Gov. Gavin Newsom is proposing a new $100 million fund to aid reconstruction efforts after disasters like the deadly wildfires that swept through Los Angeles last January. The proposal is part of his revised budget released 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 difference between what insurance pays and the cost of construction, Newsom said. Building on the success of the CalAssist Mortgage Fund, a mortgage relief program open to fire victims, there’s a new proposal to address that gap.
Tara Gallegos, a spokeswoman for Newsom’s office, said in an email to USA TODAY Network that the proposal would help Californians get “secured construction loans,” “access low-interest financing,” “reduce monthly borrowing costs” and “rebuild faster and more affordably.”
“Many families are still facing a large gap between insurance payouts and the actual cost of rebuilding – while struggling to access affordable financing,” he said.
According to Gallegos, the $100 million investment is for a new disaster reconstruction fund that will “partner with lenders, nonprofits, and philanthropy to reduce reconstruction costs and expand access to financing.”
what will money do
Los Angeles County Supervisor Katherine Barger said in a statement that many Eaton Fire survivors are under “extreme pressure and stress” as they face financial hurdles such as reduced insurance payments and rising rebuilding costs.
“My understanding is that although this funding will not provide direct cash assistance to homeowners, it could play an important role by facilitating access to private financing through the interest rate buy-down program and the loan loss guarantee program that would incentivize lenders to finance reconstruction projects,” Barger said. “These tools can make a meaningful difference for families who may not otherwise have access to the capital needed to rebuild.”
The proposal comes more than a year after the deadly Palisades and Eaton fires combined destroyed thousands of homes across the Southern California region. Victims have long been drawing attention to the issues they have faced in their efforts to rebuild, with the Har Fire Survivors Network – formerly the Eaton Fire Survivors Network – speaking out about delays in insurance payments and the need for emergency housing relief.
Add to Insurance Dispute Challenge
Castie Fortich, whose home was destroyed in the Eaton Fire, told the USA TODAY Network in January that he is still waiting for insurance money to fund 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 had “engaged in the common practice of mishandling or deliberately underpaying wildfire claims.”
Other Budget Details
In January, Newsom’s budget proposal also included $22.9 million in one-time funding to help schools recover from wildfires. Other aspects of the revised budget include a $300 million investment in health care and a $2.4 billion investment in special education.
The budget must still be passed by the legislature. The next financial year starts from July 1.
Paris Barraza is a reporter covering Los Angeles and Southern California for the USA TODAY Network.