, which dubs the revenue shortfall the “Trump Slump,” does not provide an updated figure for California’s budget deficit.

“We are seeing the slow-rolling impact of 'Liberation Day' and it's not a good one,” spokesperson H.D. Palmer said. “Conditions have definitely changed for the worse since January, in significant part because of those federal tariffs.”

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 by making 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.

And while tax revenues came in $6.8 billion above forecast through April, other problems were brewing.

A one-man 'wrecking ball' to California economy

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.

The devastating fires that hit Los Angeles in January also 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 biggest risk 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.

"It's one person that is taking a wrecking ball to our economy," state Senate President Pro Tem Mike McGuire, a Healdsburg Democrat, said last week during an event in Sacramento. "That is the existential threat to the state of California right now."

The grim outlook will almost certainly force more reductions to state programs, and legislative leaders will have their own ideas about what to target after Newsom puts forward his priorities today.

Bargaining 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.

A binder showing Gov. Gavin Newsom’s revised budget proposal for 2023-24 during a press briefing at the state Natural Resources Agency in Sacramento on May 12, 2023.

(

Rahul Lal

/

CalMatters

)

“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.”

One likely exception is a proposed $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.

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.

The war in Iran is rattling the aviation industry, from flight cancellations to rising costs for jet fuel. So if you're planning to travel this spring or summer, should you grab a ticket now, or wait?

"You should go ahead and book," says Sean Cudahy, an aviation reporter at The Points Guy travel and personal finance website.

It's generally recommended to buy international flights further in advance than domestic trips. But in the current circumstances, Cudahy says he would go ahead and book even domestic flights.

His advice is a sign of how the Middle East conflict is rippling outward, affecting prices and itineraries around the world, beyond the thousands of travelers who were stuck after the war forced a barrage of flight cancellations.

Airlines warn that ticket prices will rise with fuel costs

The war's effect on travel was sudden and striking, resulting in the cancellation of more than 46,000 flights in and out of the Middle East from Feb. 28 — when the U.S. and Israel began bombing Iran — to March 11, according to Cirium, the aviation analytics company.

That includes Dubai International, the busiest airport in the world for international travel, according to Airports Council International, along with popular hubs in Doha and Abu Dhabi.

But even airlines far from the Mideast are facing a sudden surge in a core expense: jet fuel. At the beginning of the year, a gallon of jet fuel cost $2.11; by March 10, the price rose to $3.40, according to the Argus U.S. Jet Fuel Index, a gain of more than 60%.

The spike came after tanker traffic through the Strait of Hormuz came to a virtual halt, as Iran announced it would close the waterway that normally handles about 20% of the world's oil and liquified natural gas.

Mideast refineries had been sending some 470,000 barrels of jet fuel each day through the strait to airports in Europe and elsewhere, says Rick Joswick, who heads the near-term oil analytics team at S&P Global.

The price for a gallon of jet fuel soared close to $4 in the first week of the war, prompting United Airlines CEO Scott Kirby to say on Friday that airfare price hikes from higher fuel costs would "probably start quick."

As they absorb higher fuel costs, airlines could adjust prices higher across the board, or they might tuck an increase into premium fares, where they'll be less noticeable, Cudahy of The Points Guy says.

Several airlines have publicly confirmed that they'll be raising prices to compensate, as Reuters reports. Other carriers, such as Japan Airlines, publish a schedule of fuel surcharges triggered by cost increases.

"I do think that this is ultimately going to lead to higher fares for everyone," Cudahy says. "The only question now is how significant and how long does it last?"

Air travelers stranded by the Iran conflict are greeted in Athens, Greece, after arriving on a charter flight from Dubai on Saturday.

(

Giannis Antwnoglou

/

SOOC/AFP via Getty Images

)

Crisis parallels earlier global disruptions

The higher fuel prices reflect a genuine struggle to ensure the aviation industry has ample supplies, says Joswick.

"It's not irrational. It's not some trader bidding up prices," he says. Comparing the situation to the COVID-19 pandemic, he adds, "The consumption of toilet paper didn't change. But you notice that all of the supermarkets ran out of toilet paper, right? Everyone wants to be sure that they have coverage of a critical need."

Both Cudahy and Joswick compare the Iran conflict's ripple effects to Russia launching its full-scale invasion of Ukraine in 2022, which set off flight disruptions and higher fuel prices. As long as the Strait of Hormuz is closed, Joswick says, prices will keep rising.

"If that were to persist, this would be like a 1979 kind of [oil] crisis," he says. "Anything over a month, and you're seeing a substantial long-term price increase until the flows are restored."

The U.S. and other large economies can mitigate those effects by tapping strategic oil reserves — which they opted to do on Wednesday. But Joswick predicts that while such a move can help ensure adequate oil supplies, it might not bring a sharp drop in jet fuel prices. For one thing, he says, the U.S. reserve focuses on holding crude oil, not jet fuel. And he cites logistical challenges, such as California's reliance on jet fuel that it either produces or imports.

Tips for buying a plane ticket right now

If you're ready to take your chances and book a flight, Cudahy has some guidance.

First, don't buy a restricted, basic economy ticket that you can't change later, he says.

Instead, he recommends buying a regular, full-fare economy ticket: "If the price does eventually drop, you can then go back and change it and capture the lower price."

Another tactic, Cudahy says, is to use airline miles.

"You can generally cancel it and get all your miles back later, if the price goes down," he says.

Use services such as Google Flights to comparison shop and set up alerts for price changes. And if you book flights through a third-party site such as Expedia, be sure you understand its cancellation and change policies, in case they differ from the airlines.

Because of the chance for renewed hostilities in and around Iran, Cudahy says he would try to avoid nearby airline hubs for the next couple of months.

But he wouldn't wait to book a ticket.

"In the same way that we're seeing relatively long lines at gas stations with folks trying to get their tanks filled up before the price goes up even more than it already has, I would be thinking the same way when it comes to airfare right now," he says.

While you might drive an extra mile or two to find cheaper gas, airlines and airports don't have that luxury when they buy jet fuel.

"Prices are always set on the margin," Joswick says. "That last airport that needs to buy jet fuel, they will pay whatever it takes to get that. And that price then becomes the standard for the whole industry."
Copyright 2026 NPR

The story first appeared on The LA Local.

Los Angeles residents were walking dark streets and passing broken lamps even as the LAPD quietly disbanded a specialized unit in July that tracked thieves stealing copper wire from streetlights. 

Known as the Heavy Metal Task Force, the unit launched in early 2024 to combat persistent copper wire theft from lamps lighting the Sixth Street Bridge connecting Boyle Heights to Downtown L.A.

Lt. Andrew Mathes confirmed to The LA Local this week that the unit was eliminated in July 2025 as the department and city tightened budgets. The L.A. Bureau of Street Lighting, the department responsible for maintaining the lights, also had its budget cut by about 5% in the current fiscal year as its backlog of reports continues to grow. 

The team led investigations that exposed organized wire theft, resulting in more than 300 arrests. And it conducted inspections of local scrapyards to make it harder for people to cash in on high copper resale prices.

“When you get an eye for it, copper is everywhere,” Mathes said. 

Public concerns about lights persist

Calls for repair of streetlights surged from about 35,000 in 2022, the year the Sixth Street Bridge was opened to the public, to 46,000 in 2024. There was only a slight dip in such calls in 2025.

The calls made to the city’s 311 line for non-emergency services include lamps that were hit by cars or could be malfunctioning due to age. But the jump in calls starting in 2022 also include a surge in thefts.

Reports of copper wire theft doubled from about 7,200 in fiscal year 2022-23 to nearly 16,000 in 2024-25, according to data from the L.A. City Controller. But starting last year, the monthly calls began trending down, from 1,500 in October 2024 to about 200 in May 2025. 

After previously leading a similar team on catalytic converter thefts, Mathes was tapped for leading the unit on heavy metal thefts in early 2024. The team was based in the LAPD’s Central Division near where such thefts had been focused.

“LA is the copper theft capital,” Mathes said. “It’s the worst of the worst here.”

At their most active, Mathes said, the unit was conducting two or three operations a week.

They inspected scrapyards for stolen metal and warned the owners of the penalties they could face for purchasing it. They found people impersonating construction workers removing reams of wire for resale. He’d find makeshift processing operations in decrepit RVs, with huge spools of wire spun by hand and toxic fire pits where people would melt away plastic shielding because the unwrapped copper fetches a higher price.

Mathes said they tracked a 70% reduction in such thefts in the Newton Division, south and east of downtown.

So what happens if there is no specialized unit? 

Mathes said it was fitting that the first and last arrests made by the heavy metal unit occurred near the iconic bridge on Sixth Street. 

The officers who served on the unit developed valuable experience, Mathes said. And soon before it disbanded, he said they redoubled efforts to prepare the members to continue the work in their new assignments. Central, Hollenbeck and Newton police divisions have a specialist for these kinds of investigations.

When asked about wire thefts growing in other parts of the city in 2025, he presumed it was because of the intensive work the unit was doing near downtown.

“They had to find new places to target,” Mathes said.

The Los Angeles County fires last year drove up insurance costs for many Californians. Now, a proposed settlement means some State Farm policyholders whose premiums rose won’t see additional increases, and others should even get refunds.

State Farm, the largest insurer in the state with about 20% market share, received approval for unprecedented emergency insurance rate increases in California last May. The company told the state that the billions of dollars it expected to pay out after the deadly fires placed it in financial peril.

The proposed deal among the state Insurance Department, consumer advocacy group Consumer Watchdog and State Farm, disclosed late last week, comes after months of public hearings convened by the insurance department and settlement talks.

Consumer Watchdog, which questioned the rate increases State Farm asked for, says the settlement saves the company’s California policyholders a total of $530 million. From the proposed settlement:

• Homeowners’ rate hikes will stay at the previously approved interim rate of 17% instead of the 30% the company sought.
• Condo owners who saw interim rate hikes of 15% will see their rates drop to an increase of 5.8%, and get refunds with interest dating back to June 1, 2025.
• Rental unit owners with interim rate hikes of 38% will see those increases drop to 32.8%, and receive refunds with interest. 
• Renter policyholders will see an increase of 15.65% vs. the interim rate hike of 15%.

In addition, State Farm has agreed not to cancel any new policies this year, and it won’t be canceling some policies it had planned not to renew in wildfire-affected areas. The insurance department characterized those provisions as important to the continued stability of the state’s insurance market, which has been beset with availability and affordability issues.

“When consumer advocates are able to challenge the data and present their own analysis, excessive requests are reduced and consumers are protected,” said Harvey Rosenfield in a statement. Rosenfield founded Consumer Watchdog and wrote Proposition 103, the voter-approved law that governs insurance in California.

State Farm has paid out more than $5 billion in claims from the L.A.-area fires so far, said spokesperson Tom Hartmann.

After consumer complaints and lawsuits, the insurance department is investigating the company’s handling of claims from the fires and expects results from that examination later this spring.

The agreement, which must be approved by an administrative law judge, also requires State Farm to undergo additional review of its rates in 2027. The company will be required to make a one time 2.5% premium discount available to renewing policyholders if its ratio of premiums to available cash reaches a certain level; Consumer Watchdog litigation director Will Pletcher said the deal will give the group more timely access to the company’s annual financial statements to help keep it accountable.

The insurance department expects the judge to decide on the settlement by April 7. Insurance Commissioner Ricardo Lara will then review the judge’s decision and have the final say.

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