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Newsom, Democrats announce $321-billion California budget deal

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Newsom, Democrats announce 1-billion California budget deal

California leaders reached a tentative agreement Tuesday night on the state budget, which hinges on Gov. Gavin Newsom’s demand that the Legislature pass a housing reform proposal.

The eleventh-hour negotiations about the spending plan, which takes effect July 1, speak to the political challenge of overhauling longstanding environmental regulations to speed up housing construction in a state controlled by Democrats.

The party has been loath to do more than tweak the California Environmental Quality Act, or approve one-off exemptions, despite pressure from the governor and national criticism of a law that reform advocates say has hamstrung California’s ability to build.

The proposal is among a series of policies Newsom and Democratic lawmakers are expected to advance in the coming days as part of the $321.1-billion budget. The deal reflects the Legislature’s resistance to the governor’s proposed cuts to reduce a $12-billion budget deficit expected in the year ahead, citing uncertainty about the scope of the state’s financial problems.

“We appreciate the strong partnership with the Legislature in reaching this budget agreement,” said Izzy Gardon, a spokesperson for Newsom. “The governor’s signature is contingent on finalizing legislation to cut red tape and unleash housing and infrastructure development across the state — to build more, faster.”

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The consensus comes after weeks of conversations about how to offset the deficit, caused by overspending in California, and start to address even larger financial problems anticipated in the future, including from potential federal policy changes.

The tentative deal largely relies on borrowing money, tapping into state reserves, and shifting funding around to close the shortfall. By reducing and delaying many of the governor’s proposed cuts, the budget continues a practice at the state Capitol of sparing state programs from immediate pain while avoiding taking on California’s long-term budget woes.

Assembly Republican Leader James Gallagher (R-Yuba City) said the budget deal papers over the state’s financial problems.

“We’re in this situation because of overspending,” Gallagher said. “We’ve made long-term commitments to programs that Democrats have championed, and now, just like everybody warned, the money is not there to support them all, and they don’t want to cut back their program that they helped expand.”

The cuts lawmakers and the governor ultimately agreed to will reduce the expansion of state-sponsored healthcare to undocumented immigrants and reinstate asset limit tests for Medi-Cal enrollees. The final deal, however, achieves less savings for the state than Newsom originally proposed.

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The plan restores cost-of-living adjustments for child-care workers, which the governor wanted to nix, and rejects his call to cap overtime hours for in-home caregivers.

Democrats in the Legislature successfully pushed to provide another $500 million in funding for Homeless Housing, Assistance and Prevention grants. The governor originally resisted giving more money to counties, which he has chastised for being unable to show results for the billions of dollars in state funding they have received to reduce homelessness.

Assembly Budget Chair Jesse Gabriel (D-Encino) pushed back on the notion that the Legislature hasn’t done “real belt-tightening.” Lawmakers are trying to balance compassion and fiscal responsibility before making drastic cuts to safety net programs that Californians rely on, he said.

“That is the balance that we are trying to strike here with this budget of being responsible, of focusing on the work that we need to do regardless, but also understanding that there is a pretty high delta of uncertainty for a lot of reasons,” Gabriel said.

The budget also preserves Newsom’s plan to provide $750 million to expand the California Film and Television Tax Credit, a proposal supported by Hollywood film studios and unions representing workers in the industry.

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The tentative agreement is expected to serve as a precursor to more challenging financial discussions about additional reductions in the months ahead.

California expects to lose federal funding from the Trump administration and state officials predict a potentially greater funding dilemma in 2026-27.

Here are few key elements of the budget deal, detailed in summaries of the agreement and legislation:

A housing caveat

Described colloquially as a “poison pill” inserted into the budget bill, the agreement between the Legislature and Newsom will only become law if legislators send the governor a version of a proposal initially introduced by Sen. Scott Wiener (D-San Francisco).

Wiener’s bill is expected to lessen the number of building projects that would require a full environmental review under CEQA and make the process of developing environmental impact reports more efficient.

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Paired with another proposal that could exempt more urban housing developments from CEQA, the legislation could mark a significant change in state policy that makes it easier to build.

Newsom is effectively forcing the Wiener proposal through by refusing to sign a budget deal without the CEQA exemptions. The proposal was still being drafted as of Tuesday evening.

The governor declared lofty goals to build more housing on the 2018 gubernatorial campaign trail, but he has failed to spur enough construction to meet housing demand and make homes more affordable.

New York Times columnist Ezra Klein effectively called out the inaction in California caused by the state’s marquee environmental law and a lack of political will in his recent book “Abundance,” which increased pressure on the governor and other Democrats to reconsider their approach and push for more substantial fixes this year.

The CEQA reform bill must be passed by Monday under the budget agreement, which omits a separate Newsom call to streamline the Delta tunnels project.

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Changes to Med-Cal funding

Medi-Cal cost overruns are causing major problems for the California budget. The challenges stem from a higher-than-expected price tag for the expansion of state-sponsored healthcare to all income-eligible undocumented immigrants and medical care for other enrollees.

Newsom’s budget proposal in May suggested substantial trims to the healthcare program for people who are undocumented. His plan included freezing new enrollment as of Jan. 1, requiring all adults to pay $100 monthly premiums, eliminating long-term care benefits and cutting full dental coverage. The changes offered minor savings in the year ahead but could save billions of dollars in future years.

Lawmakers ultimately agreed to require undocumented immigrant adults ages 19 to 59 to pay $30 monthly premiums beginning July 2027. They plan to adopt Newsom’s enrollment cap but give people three months to reapply if their coverage lapses instead of immediately cutting off their eligibility.

Democrats agreed to cut full dental coverage for adult immigrants who are undocumented, but delayed the change until July 1, 2026.

State leaders agreed to reinstate much higher limits than the governor originally proposed on the assets Medi-Cal beneficiaries may possess and still get coverage. The new limits would be $130,000 for individuals and $195,00 for couples, compared to prior limits of a few thousand dollars.

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They also adopted Newsom’s proposal to withdraw Medi-Cal benefits for specialty weight-loss drugs.

Shifting money around

The negotiations resulted in less general fund spending than the Legislature proposed in a counter to Newsom’s budget revision in May, dropping from $232 billion to an estimated $228 billion for 2025-26.

Officials are using more money from California’s cap-and-trade program, which sets limits on companies’ greenhouse gas emissions and allows them to buy pollution credits from the state, including $1 billion next year. They are also using $300 million from climate change bonds instead of the general fund to pay for environmental programs.

Lawmakers and the governor agreed to delay a $3.4-billion payment on a loan to cover Medi-Cal cost overruns and increase the loan by another $1 billion next year.

Trump uncertainty

The plan continues an agreement to take $7.1 billion from the state’s rainy day fund to help cover the deficit and taps into another $6.5 billion from other cash reserves to balance the budget.

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California leaders for months have warned about the so-called Trump effect on the state budget.

Financial analysts at UCLA predict that the state economy is expected to slow in the months ahead due to the effects of Trump’s tariff policy and immigration raids on construction, hospitality, agriculture and other key sectors.

Meanwhile, the state is warning that federal funding reductions to California could require lawmakers to adopt additional budget cuts in August or September, during a special session in the fall or early next year.

State officials expect future deficit estimates to range from $17 to $24 billion annually, according to an Assembly summary of the budget deal.

More to come

The final budget agreement is being publicly released in bits and pieces this week through a series of trailer bills that appear online at random hours.

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Lawmakers are expected to pass a main budget bill on Friday and approve additional legislation by Monday, before the July 1 deadline for the budget to go into effect. Some legislation, such as the CEQA housing exemptions, will not appear in print until the end of the week.

Other decisions, such as reauthorizing California’s cap-and-trade program, will be considered later in the year outside of the budget process.

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FBI Director Kash Patel says bureau ramping up AI to counter domestic, global threats

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FBI Director Kash Patel says bureau ramping up AI to counter domestic, global threats

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FBI Director Kash Patel said Saturday that the agency is ramping up its use of artificial intelligence (AI) tools to counter domestic and international threats.

In a post on X, Patel said the FBI has been advancing its technology, calling AI a “key component” of its strategy to respond to threats and stay “ahead of the game.”

“FBI has been working on key technology advances to keep us ahead of the game and respond to an always changing threat environment both domestically and on the world stage,” Patel wrote. “Artificial intelligence is a key component of this.”

‘PEOPLE WOULD HAVE DIED’: INSIDE THE FBI’S HALLOWEEN TAKEDOWN THAT EXPOSED A GLOBAL TERROR NETWORK

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Kash Patel, director of the FBI, speaks during a news conference at the Department of Justice in Washington, D.C. ( Eric Lee/Bloomberg via Getty Images)

Patel said the bureau is developing an AI initiative aimed at supporting investigators and analysts working in the national security space.

“We’ve been working on an AI project to assist our investigators and analysts in the national security space — staying ahead of bad actors and adversaries who seek to do us harm,” he said.

Patel added that FBI leadership has established a “technology working group” led by outgoing Deputy Director Dan Bongino to ensure the agency’s tools “evolve with the mission.”

EXCLUSIVE: FBI CONCLUDES TRUMP SHOOTER THOMAS CROOKS ACTED ALONE AFTER UNPRECEDENTED GLOBAL INVESTIGATION

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The bureau is ramping up its use of AI tools to counter domestic and international threats. (Brendan Smialowski/AFP )

“These are investments that will pay dividends for America’s national security for decades to come,” Patel said.

A spokesperson for the FBI told Fox News Digital it had nothing further to add beyond Patel’s X post.

The FBI currently uses AI for tools such as vehicle recognition, voice-language identification, speech-to-text analysis and video analytics, according to the agency’s website.

DAN BONGINO TO RESIGN FROM FBI DEPUTY DIRECTOR ROLE IN JANUARY

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Patel credited outgoing Deputy Director Dan Bongino for his leadership with the AI initiative. (Michael M. Santiago/Getty Images)

Earlier this week, Bongino announced he would leave the bureau in January after speculation rose concerning his departure.

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“I will be leaving my position with the FBI in January,” Bongino wrote in an X post Wednesday. “I want to thank President [Donald] Trump, AG [Pam] Bondi, and Director Patel for the opportunity to serve with purpose. Most importantly, I want to thank you, my fellow Americans, for the privilege to serve you. God bless America, and all those who defend Her.”

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Lawmakers weigh impeachment articles for Bondi over Epstein file omissions

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Lawmakers weigh impeachment articles for Bondi over Epstein file omissions

Lawmakers unhappy with Justice Department decisions to heavily redact or withhold documents from a legally mandated release of files related to Jeffrey Epstein threatened Saturday to launch impeachment proceedings against those responsible, including Pam Bondi, the U.S. attorney general.

Democrats and Republicans alike criticized the omissions, while Democrats also accused the Justice Department of intentionally scrubbing the release of at least one image of President Trump, with Senate Minority Leader Chuck Schumer (D-N.Y.) suggesting it could portend “one of the biggest coverups in American history.”

Trump administration officials have said the release fully complied with the law, and that its redactions were crafted only to protect victims of Epstein, a disgraced financier and convicted sex offender accused of abusing hundreds of women and girls before his death in 2019.

Rep. Ro Khanna (D-Fremont), an author of the Epstein Files Transparency Act, which required the release of the investigative trove, blasted Bondi in a social media video, accusing her of denying the existence of many of the records for months, only to push out “an incomplete release with too many redactions” in response to — and in violation of — the new law.

Khanna said he and the bill’s co-sponsor, Rep. Thomas Massie (R-Ky.), were “exploring all options” for responding and forcing more disclosures, including by pursuing “the impeachment of people at Justice,” asking courts to hold officials blocking the release in contempt, and “referring for prosecution those who are obstructing justice.”

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“We will work with the survivors to demand the full release of these files,” Khanna said.

He later added in a CNN interview that he and Massie were drafting articles of impeachment against Bondi, though they had not decided whether to bring them forward.

Massie, in his own social media post, said Khanna was correct in rejecting the Friday release as insufficient, saying that it “grossly fails to comply with both the spirit and the letter of the law.”

The lawmakers’ view that the Justice Department’s document dump failed to comply with the law echoed similar complaints across the political spectrum Saturday, as the full scope of redactions and other withholdings came into focus.

The frustration had already sharply escalated late Friday, after Fox News Digital reported that the names and identifiers of not just victims but of “politically exposed individuals and government officials” had been redacted from the records — which would violate the law, and which Justice Department officials denied.

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Among the critics was Rep. Marjorie Taylor Greene (R-Ga.), who cited the Fox reporting in an exasperated post late Friday to X.

“The whole point was NOT to protect the ‘politically exposed individuals and government officials.’ That’s exactly what MAGA has always wanted, that’s what drain the swamp actually means. It means expose them all, the rich powerful elites who are corrupt and commit crimes, NOT redact their names and protect them,” Greene wrote.

Senior Justice Department officials later called in to Fox News to dispute the report. But the removal of a file published in the Friday evening release, capturing a desk in Epstein’s home with a drawer filled of photos of Trump, reinforced bipartisan concerns that references to the president had been illegally withheld.

In a release of documents from the Epstein family estate by the House Oversight Committee this fall, Trump’s name was featured over 1,000 times — more than any other public figure.

“If they’re taking this down, just imagine how much more they’re trying to hide,” Schumer wrote on X. “This could be one of the biggest coverups in American history.”

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Several victims also said the release was insufficient. “It’s really kind of another slap in the face,” Alicia Arden, who went to the police to report that Epstein had abused her in 1997, told CNN. “I wanted all the files to come out, like they said that they were going to.”

Trump, who signed the act into law after having worked to block it from getting a vote, was conspicuously quiet on the matter. In a long speech in North Carolina on Friday night, he did not mention it.

However, White House officials and Justice Department leaders rejected the notion that the release was incomplete or out of compliance with the law, or that the names of politicians had been redacted.

“The only redactions being applied to the documents are those required by law — full stop,” said Deputy Atty. Gen. Todd Blanche. “Consistent with the statute and applicable laws, we are not redacting the names of individuals or politicians unless they are a victim.”

Other Republicans defended the administration. Rep. James Comer (R-Ky.), chair of the House Oversight Committee, said the administration “is delivering unprecedented transparency in the Epstein case and will continue releasing documents.”

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Epstein died in a Manhattan jail awaiting trial on sex trafficking charges. He’d been convicted in 2008 of procuring a child for prostitution in Florida, but served only 13 months in custody in what many condemned as a sweetheart plea deal for a well-connected and rich defendant.

Epstein’s acts of abuse have attracted massive attention, including among many within Trump’s political base, in part because of unanswered questions surrounding which of his many powerful friends may have also been implicated in crimes against children. Some of those questions have swirled around Trump, who was friends with Epstein for years before the two had what the president has described as a falling out.

Evidence has emerged in recent months that suggests Trump may have had knowledge of Epstein’s crimes during their friendship.

Epstein wrote in a 2019 email, released by the House Oversight Committee, that Trump “knew about the girls.” In a 2011 email to Ghislaine Maxwell, who was convicted of conspiring with Epstein to help him sexually abuse girls, Epstein wrote that “the dog that hasn’t barked is trump. [Victim] spent hours at my house with him … he has never once been mentioned.”

Trump has denied any wrongdoing.

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The records released Friday contained few if any major new revelations, but did include a complaint against Epstein filed with the FBI back in 1996 — which the FBI did little with, substantiating long-standing fears among Epstein’s victims that his crimes could have been stopped years earlier.

Sen. Adam Schiff (D-Calif.), one of the president’s most consistent critics, wrote on X that Bondi should appear before the Senate Judiciary Committee to explain under oath the extensive redactions and omissions, which he called a “willful violation of the law.”

“The Trump Justice Department has had months to keep their promise to release all of the Epstein Files,” Schiff wrote. “Epstein’s survivors and the American people need answers now.”

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Sen Murphy warns ‘people are going to die’ as Congress punts on expiring Obamacare subsidies

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Sen Murphy warns ‘people are going to die’ as Congress punts on expiring Obamacare subsidies

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A bipartisan Obamacare fix remains out of reach in the Senate, for now, and lawmakers can’t agree on who is at fault. 

While many agree that the forthcoming healthcare cliff will cause financial pain, the partisan divide quickly devolved into pointing the finger across the aisle at who owns the looming healthcare premium spikes that Americans who use the healthcare exchange will face. 

Part of the finger-pointing has yielded another surprising agreement: Lawmakers don’t see the fast-approaching expiration of the Biden-era enhanced Obamacare subsidies as Congress failing to act in time.

“Obviously, it’s not a failure of Congress to act,” Sen. Chris Murphy, D-Conn., told Fox News Digital. “It’s a failure of Republicans to act. Democrats are united and wanting to expand subsidies. Republicans want premium increases to go up.”

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Partisan rancor over Obamacare has seeped into how lawmakers view the effect that expiring subsidies will have on their constituents. Sen. Chris Murphy, D-Conn., argued that it was a “life or death” situation, while Republicans contended that Democrats set up the very cliff they maligned.  (Tom Williams/CQ-Roll Call, Inc. via Getty Images)

DEMOCRATS’ LAST-MINUTE MOVE TO BLOCK GOP FUNDING PLAN SENDS LAWMAKERS HOME EARLY

Senate Republicans and Democrats both tried, and failed, to advance their own partisan plans to replace or extend the subsidies earlier this month. And since then, no action has been taken to deal with the fast-approaching issue, guaranteeing that the subsidies will lapse at the end of the year.

A report published last month by Kaiser Family Foundation, a nonprofit healthcare think tank, found that Americans who use the credits will see an average increase of 114% in their premium costs.

The increase can vary depending on how high above the poverty level a person is. The original premium subsidies set a cap at 400% above the poverty level, while the enhanced subsidies, which were passed during the COVID-19 pandemic, torched the cap.

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For example, a person 60 years or older making 401% of the poverty level, or about $62,000 per year, would on average see their premium prices double. That number can skyrocket depending on the state. Wyoming clocks in at the highest spike at 421%.

SENATE MULLS NEXT STEPS AFTER DUELING OBAMACARE FIXES GO UP IN FLAMES

Sen. Rick Scott, R-Fla., doesn’t want to blow up Obamacare or get rid of Obamacare subsidies, but he does want to provide Americans with more options for healthcare.  (Andrew Harnik/Getty Images)

In Murphy’s home state of Connecticut, premiums under the same parameters would hike in price by 316%.

“When these do lapse, people are going to die,” Murphy said. “I mean, I was talking to a couple a few months ago who have two parents, both with chronic, potentially life-threatening illnesses, and they will only be able to afford insurance for one of them. So they’re talking about which parent is going to survive to raise their three kids. The stakes are life and death.”

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Both sides hold opposing views on the solution. Senate Republicans argue that the credits effectively subsidize insurance companies, not patients, by funneling money directly to them, and that the program is rife with fraud.

Senate Democrats want to extend the subsidies as they are, and are willing to negotiate fixes down the line. But for the GOP, they want to see some immediate reforms, like income caps, anti-fraud measures and more stringent anti-abortion language tied to the subsidies.

Sen. Rick Scott, R-Fla., who produced his own healthcare plan that would convert subsidies into health savings accounts (HSAs), argued that congressional Democrats “set this up to expire.”

SENATE REPUBLICANS LAND ON OBAMACARE FIX, TEE UP DUELING VOTE WITH DEMS

Senate Majority Leader John Thune, R-S.D., panned Senate Democrats’ Obamacare subsidy proposal as “obviously designed to fail.”  (Tom Williams/CQ-Roll Call, Inc. via Getty Images)

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But he doesn’t share the view that the subsidies’ expected expiration is a life-or-death situation.

“I’m not taxing somebody who makes 20 bucks an hour to pay for healthcare for somebody who makes half a million dollars a year, that’s what they did,” he told Fox News Digital. “All they did was mask the increase in healthcare costs. That’s all they did with it.”

Sen. Jim Banks, R-Ind., similarly scoffed at the notion, and told Fox News Digital, “The Democrat plan to extend COVID-era Obamacare subsidies might help less than half a percent of the American population.”

“The Republican plan brings down healthcare costs for 100% of Americans,” he said. “More competition, expands health savings accounts. That needs to be the focus.”

Democrats are also not hiding their disdain for the partisan divide between their approaches to healthcare.

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Sen. Brian Schatz, D-Hawaii, told Fox News Digital that the idea that this “is a congressional failure and not a Republican policy is preposterous.”

“They’ve hated the Affordable Care Act since its inception and tried to repeal it at every possible opportunity,” he said, referring to Obamacare. “The president hates ACA, speaker hates ACA, majority leader hates ACA, rank-and-file hate ACA. And so this is not some failure of bipartisanship.”

While the partisan rancor runs deep on the matter of Obamacare, there are Republicans and Democrats working together to build a new plan. Still, it wouldn’t deal with the rapidly approaching Dec. 31 deadline to extend the subsidies.

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Senate Majority Leader John Thune, R-S.D., predicted that the Senate would have a long road to travel before a bipartisan plan came together in the new year, but he didn’t rule it out.

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“It’s the Christmas season. It would take a Christmas miracle to execute on actually getting something done there,” he said. “But, you know, I think there’s a potential path, but it’ll be heavy lift.”

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