California Finalizes $321B Budget With Major Policy Changes

California Governor Gavin Newsom signed a $321 billion budget for the 2025–26 fiscal year, addressing a $12 billion projected deficit mainly through delayed spending cuts and borrowing from special funds, while avoiding broad-based tax increases. The budget includes a $750 million annual expansion of the film and television tax credit program to retain industry projects and allocates $25 million for a new semiconductor research facility in Silicon Valley, expected to generate over $1 billion in research and create more than 200 jobs. Changes to Medi-Cal include a $30 monthly premium for adult undocumented immigrants beginning in 2027 and a freeze on new enrollments starting in January, aimed at managing rising costs. The budget has raised concerns among legislators and local business leaders regarding the proposed H.R.-1 bill, which could impose deep cuts to Medi-Cal and other social programs, potentially affecting Sacramento’s workforce and economy. The governor has also linked the passage of housing production bills to the budget to streamline development. Significant infrastructure and housing projects are underway in Sacramento, including airport expansion, new medical centers, and initiatives for homeless and first-time homebuyers, amid ongoing state and federal policy debates.