California allocates $750 million to Hollywood while simultaneously cutting health benefits for undocumented immigrants in its massive $322 billion budget, revealing Governor Newsom’s shifting priorities in the face of mounting deficits.
Key Takeaways
- California’s 2025-2026 fiscal budget totals $322 billion, attempting to address a current $12 billion deficit while facing a projected $21 billion structural deficit.
- The budget allocates $750 million in tax credits to Hollywood and provides long-term funding for the high-speed rail project at $1 billion annually until 2045.
- Health benefits for undocumented immigrants are being significantly reduced, including implementing a $30 monthly fee, freezing new enrollment, and ending full dental coverage by 2026.
- Governor Newsom demanded last-minute reforms to housing and infrastructure, with his signature contingent on passing a bill to overhaul the California Environmental Quality Act.
- The budget eliminates Medi-Cal coverage for weight loss drugs like Ozempic and Wegovy, saving $885 million.
Hollywood Bailout Amid Healthcare Cutbacks
California’s mammoth $322 billion budget for the 2025-2026 fiscal year reveals a stark contrast in priorities as the Golden State grapples with significant financial challenges. The budget, signed by Governor Gavin Newsom on June 30 after legislative approval, allocates a generous $750 million in tax credits to Hollywood while simultaneously scaling back healthcare benefits for undocumented immigrants. This third consecutive deficit-ridden budget under Newsom’s administration showcases the difficult balancing act between maintaining progressive policies and pursuing pro-business initiatives during economic constraints.
“It is never easy to balance the budget with the deficit we faced,” said Scott Wiener, chair of the state senate’s budget committee.
Never thought I'd say this, but California's High Speed Rail project could be in danger of falling behind schedule. https://t.co/yJQG8IdBjy pic.twitter.com/hnrE0KIqpc
— Rob Pyers (@rpyers) June 25, 2025
Healthcare Cuts for Undocumented Residents
The budget implements significant changes to healthcare access for undocumented immigrants in California. Starting January, new enrollment in Medi-Cal for undocumented adults aged 19 to 59 will be frozen, and current enrollees will face a new $30 monthly fee. Additionally, full dental coverage for undocumented Medi-Cal recipients will end in 2026. These measures are expected to save over $3.3 billion across the next three fiscal years. The cuts come in response to higher-than-anticipated demand and rising healthcare costs that have strained state finances.
“We did have to make some difficult decisions around Medi-Cal and those decisions remain,” said Wiener.
Further healthcare cuts include eliminating Medi-Cal coverage for weight loss medications like Ozempic and Wegovy, a move projected to save $885 million. These healthcare reductions represent a significant policy shift for a state that had previously expanded coverage to undocumented residents, highlighting the financial pressures facing California as it confronts both immediate and long-term budget deficits.
Infrastructure Investments and Housing Reforms
A cornerstone of the budget is securing long-term funding for California’s controversial high-speed rail project, allocating $1 billion annually from cap-and-trade proceeds until 2045. This commitment ensures the project’s continued development despite years of delays and cost overruns. The budget also provides $750 million in loans to San Francisco Bay Area transportation agencies facing budget shortfalls and allocates $25 million for a new semiconductor research facility in Silicon Valley, reflecting California’s ongoing efforts to maintain its technological edge.
“We appreciate the strong partnership with the Legislature in reaching this budget agreement,” Newsom spokesperson Izzy Gardon said in a statement.
Housing reform represents another critical element of the budget negotiations. Governor Newsom’s signature on the budget was contingent on passing legislation to overhaul the California Environmental Quality Act (CEQA), which has long been criticized for delaying housing development. The proposed streamlining of housing construction regulations aims to address California’s persistent housing crisis by accelerating development timelines and reducing bureaucratic obstacles that have contributed to the state’s affordability problems and homelessness epidemic.
