It’s Gavin Newsom’s final year in office as California governor — and his last chance to use his role as governor to audition for the national stage.
The governor, who will address the Legislature and present his budget proposal this week, has spent the past seven years pushing an ambitious agenda. Now in his final year, numerous interest groups will clamor for him to pass their preferred policies, nix the regulations they fear and protect the programs they favor. How he responds will follow him into his expected presidential primary run.
Will he, with his recent focus on affordability, make a dent in Californians’ housing and health care costs? Will he make progress on reducing homelessness? Will he continue pushing green energy as voters demand cheaper gas? Will he weather another dismal budget deficit without punishing cuts that would alienate the progressives whose programs he has championed?
“This really is a pivotal year for him,” Democratic political consultant Kelly Calkin said. “What do voters in the rest of the country want to see? They’re feeling the pinch of affordability. … He’s probably going to look through that lens on what helps shape his agenda for the next year.”
It’s also his final opportunity to make headway on some of the lofty goals Newsom made when he ran for governor in 2018 that he hasn’t always met.
He vowed to tackle homelessness, which has only gotten worse over his seven-year tenure, despite the more than $24 billion his administration has poured into it. He started off his term with an initial, headline-grabbing proposal to grant new parents six months of paid leave, but quickly pared it back to a two-week increase, for a total of eight weeks, and gradual boosts in how much the program pays.
In 2021 he said the state would add 200,000 new subsidized child care slots by this year, but the plan been delayed for two years and remains tens of thousand of slots short; he has since promised to resume the expansion this year.
He campaigned on establishing a single-payer public health care system, even calling out “politicians saying they support single-payer but that it’s too soon, too expensive or someone else’s problem.” Then he pivoted to “universal coverage,” with the state slowly expanding coverage for low-income Californians, including undocumented immigrants, but abruptly halted that amid a budget deficit last year.
He spoke, like so many before him, of evening out the state’s boom-and-bust tax system that over-relies on stock market returns, but has largely quashed other proposals to raise revenue as the state stares down a deficit.
‘It never seems like enough’
Newsom’s penchant for big promises and first-in-the-nation ideas has been both a blessing and a curse for the ambitious politician. Advocates of those policies say the lofty goals have made a difference, even if the state ultimately falls short of achieving all of them.
Newsom has left his mark on state government: He started new programs like the expansion of public school to all 4-year-olds, created an office to control rising health care costs, flexed the state’s regulatory powers to achieve its greenhouse gas-reduction goals — only to run into resistance with the Trump administration — and pushed state leaders into overseeing thorny issues like homelessness and the mental health care system that had long been left to local and county governments.
“I don’t think there was a lot of stuff lacking,” said Anthony Rendon, the former Assembly speaker who led the chamber during Newsom’s first five years in office, of policy issues the governor has yet to address. After years of working with Newsom’s predecessor Jerry Brown, who was focused mostly on fiscal restraint and building up the state’s reserves, Rendon and former Senate President Pro Tem Toni Atkins recalled Newsom starting off his first term in 2019 pleasing the mostly Democratic Legislature with a long list of progressive ideas and a willingness to spend on them.
“In retrospect, it never seems like enough,” Rendon said.
Case in point: housing. It’s perhaps the most visible measure by which Newsom will be judged after he leaves office and it comprises a bulk of the recent national Democratic platform focused on lowering the cost of living. About 40% of California households are “burdened” by their rent or mortgage, Census data shows, a policymaker benchmark meaning housing eats up more than a third of their income.
Newsom ran on lowering those costs by boosting production and said it was “achievable” for the state to build an ambitious 3.5 million new homes by 2025. In 2024, the state added just under 120,000 new units, about a fifth of the annual rate needed to meet that goal. In media appearances the governor now downplays his original figure as a “stretch goal.”
Yet those who favor building more say he’s still accomplished more than any other governor on housing. They blame local resistance to housing density, high interest rates and the persistently high cost of building as reasons for the slow progress.
“You can’t solve a systemic problem overnight or even in seven years, but what you can do is change the trajectory of the issue,” said Ray Pearl, executive director of the California Housing Consortium, a nonprofit that advocates for building affordable housing.
A pivot to modular housing this year?
Pearl pointed to actions Newsom has taken, like an early budget move to quintuple the state’s tax credit for low-income housing construction, backing laws that relax rules on where housing can be built and picking legal fights with cities that refuse to plan adequate housing units for their populations.
“Leadership sets the tone,” he said. “It’s changed the focus and the conversation to where the state of California has finally gotten serious in planning for and producing affordable housing.”
Pearl said in Newsom’s final year in office he hopes the governor will support a proposed $10 billion bond lawmakers want to put on this year’s ballot to boost a state affordable housing fund.
Newsom acknowledges California has yet to see his promised building boom, and last month expressed interest in alternative forms of construction, such as modular housing, as another solution. On The Ezra Klein Show, he hinted at an upcoming legislative debate over how the state can promote modular housing, a cheaper way to build in which houses are assembled in factories then shipped to sites to be installed. An Assembly committee chaired by one of Newsom’s allies on housing, Democratic Oakland Assemblymember Buffy Wicks, is set to discuss the method this year. Its use in the Bay Area has already exposed familiar debates about the use of union labor in housing.
“This holds a lot of promise. It holds a lot of political peril, in the context of the politics within labor. And that has to be accommodated and dealt with,” Newsom said. “By the way, if there’s a big preview for California in my last year, it’s in this space legislatively to take it to the next level.”
It’s the closest Newsom has come in recent weeks to stating a new policy goal or proposal. Izzy Gardon, Newsom’s spokesperson, would not provide any details on his housing or any other agenda, telling CalMatters only to “stay tuned.”
Gardon refused interview requests to discuss the governor’s policy goals for his final year. Newsom is expected to deliver his State of the State address on Thursday.
Tough times for health care and social services
Already, advocates for the comprehensive safety-net services that Newsom has championed — another hallmark of his tenure — are urging him to maintain those programs as he stares down another tough budget deficit estimated at $18 billion. The agency overseeing those services accounts for nearly 40% of the state’s general fund spending and many of its programs are projected to lose significant federal funds through President Donald Trump’s tax and spending bill.
During Newsom’s two terms, he added subsidized child care slots, boosted cash assistance for the poor, installed a state surgeon general who has focused on childhood trauma and the racial health gap and most significantly, incrementally expanded health care coverage to different groups of undocumented immigrants.
The latter, a controversial and costly policy, has allowed the governor to pivot from his original promise of a universal, state-paid health care system that was the pie-in-the-sky dream of progressives and still say he was achieving “universal access.” After passage of the Affordable Care Act, more than 90% of Californians were insured by the time Newsom took office. His expansions, first for immigrant young adults and then for older ones, pushed it to nearly everyone in 2023.
Policy allies generally don’t fault Newsom for shifting away from a single-payer system, which would have required billions more in state funds and complex agreements with an increasingly un-aligned federal administration. They are particularly satisfied that his administration has laid some of the groundwork for such a proposal by attempting to rein in the growth of health care costs through price limits imposed by the Office of Health Care Affordability. But now, they’re worried he’ll walk away from his expansive coverage goals altogether.
Last year, facing higher than expected costs in the Medi-Cal program and needing to close a $12 billion deficit, Newsom undid coverage for the last group of undocumented residents to become eligible: working-age adults. A freeze on new enrollment of adults took effect Jan. 1. Later this year, undocumented immigrant adults will lose Medi-Cal dental coverage and next year most will face monthly premiums that are expected to force some off coverage, to the disappointment of health advocates who are urging Newsom to reverse the cuts.
Amanda McAllister-Wallner, executive director of the advocacy group Health Access California, said she’s worried the administration will consider further cuts this year, after Newsom has come out heavily against other proposals to raise revenue for the health system, like a nurses’ union proposal for a wealth tax. She doesn’t like that the governor appeared willing to back down on coverage at the same time the state’s provision of social services for immigrants became an increasing political controversy nationally.
“The hope was that the Health for All expansion would be considered the baseline, that that would be something we budget for long term because it’s just something that’s part of who we are as a state,” said McAllister-Wallner. “Health care has been an area where the governor has really made a name for himself in a way that I think he can and should be very proud of, and to see … a backing-off of those commitments would be the biggest disappointment for me.”