California at a Crossroads: Creating Long-Term Stability After H.R. 1

President Trump’s H.R. 1 is one of the greatest transfers of wealth in modern history, structured in favor of the wealthiest individuals and corporations and paid for by stripping away health care and food assistance for the most vulnerable workers and families. As the legislation works its way through state budgets and systems, the urgency of protecting the social safety net could not be clearer.

By 2028, Trump's H.R. 1 will have pushed roughly 2 million Californians off Medi-Cal and more than half a million off CalFresh, leaving them vulnerable to financial hardship, deteriorating health, and premature death. While our focus is on those who will lose direct access to the safety net, the impact of H.R. 1 will reverberate across communities: hospitals will have to cut staffing, increasing wait times; clinics will close, limiting access even for those who have other forms of coverage; and thousands will go hungry due to cuts to food assistance.

It is also critical to note that most, if not all, of the individuals who will lose access to these programs are legitimately eligible for them. It is the red-tape provisions in H.R. 1 that are specifically designed to push them off the rolls. Republicans are counting on these coverage losses to help offset massive tax breaks handed to corporations and the ultra-wealthy, intensifying the pain for those who lose access. The remainder of the bill will be paid for by increasing the national debt, placing a greater burden on future generations.

For Californians, H.R. 1's impacts on the safety net will come through direct federal benefit reductions to Medi-Cal and CalFresh, cost shifts that force the state and counties to shoulder a greater share of administrative and program expenses, and new restrictions on the financing mechanisms the state can use to fund these programs. Taken together, it will cost California over $20 billion annually to make up for the federal share in safety net spending. California was already in a precarious financial position before H.R. 1 became law, having faced budget deficits in each of the past two years. The situation grows considerably more dire once the harshest provisions of H.R. 1 take full effect in 2027.

This brief provides an update on the law's fiscal impact on the state and counties, responds to the governor’s May Revise, examines who benefits from H.R. 1's tax cuts and who gets hurt, and looks at current legislative and initiative proposals to raise new revenue to meet the challenge.

In this moment of crisis, state and local leaders must act with urgency by seriously considering the revenue measures needed to protect Californians from the harm inflicted by H.R. 1. Making up the entirety of these federal cuts may not be feasible, but that cannot be an excuse for inaction, and requires the courage to raise revenues and find the resources to shield the most vulnerable people from severe harm.