Gov. Gavin Newsom is proposing a new $100 million fund to aid rebuilding efforts after disasters, following the deadly Los Angeles wildfires last January. The proposal is part of his revised budget unveiled on Thursday, May 14.
Bridging the Insurance Gap
In Los Angeles — where county and city residents faced the high-profile, deadly Palisades and Eaton fires in 2025 — the issue is about the gap between what insurance is paying and the costs of construction, Newsom said. Building on the success of the CalAssist Mortgage Fund, a mortgage relief program open to fire victims, comes a new proposal to address that gap.
The proposal will help Californians “secure construction loans,” “access lower-interest financing,” “reduce monthly borrowing costs,” and “rebuild faster and more affordably,” Tara Gallegos, a spokesperson for Newsom’s office, said in an email to the USA TODAY Network.
“Many families still face a major gap between insurance payouts and the true cost of rebuilding — while struggling to access affordable financing,” she said.
The $100 million investment is for a new Disaster Rebuilding Fund, which would “partner with lenders, nonprofits, and philanthropy to lower rebuilding costs and expand access to financing,” according to Gallegos.
What the Money Would Do
Many Eaton Fire survivors are under “enormous pressure and strain” as they navigate financial constraints like insurance payouts falling short and rising rebuilding costs, Los Angeles County Supervisor Kathryn Barger said in a statement.
“My understanding is that while this funding would not provide direct cash assistance to homeowners, it could play an important role by facilitating access to private financing through an interest rate buy-down program and a loan loss guarantee program that would encourage lenders to finance rebuilding projects,” Barger said. “These tools can make a meaningful difference for families who otherwise may not have access to the capital needed to rebuild.”
The proposal comes more than a year after the deadly Palisades and Eaton fires destroyed thousands of homes combined across swaths of Southern California. Victims have long been raising attention to the issues they say they’ve faced in their efforts to rebuild, with the Every Fire Survivors Network — formerly the Eaton Fire Survivors Network — speaking out about insurance payout delays and the need for emergency housing relief.
Insurance Disputes Add to the Challenge
Casty Fortich, whose home was destroyed in the Eaton Fire, told the USA TODAY Network in January that he was still waiting on insurance money key to his rebuilding efforts in Altadena.
Earlier in May, Insurance Commissioner Ricardo Lara said his department’s investigation “found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives.” The insurer rejected “any suggestion” they “engaged in a general practice of mishandling or intentionally underpaying wildfire claims.”
Other Budget Details
In January, Newsom’s budget proposal also included $22.9 million in one-time funding to support schools recovering from the wildfires. Other aspects of the revised budget include a $300 million investment toward health care and a $2.4 billion investment in special education.
The budget must still be passed by the legislature. The next fiscal year starts on July 1.
Paris Barraza is a reporter covering Los Angeles and Southern California for the USA TODAY Network.
