CALIFORNIA'S BUDGET: MORE SPENDING, HIGHER COSTS FOR TAXPAYERS

The following information was released by California State Senator Kelly Seyarto:

Late last week, the majority party in the Legislature approved a state budget totaling nearly $356 billion. The largest budget in California history.

With families facing rising costs for housing, groceries, gas, utilities, insurance, and health care, Californians were looking for a budget focused on affordability, public safety, and responsible spending.

While this budget funds many important state programs, it also raises serious questions about whether Sacramento is focusing on the issues that matter most to everyday Californians.

I voted NO because I believe we can do better.

Higher Taxes and Higher Costs

This budget includes $14 billion in new taxes.

- A new tax on software and digital services used every day by businesses for payroll, accounting, scheduling, cybersecurity, inventory management, and other day-to-day operations. These costs will be passed on to consumers through higher prices.

- Higher health care costs. The budget imposes a new $575 million tax on health plans by levying an $8.85 monthly tax per member on both Medi-Cal managed care plans and commercial health insurance plans. This is estimated to result in a $1.5 billion increase in commercial health insurance costs for individuals and businesses, adding more than $400 per year for a family of four.

- Higher gas prices. The budget adds $1.9 million and new staff positions at the California Energy Commission to enforce "minimum gasoline supply requirements" on refiners. These regulations will increase costs for fuel producers, costs that will be passed on to consumers, even though California drivers already pay $1.68 more per gallon than the national average.

- Continued limits on business tax credits, including research and development credits that help California attract jobs and investment.

- No plan to pay down California's unemployment insurance debt. The budget spends $668 million on interest payments alone while leaving the underlying debt largely untouched. Meanwhile, California employers continue bearing the burden of repayment through higher costs, making it more difficult to create jobs and grow businesses.

- Cuts funding for the Middle-Class Scholarship Program by approximately $435 million, or 45% from the 2025-26 level of scholarships provided, making college less affordable for many California students and families.

These tax increases come on top of roughly $30 billion in additional state revenue, much of it tied to stock market gains and capital gains tax collections. Because those revenues can fluctuate significantly from year to year, relying on a potentially temporary revenue surge to support ongoing spending commitments raises serious questions about the state's long-term fiscal stability.

Public Safety Should Be a Priority

Not every item in this budget is objectionable. There is funding for additional judgeships and court infrastructure that can help improve efficiency in California's court system. Riverside and San Bernardino Counties continue to face significant workload challenges, and additional judicial resources could help reduce delays and improve access to justice.

However, California voters approved Proposition 36 to strengthen accountability for repeat theft and drug-related crimes, and this budget falls short of providing the level of funding needed for full implementation. At the same time, funding for organized retail theft enforcement is being reduced, and the state is moving forward with plans to close another prison.

California Has A Spending Problem

California's General Fund budget now totals approximately $253 billion, more than double what the state spent just ten years ago.

The budget includes:

- $1 billion for High-Speed Rail, despite years of delays and cost overruns.

- Another $225 million for Caltrans to become the "greenest fleet in the nation," despite previously spending $1.4 billion for this same purpose. These transportation dollars could otherwise be used for road and infrastructure improvements.

- An additional $70 million for immigration-related legal services, on top of the existing annual $75 million funding.

- $27 million for lawsuits against the federal government, continuing a strategy that has already cost taxpayers millions.

We may disagree on individual spending decisions, but taxpayers have every right to ask whether these investments should take precedence over lowering costs, improving infrastructure, strengthening public safety, and addressing California's affordability crisis.

Even as Sacramento claims the state faces budget challenges, this spending plan continues funding projects and programs that many Californians do not view as top priorities.

The problem is not a lack of revenue. The problem is that Sacramento continues expanding government while asking taxpayers to pay more.

Californians Deserve Better Results

Families want lower costs, safer communities, better roads, affordable energy, and a government that lives within its means.

A budget should reflect priorities. This budget moves California in the wrong direction.

Californians deserve a government that puts taxpayers first.

Thank you for this opportunity to be of service.