California allocates $750 million in tax credits to Hollywood while cutting healthcare for undocumented immigrants in its newly approved $322 billion budget.
Key Takeaways
- California’s massive $322 billion budget for 2025-2026 was signed by Governor Newsom on June 30 while facing a $12 billion immediate deficit and projecting a $21 billion structural deficit
- The budget allocates $1 billion annually until 2045 from cap-and-trade proceeds for the controversial high-speed rail system
- Hollywood receives $750 million in tax credits while healthcare for undocumented immigrants is significantly scaled back, including a new $30 monthly fee and frozen enrollment
- Full dental coverage for undocumented Medi-Cal recipients will end in 2026, saving over $3.3 billion over three fiscal years
California’s Budget Priorities: Hollywood Over Healthcare
While Californians struggle with the nation’s highest cost of living, Governor Gavin Newsom and state lawmakers have revealed their priorities in the newly approved $322 billion budget. The massive spending plan, signed on June 30, manages to find $750 million in tax credits for Hollywood elites while simultaneously cutting healthcare benefits for others. This marks Newsom’s third consecutive year facing deficits, with the current budget addressing a $12 billion shortfall while projecting an alarming $21 billion structural deficit looming on the horizon. Despite these financial challenges, the budget continues pouring money into the state’s controversial high-speed rail project.
The fiscal plan includes significant changes to California’s Medi-Cal program, which had previously been expanded to include undocumented immigrants. Beginning in January, new enrollment for undocumented adults ages 19 to 59 will be frozen, and those already enrolled will face a new $30 monthly fee. Additionally, full dental coverage for undocumented Medi-Cal recipients will completely end in 2026. These healthcare reductions are projected to save over $3.3 billion across the next three fiscal years, while the budget simultaneously eliminates Medi-Cal coverage for weight loss medications like Ozempic and Wegovy, saving an additional $885 million.
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
Transportation and Infrastructure Funding
Despite facing substantial deficits, the budget secures ongoing annual support of at least $1 billion until 2045 for California’s perpetually delayed and over-budget high-speed rail project. The funds will come from cap-and-trade proceeds, effectively redirecting money from the state’s climate change initiatives to the rail system. Additionally, San Francisco Bay Area transportation agencies will receive $750 million in loans to address their own budget shortfalls, further straining the state’s financial resources. These transportation allocations come as part of Newsom’s demanded last-minute reforms to housing and infrastructure.
“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 includes $25 million for a new semiconductor research facility in Silicon Valley, part of efforts to maintain California’s technological competitiveness. However, negotiations continue over a proposal to streamline housing construction, with Newsom’s signature on the budget contingent on passing a bill to overhaul the California Environmental Quality Act (CEQA). This controversial environmental law has frequently been used to block or significantly delay housing development projects throughout the state, contributing to California’s housing crisis.
Hollywood’s Windfall Amid Healthcare Cuts
While ordinary Californians continue struggling with high taxes and living costs, the budget lavishes $750 million in tax credits on the entertainment industry through the California Film and Television Tax Credit program. This handout to Hollywood comes directly alongside cuts to healthcare services that were previously promised to other residents. The stark contrast in priorities reveals California’s leftist leadership’s commitment to catering to wealthy industry donors while reducing services to other populations when faced with financial constraints of their own making.
“We did have to make some difficult decisions around Medi-Cal and those decisions remain,” said Wiener.
The administration attempted to put a positive spin on the budget agreement despite the obvious contradictions in priorities. “We appreciate the strong partnership with the Legislature in reaching this budget agreement,” Newsom spokesperson Izzy Gardon said in a statement. However, the reality remains that California continues to face significant financial challenges while maintaining spending on pet projects like the high-speed rail system and Hollywood subsidies. The $21 billion projected structural deficit suggests more difficult cuts may be needed in future budgets unless the state dramatically changes its spending priorities.
