The California Legislature has passed a $321 billion budget for the new fiscal year, with changes to Medi-Cal coverage for undocumented immigrants, funding to better prepare the state against future wildfires and additional investments to help revive the Hollywood industry.

The legislature forwarded the spending plan to Gov. Gavin Newsom, who signed it on Friday evening, June 27.

But the governor also made clear that adoption of the budget would be contingent on legislators sending him a plan that would make it easier to build housing in the state. The legislature has until Monday to send along the housing construction bill to the governor, with the new fiscal year starting on Tuesday.

Faced with a $12 billion deficit, state officials relied on a combination of cost-cutting measures, borrowing and the use of reserve funds in putting together the 2025-26 budget.

Below, we highlight just a few areas of the budget that will impact Southern Californians — from health care, transportation and public safety to support for Hollywood’s entertainment industry and firefighters.

Medi-Cal

Under the budget agreement, individuals 19 and older with “unsatisfactory immigration status” would no longer be allowed to enroll in Medi-Cal, the state’s version of Medicaid, beginning in January.

Current Medi-Cal enrollees can remain on the state’s health insurance plan for low-income people, but those 19 or older with “unsatisfactory immigration status” would lose dental coverage starting in July 2026.

In addition, undocumented individuals ages 19 to 59 would have to pay $30 a month in premiums starting in July 2027. Newsom previously proposed charging $100 a month to adults without legal status enrolled in Medi-Cal, beginning in 2027.

A number of Democrats opposed the governor’s plan to make changes to Medi-Cal coverage for undocumented immigrants when he proposed it in May. But Newsom and Democratic legislative leaders ultimately agreed to a budget that included some changes.

Democratic state Sen. María Elena Durazo of Los Angeles broke with her party, though, and voted “no” on the health care changes, calling them a betrayal of immigrant communities.

California last year extended health care benefits to all low-income adults, regardless of immigration status. But more people signed up than anticipated, costing the state billions more than anticipated.

Funding for firefighters

The budget appropriates $39 million in the upcoming fiscal year and $78 million in subsequent years to transition seasonal Cal Fire firefighters to year-round employees, as called for under SB 581, the Fight for Firefighters Act championed by state Senate President Pro Tem Mike McGuire, D-Healdsburg.

“Wildfire season is 365 days per year. We need a modern-day staffing plan that makes CalFire full-time, too, and we’re doing just that with the state budget,” McGuire said.

The Senate leader said California will transition 760 nine-month seasonal firefighters to full-time positions next year, with more to come in future years. In addition, the state has plans to hire thousands of new firefighters in future years.

“Bottom line: This investment will save lives and make our state more wildfire safe,” McGuire said.

The budget also includes $10 million to pay for increased wages for incarcerated firefighters.

Although AB 247, a bill by Assemblymember Isaac Bryan, D-Los Angeles, to increase pay for incarcerated firefighters, still needs final approval from the legislature, funding for it has been included in the budget in anticipation of the bill’s passage.

Currently, incarcerated firefighters working through the California Department of Corrections and Rehabilitation’s Conservation (Fire) Camp Program earn $5.80 to $10.24 per day, plus an extra $1 per hour when responding to an active emergency. That amounts to $29.80 a day during an active emergency for someone at the lowest end of the pay scale.

AB 247 would increase these firefighters’ pay to the federal minimum wage of $7.25 an hour while assigned to an active fire incident. The hourly wage rate would be updated annually.

A previous version of the bill called for paying incarcerated firefighters $19 an hour, but was later revised down. The latest bill version passed out of the Assembly earlier this month and is scheduled to be heard by the Senate Public Safety Committee on July 8.

Public safety

The budget agreement will provide $100 million to help implement Proposition 36, a tough-on-crime initiative that voters overwhelmingly approved last year. The measure makes shoplifting a felony for repeat offenders, increases penalties for certain drug charges and gives judges the authority to order people with multiple drug charges into treatment.

Advocates of the measure, which include sheriffs, district attorneys and probation officers, said the amount budgeted isn’t enough. Some have estimated it would cost about $400 million for the first year of the program.

Assemblymember Diane Dixon, R-Newport Beach, criticized the budget for failing to fully fund Proposition 36.

“The supermajority Democrats continue to prioritize funding for wasteful and never-ending multi-billion-dollar pie in the sky items like the high speed rail and Medi-Cal for undocumented immigrants,” she said in a statement, adding that it “does nothing to reduce rising gas prices for Californians” nor “adequately address the basic needs of Californians.”

Transportation

Legislative leaders negotiated with Newsom to drop his initial plan to cut $1.85 billion in transportation funding, restoring $1.1 billion back into the budget.

That includes approximately $326.2 million for various LA Metro projects and $44.8 million to the Southern California Regional Rail Authority for projects to enhance its Inland Empire-Orange County and San Bernardino lines, according to figures provided by Eli Lipmen, executive director of Move LA, an organization that advocates for public transit.

In addition, the restored funding meant that approximately $196.6 million earmarked for various transportation projects within Anaheim and Irvine, and another $40.5 million previously awarded to the Riverside County Transportation Commission, were saved from the chopping block, according to the figures Lipmen shared.

The restoration of transportation funds was a major win for transit advocates.

In March, Assemblymember Mark González, D-Los Angeles, along with state Sen. Jesse Arreguín, D-Berkeley, had requested $2 billion in flexible funding over the next two fiscal years to address the operating shortfalls of transit agencies throughout the state.

At the time, González and other Assembly members sent a letter emphasizing the importance of continuing to invest in transit-related infrastructure as the greater L.A. region prepares to host the World Cup in 2026 and the Olympic and Paralympic Games in 2028.

In addition to the restored $1.1 billion, the state will provide a $750 million interest-free loan to prop up transit agencies in the Bay Area while legislators and transit advocates work on a future ballot measure calling for a regional tax to fund the area’s public transit systems, said Stefan Elgstrand, a spokesperson for Arreguín.

Although no such loan was extended to LA Metro, Elgstrand said the Southern California transit agency could seek other loan opportunities.

Lipmen, meanwhile, said the push for funding to enhance transportation services ahead of the Olympics will be fought another day.

“We still need funding for the Olympics. … (LA) Metro is still stuck in a very bad position. That’s definitely still an issue, but it’s being pushed to next year,” said Lipmen, referring to future budget talks.

Film and television tax credit

California’s investment in its film and television tax credit program will more than double in the new fiscal year, an idea which Newsom had been pitching since last fall.

State officials, as well as local officials in and around Los Angeles who support bumping up the allocation from $330 million to $750 million, say it’s critical for California to modernize this tax credit program to remain competitive with other states and countries where shooting a show or movie is cheaper.

A number of film crews and production companies have relocated out of California in recent years. Advocates say these relocations have hurt not only the Hollywood industry but have also resulted in lost economic activity that has negatively impacted local economies more broadly.

Assemblymember Rick Chavez Zbur, D-Hollywood, lead author of a bill to expand the film and television tax credit program, on Friday called the move a “historic investment” in the creative economy and for working families and small businesses.

“We’re not just restarting production — we’re rewriting the script to put workers back at the center of California’s entertainment future,” he said.

The Associated Press contributed to this report.