California’s $322 billion budget bails out Hollywood with $750 million in tax credits while simultaneously cutting healthcare for undocumented immigrants amid a spiraling $21 billion deficit.
Key Takeaways
- California’s $322 billion budget for 2025-2026 diverts $750 million to Hollywood tax credits while facing a projected $21 billion structural deficit
- The state is rolling back healthcare for undocumented immigrants, implementing a $30 monthly fee and freezing new enrollments in Medi-Cal starting January
- Governor Newsom secured $1 billion in annual funding for his high-speed rail project through 2045, despite ongoing financial challenges
- The budget eliminates coverage for weight loss drugs like Ozempic and Wegovy to save $885 million while providing $750 million in loans to Bay Area transportation agencies
California’s Budget Priorities: Hollywood Over Healthcare
California lawmakers have passed a massive $322 billion budget for the 2025-2026 fiscal year that demonstrates clear priorities amid growing financial pressure. The budget, signed by Governor Gavin Newsom on June 30, includes generous handouts to the entertainment industry while slashing healthcare benefits for undocumented immigrants. Despite facing a $12 billion current deficit and projecting a staggering $21 billion structural deficit in the future, the state found room to allocate $750 million in tax credits for Hollywood studios and producers, raising serious questions about fiscal responsibility during an economic downturn.
The budget makes significant cuts to Medi-Cal benefits that had previously been extended to undocumented residents. A new $30 monthly fee will be implemented for undocumented immigrants ages 19 to 59 enrolled in Medi-Cal, with new enrollment completely frozen starting in January. Furthermore, full dental coverage for undocumented Medi-Cal recipients will end in 2026, a move expected to save over $3.3 billion across the next three fiscal years. These healthcare reductions come at the same time California is funneling hundreds of millions to entertainment industry giants.
Do illegal immigrants get free health care if they pay $30 a month. Slap in the face of taxpayers and why we need every immigration law enforced in CA https://t.co/yn0kk0bQ1u
— Brandon S (@BSaarX) June 25, 2025
High-Speed Rail and Infrastructure Spending
Governor Newsom’s controversial high-speed rail project secured a significant victory in the budget negotiations, receiving a commitment for ongoing annual support of at least $1 billion through 2045, funded by cap-and-trade revenue projections. This long-term financial commitment comes despite the project’s history of massive cost overruns and delays. The rail initiative, which has yet to transport a single passenger, continues to consume billions in taxpayer dollars while essential services face cuts. Additionally, the budget provides $750 million in loans to San Francisco Bay Area transportation agencies to address their budget shortfalls.
“It is never easy to balance the budget with the deficit we faced,” Scott Wiener, chair of the state senate’s budget committee, said during a hearing on Wednesday.
The budget also allocates $25 million for a new semiconductor research facility in Silicon Valley, highlighting the administration’s selective approach to economic development. These infrastructure investments come as part of Newsom’s last-minute reforms to housing and infrastructure that were incorporated into the final budget agreement. The governor’s signature on the budget was reportedly contingent on passing a bill to overhaul the California Environmental Quality Act (CEQA), which has been a significant obstacle to housing development in the state.
Medicaid Cuts and Fiscal Challenges
In addition to restricting healthcare access for undocumented immigrants, the budget eliminates Medi-Cal coverage for weight loss drugs like Ozempic and Wegovy, a measure expected to save $885 million. These cuts represent a significant departure from California’s previous trajectory of expanding healthcare benefits regardless of immigration status. The budget marks Newsom’s third consecutive year facing a deficit, requiring difficult trade-offs between the state’s progressive policies and financial reality.
“We did have to make some difficult decisions around Medi-Cal and those decisions remain,” said Wiener .
The Newsom administration has attempted to frame these cuts as necessary adjustments rather than a retreat from its policy goals. However, the stark contrast between healthcare reductions and entertainment industry subsidies reveals the true priorities of California’s leadership. With a $21 billion structural deficit looming, taxpayers are rightfully questioning whether funding Hollywood productions and an endless rail project should take precedence over basic services and fiscal stability in what remains one of the highest-taxed states in the nation.
