As we head into 2026, it appears that California is poised to begin the New Year with an $18 Billion debt and could easily be double that amount.
California will face a nearly $18 billion budget deficit in the new fiscal year due to higher than expected spending, despite an economic boon largely driven by AI enthusiasm and strong revenue, the nonpartisan Legislative Analyst’s Office said Wednesday.To make things worse, the $17.7 billion shortfall could balloon to an annual $35 billion by fiscal year 2027-28, as spending continues to grow and debts come due, the office warned in its annual fiscal outlook.
As the next presidential election cycle looms, these numbers could prove difficult for Gov. Gavin Newsom to explain on the campaign trail. In an attempt to stem the fiscal bleeding, he is attempting to control the cash flow my cutting off some of the generous benefits given to illegal immigrants in the state.
As an added bonus, California’s deep blue bureaucrats are blaming President Donald Trump for forcing them into fiscal and constitutional responsibility.
Many illegal immigrants in California will become ineligible for Medi-Cal coverage in the new year, according to new guidance from state officials.The Department of Health Care Services, which administers the state’s Medicaid program, called Medi-Cal, announced the move in August. The department stated on its website that immigrants with “unsatisfactory immigration status” will not be able to sign up for Medi-Cal on Jan. 1. That’s a reference to illegal immigrants.“Federal cuts approved by Congress, Trump-era tariffs and ongoing attacks on our undocumented communities have created true fiscal strain for people in states like California,” said Assemblymember Dawn Addis, D-San Luis Obispo and chair of the Assembly Budget Subcommittee on Health.“In response, the legislature acted to protect care by minimizing and postponing reductions in coverage,” Addis told The Center Square in an emailed statement on Tuesday. “The cost of the federal government’s erosion of healthcare is extremely high – both in tens of millions of dollars to our state and in real health consequences for Californians.”
Now the state bureaucrats are scrambling to sign-up as many illegal immigrants as it can before the January 1st deadline.
Every Friday for the past two months, nonprofit workers armed with iPads and clipboards have fanned out in South Los Angeles looking for immigrants living in the U.S. unlawfully. Their goal: Sign them up for the state’s Medicaid program before the end of the year.The program, called Medi-Cal, will stop accepting adults with what the government calls “unsatisfactory” immigration status. Medi-Cal will require such immigrants who already are in the program to pay a $30 monthly premium to keep their health coverage starting in mid-2027.It is a striking policy U-turn for Democratic California Gov. Gavin Newsom, who championed extending government-supported healthcare to all low-income Californians—regardless of their immigration status—as core to the state’s economic and moral identity.“We are implementing our ideals,” Newsom said in a 2022 speech, adding that expanding access to preventive care would save money by diverting people from costly emergency- room visits.People rushed into the program, and costs soared. Medi-Cal has played a role in deepening California’s budget hole.
The quest for new Medi-Cal participants may prove difficult…as California’s immigration rates have plunged after the enormous success of the Trump administration’s border control efforts.
The estimates, which mostly include immigrants accessing legal pathways and social services, indicate that President Donald Trump’s efforts to restrict immigration are having profound effects on California’s population. From July 2024 to July 2025, the state grew by just 0.05%, compared to almost 0.6% over the previous yearlong period.California has historically depended on immigration to counterbalance its population loss to other parts of the country. During Trump’s first term, his immigration policies contributed to California’s population decline, which experts said damaged the state’s economy and threatened its representation in Congress.
Personally, I am looking forward to the Trump Team’s auditors taking a look at California’s books. I am sure that the amount of fraud and corruption discovered will make Minnesota’s look trivial.
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