Gavin Newsom’s broken promises on health care — coming to a tax hike near you

A coalition of special interests will ask LA County voters to raise the sales tax half a percent next week to make up for Gavin Newsom’s poor planning on health care spending.

LA voters will decide the fate of the Essential Services Restoration Act, a half-cent county sales tax, on June 2. The tax will supposedly raise $1 billion annually through 2031.

The official pitch is that it will make up for federal Medicaid cuts from HR1, President Donald Trump’s “One Big Beautiful Bill.”

Actually, federal spending on Medicaid (known as Medi-Cal in the Golden State) has continued to rise after HR1 — just at a lower rate.

Governor Newsom’s January budget projects Medi-Cal spending of $222.4 billion for 2026-27 — up from $196.7 billion in 2025-26, and more than double its pre-COVID level. Medi-Cal now consumes roughly 20% of California’s General Fund, and more than 40% of total state spending.

On Newsom’s watch, full-scope Medi-Cal was extended to undocumented young adults in 2020; illegal aliens aged 50 and older in 2022; and the remaining 26-to-49 cohort on January 1, 2024.

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By 2025 the math broke. The Newsom administration cited Medi-Cal spending on undocumented immigrants running $2.7 billion above projections as the reason for a course correction. New enrollment for undocumented adults was frozen on January 1, 2026, and premiums for existing beneficiaries are supposed to begin in 2027.

To reduce the rate of spending growth, in Medi-Cal and in other states’ Medicaid programs, the Republican controlled Congress made some commonsense reforms.

The One Big Beautiful Bill Act requires twice yearly eligibility checks for all beneficiaries, for example. It also adds a community engagement requirement under which some beneficiaries must work, study, or volunteer at least twenty hours per week to remain eligible.

Further, HR1 reduces federal support for illegal alien Medi-Cal benefits, while still partially reimbursing their emergency room visits.

With federal and state officials moving to curb Medi-Cal’s ballooning costs, L.A.’s healthcare power players are scrambling. Faced with the prospect of fewer dollars, they’re pushing a familiar playbook: cry “crisis,” spook voters, and push through a new half-cent sales tax to keep the cash flowing.

The coalition pushing the sales tax, “Restore Healthcare for Angelenos,” is led by St. John’s Community Health.

In 2011, St. John’s reported $25.7 million in total revenue. In 2024, it reported $187.5 million — a 7.3-fold increase. Net assets grew from $10.7 million to $93.4 million. In 2024 alone, this safety-net clinic posted net income of $23.5 million — a 12.5% margin — and grew net assets by 34% in a single year.

St. John’s used $4 million of its recent profits to fund the new advocacy group. It could be a good investment — for them: if Angelinos decide to tax themselves another half percent, more illegal aliens will be able to visit the clinic at taxpayer expense, while managers can hold on to their generous compensation. St. John’s now employs 16 officers earning over $250,000 each.

Another major donor to the “Yes on ER” campaign is SEIU Local 721, the union representing most of St. John’s staff and roughly 55,000 Los Angeles County employees. Under the measure’s spending formula, up to 47% of the revenue flows to the county Department of Health Services, another 22% to safeguard public hospitals and clinics, and 2.5% to Correctional Health Services — more than 70% of the proceeds funneled to departments staffed by SEIU 721 members.

The union ratified a new county contract in October 2025 featuring cash bonuses, cost-of-living adjustments, and increased county contributions to worker health care, all of which must be paid from county revenue. A billion dollars a year in new general-fund money makes those commitments easier to honor.

LA County is not the only one facing an organized push for more sales taxes to “save” Medi-Cal. Santa Clara County passed an identical sales tax last November. Contra Costa County has Measure B on the June ballot, using the same federal-cuts framing.

But in LA County, the new tax would be added to an especially high sales tax burden: the countywide rate would rise from 9.75% to 10.25%, while in Palmdale and Lancaster, the new rates would be an eye-watering 11.75%.

Sacramento built Medi-Cal into an unsustainable $222 billion enterprise, enriching healthcare providers and unions along the way. Now it is pulling back.

But rather than accept a reduced rate of Medi-Cal spending increases, these special interests want Los Angeles taxpayers to cover the difference.

Marc Joffe is a Visiting Fellow at California Policy Center.