CA lawmakers halt hundreds of bills with new spending as deficits loom

State legislators on Friday halted hundreds of bills with new spending attached from advancing. Why? The Legislature again underwent its relatively opaque process known as the “suspense file.” Hanging over lawmakers’ heads is the expected $12 billion state budget deficit that is projected to worsen due to federal tariffs and increased state health care spending.

The Assembly and Senate’s appropriations committees hold these proceedings twice a year. As CalMatters’ Jeanne Kuang and Yue Stella Yu explain, 32% of 1,098 measures were held in the committees on Friday — meaning those proposals are essentially dead or shelved for the year. 

• Assemblymember Buffy Wicks, an Oakland Democrat and chairperson of the Assembly appropriations committee: “Many good bills are going to fall by the wayside today. We are not in a year where we can be expanding programs, developing new offices, new agencies, new departments and expanding our footprints.”

The Assembly trimmed about the same number of bills compared to last May, while the Senate squashed a slightly higher percentage of bills (29% compared to 25.5% in 2024), according to longtime lobbyist Chris Micheli.

Some notable bills that didn’t advance included ones that would have expanded health care services, such as a proposal to seek federal approval to cover some housing services under Medi-Cal, an insurance program for low-income residents, and another to allow more Medi-Cal patients to receive home-based care.

Two crime bills, both introduced by Republicans, were also spiked. One would have barred some prisoners from being released early through the state’s elderly parole program, and the other would have increased penalties for giving fentanyl to minors.

But the committees did pass 742 other bills, including a proposal by Assemblymember Rick Zbur and backed by Gov. Gavin Newsom to expand tax credits for the state’s film industry. Though language to increase the state’s film tax credit to $750 million annually was struck from the bill, the specific amount is expected to be ironed out during budget negotiations, said Zbur, a Los Angeles Democrat.

The bills that survived on Friday will face another hurdle next week, when they must advance out of the chamber — Assembly or Senate — where they were introduced. 

Read more here.

The nonpartisan Legislative Analyst’s Office agrees with the Newsom administration that the state is “likely to face persistent future deficits” which are expected to range from $10 billion to $20 billion through the next four years.

The latest number-crunching by the analyst’s office dropped Saturday, a typical occurrence that follows the governor’s unveiling earlier this month of his updated state budget plan, which also projected years of operating deficits in the tens of billions.

One of Newsom’s key proposals to help reduce spending and plug the budget hole is to limit new Medi-Cal recipients, particularly freezing enrollment for adult immigrants who do not have permanent legal status. The office recommends that the Legislature should “maintain at least the level of ongoing solutions” as proposed by the governor, but could adopt “additional solutions” in anticipation of future deficits.

Some bit of good news: Because of slightly higher revenue estimates, the analyst’s office projects that this year’s budget condition will improve by nearly $2 billion compared to the administration’s assessment. But uncertain “federal budget changes” are likely to add more financial pressures on the state, according to the office.

All this info will shape the discussions between lawmakers and Newsom as they craft a budget deal for the next year by late June. 

Speaking of “federal budget changes” the Republican-led U.S. House of Representatives last week advanced a budget package that could have major effects on millions of low-income Californians enrolled in Medicaid. 

Nationally, the bill guts Medicaid spending by $700 billion, which could lead to California losing as much as $20 billion a year and 217,000 jobs, according to an April analysis by the UC Berkeley Labor Center. 

To reduce costs, the bill proposes cutting funding for states that provide coverage to immigrants without legal status, which would affect California. It would also limit the number of new enrollees by imposing proof of work hours. 

About 15 million Californians are on Medi-Cal, the state’s implementation of Medicaid. But roughly 29% of Medi-Cal recipients are unable to work due to caregiving responsibilities, school, having a disability or other reasons. The new work requirements could jeopardize coverage for as many as 3.5 million Californians according to a Center on Budget and Policy Priorities analysis.

The House advanced the bill with all 43 California Democrats voting against it and all nine GOP members — who represent a total of 2.5 million Medi-Cal enrollees — voting for it. At least one right-leaning group in California says the cuts are warranted to curb federal spending.

The U.S. Senate has to approve the bill, but some GOP senators say the bill doesn’t cut enough to address the national debt.

A neighborhood in San Diego County is the first purpose-built “wildfire resilient neighborhood” in the country. CalMatters’ Ben Christopher and video strategy director Robert Meeks have a video segment on Dixon Trail and the challenges of statewide home hardening as part of our partnership with PBS SoCal. Watch it here.

SoCalMatters airs at 5:58 p.m. weekdays on PBS SoCal.