Newsom

SACRAMENTO — Gov. Gavin Newsom reached an agreement Friday with legislative leaders on a $351.7-billion state budget in his final year as governor, a spending plan that uses a tax windfall to avoid major cuts and lessen California’s chronic deficit in the years ahead.

The deal provides nearly $2 billion in state revenue next year through tax hikes on corporations, new levies on software sales and a revamped tax on managed healthcare organizations. Lawmakers and the governor continue major investments in education, healthcare and agreed to increase spending on subsidized childcare and affordable housing.

“We want to leave the next governor not only a balanced budget, but a budget that is substantially structurally sound, and we’re going to accomplish that,” Newsom said in an interview Friday. “We were very cautious in terms of new spending,”

The agreement ends weeks of lobbying by outside interests and negotiations among lawmakers and the governor at the state Capitol about how to handle a surge of income tax collected on stock market gains related to artificial intelligence.

Early forecasts last June projected a $12.6-billion deficit in 2026-27, according to the California Department of Finance. Updated predictions now suggest the state will end the year with a surplus of $4.5 billion.

Democrats, following Newsom’s lead, are tucking away $6.4 billion for future years, which allows the governor to knock down a deficit previously projected through 2027-28 and assuage criticism about his spending habits.

But economists say the fix and revenue increase is likely only temporary.

Spending in California has generally exceeded revenue growth during Newsom’s tenure in the governor’s office, creating a chronic shortfall. Despite the extra funding, the budget continues a trend of relying on reserves, shifting funds, borrowing and suspending debt payments to balance state spending.

The Legislative Analyst’s Office, the nonpartisan fiscal advisor for lawmakers, has warned of a roughly $10-billion gap between the amount of money the state brings in and spends, which could grow dramatically worse if the stock market turns downward. The LAO has said the existence of any operating deficit during a revenue boom is a red flag and that the state is “ill-prepared” for even a modest decline.

Christopher Thornberg, an economist and founder of the consulting firm Beacon Economics, said it’s business as usual in Sacramento.

“They love increasing spending. But it seems politically impossible to go the other way,” Thornberg said. “We’ve seen this play out over and over again.”

Lawmakers and the governor offered a different take and asserted that their decision to put the $6.4 billion into a short-term reserve, called the Projected Surplus Temporary Holding Account, and ask voters to allow them to store more money in the rainy day fund are examples of prudent budgeting.

“You see us save more and you see try to address the immediate needs of our community, but also the structural budget that potentially awaits us,” said Senate President Pro Tem Monique Limón (D-Goleta) in an interview. “We are forecasting a moment where we will need to address these issues and we want to start now to think about the future as well.”

Under a progressive tax structure, the state budget is dependent on income taxes paid by the ultra-rich on earnings largely from capital gains. The set up leaves California vulnerable to the unpredictable nature of the stock market, dramatic swings in revenue and, in recent years, reliant on poor projections.

Negotiations at the state Capitol included an agreement on a constitutional amendment that seeks to offset the revenue highs and lows.

If approved by voters on the statewide ballot in November, the amendment would raise a cap on mandatory deposits into the rainy day fund from 10% to 20% of general fund revenue. The measure would also allow lawmakers to exempt money they put into the rainy day fund and the temporary holding account from state spending limits.

Under an existing state appropriations restraint, also known as the Gann Limit, lawmakers cannot spend more than an amount determined by a formula that takes annual tax proceeds, changes to the population and cost of living into consideration. Tax revenue above the limit must be divided between schools and refunds to taxpayers.

With few exceptions, the limit applies to most appropriations of tax revenue, including when lawmakers put money away in the rainy day fund and other reserves.

Newsom said the change will leave the state in a much better position to weather the volatility. Though calls for tax reform remain in California, the governor said being able to place more money into the reserves could ultimately solve the state’s budget challenges.

“The one thing missing is the one thing that I think we finally landed, which is the change in the reserves,” Newsom said. “It changes the political dynamic, where now you’re not exchanging general fund priorities.”

Republicans criticized the proposed constitutional amendment, which passed in a budget trailer bill this week, for failing to require that excess revenue pays down the state’s $22 billion in unemployment insurance debt.

State Sen. Tony Strickland (R-Huntington Beach) called it a missed opportunity.

“It does not require debt payment to go to the UI debt,” Strickland said. “It facilitates more spending, exempting reserve deposits from the state spending limit.”

As part of the negotiations, lawmakers agreed to delay some healthcare cuts that would have required monthly premiums for immigrants and eliminated dental care. The deal adopts a Medi-Cal asset test of $21,000 on July 1, 2027, instead of a $2,000.

The budget agreement includes a provision requiring California’s next governor to develop options to reduce taxpayer subsidies for corporations whose employees receive state-sponsored healthcare through Medi-Cal instead of the company’s health plan. The plan is aimed at raising revenue to offset federal cuts that are expected to leave millions of Californians without access to healthcare.

The California Department of Finance said state reserves are expected to total $28.8 billion under the 2026-27 budget.

Gov. Gavin Newsom signed a law Thursday to crack down on inflated profits stemming from car crash lawsuits, blessing a hard-fought compromise between Uber and the state’s trial attorneys that averts a November showdown between two of California’s most powerful and moneyed lobbying forces.

The deal, the fruit of months of negotiations, takes aim at the lucrative way doctors can charge for procedures on patients referred to them by personal injury lawyers.

If a law firm has a client who was hurt in a car accident, the lawyer will often send them to a doctor who will perform surgery on a “lien” basis, meaning the doctor will be paid from money that comes from a lawsuit settlement rather than through insurance.

Uber contends this arrangement has created an incentive for doctors and attorneys to collude to dramatically inflate medical bills. The more expensive the bill, they say, the bigger the resulting payout.

The law, SB 623, caps how much these doctors can charge when their patient is involved in a lawsuit against a ride-share company, which are frequent targets of litigation due to their top-of-the-line insurance policies. The new law will also require Uber to ramp up background checks of its drivers.

“We’re going to have a much safer state both for medical patients and passengers in Ubers,” said Nicholas Rowley, a prominent Texas attorney who helped bankroll the fight and took a leading role in the negotiations.

The law only applies to cases that involve ride-share accidents that take place after Jan. 1, 2027.

“This legislation puts meaningful guardrails in place to better protect accident victims, increase transparency and accountability in the medical lien system and strengthen safety,” said Ramona Prieto, Uber’s head of public policy for the Western U.S., in a statement.

For months, Uber and lawyers from across the state poured tens of millions into dueling ballot measures that threatened to devastate the profits of whichever side lost.

Uber fired the first shot with a ballot measure that sought to cap how much attorneys can earn in lawsuits involving auto accidents. The company argued attorneys were swindling their own clients, inflating medical bills of car crash victims to increase the value of the settlement and then pocketing a hefty chunk of the payouts.

The state’s trial attorneys countered that the fee cap would make small or difficult cases a money-losing endeavor and block scores of accident victims from the courts. They shot back with their own ballot measure that would increase legal liability for ride-share companies if a passenger or driver is sexually assaulted while on a ride, seizing on investigative reporting that highlighted assaults in Ubers.

“They were waiting for us to blink and we didn’t,” said Douglas Saeltzer, the head of the Consumer Attorneys of California, the lawyer trade group that pushed for the measure against Uber. “Their starting place, I don’t believe, was in the interest of protecting victims — it was in the interest of protecting Uber.”

With the passage of Thursday’s law, both sides have agreed to pull their respective measures from the November ballot, halting campaigns that had both parties amassing tens of millions in funding and blanketing the airwaves with ads.

“Now we can stop seeing all the commercials,” said Assemblymember Blanca Pancheo (D-Downey) at a Tuesday hearing.

The law, put forward by Assemblymember Diane Papan (D-San Mateo) and Sen. Thomas Umberg (D-Santa Ana), also caps the amount that can be earned by third-party investors who buy out a doctor’s lien in a personal injury case. These companies will purchase a doctor’s stake in the case at a reduced rate, then pocket a share of the payout if the case settles.

“Private equity and hedge funds buy them at a steep discount, then turn around and collect the full inflated amount,” Saeltzer said at a Tuesday hearing on the bill. “That’s money flowing to Wall Street investors, not patients.”

The law will require annual background checks for ride-share drivers and expand the list of offenses that disqualify someone from the job.

In addition to the ballot battle, has Uber sued two of LA’s most well-known personal injury firms — the Law Offices of Jacob Emrani and Downtown L.A. Law Group — accusing them of inflating medical bills and forcing clients to undergo needless and expensive surgeries to inflate the value of the claim. The firms asked the judge to dismiss the case Wednesday, arguing Uber had failed to prove fraud. Both firms have vehemently denied wrongdoing.

The lawsuit, filed last year, has put the plaintiff lawyers in the unusual position of playing defense. Listening in the audience at Wednesday’s hearings were the partners of Downtown L.A. Law Group and Jacob Emrani.

“Let’s be clear about what this Uber case really is,” said John Hueston, outside counsel for Emrani. “It’s brought by a $150 billion dollar company … to intimidate the plaintiff’s bar, exhaust its resources and chill the suits that hold Uber accountable.”

Michael Huston, one of the lawyers who represents Uber, countered that the case is “not an attack on the plaintiff’s bar.”

“We have brought suit against the two in this state … that are engaged in naked fraud,” he said.

Proponents of a tax on California billionaires vowed on Thursday to move forward with their November ballot measure despite mounting opposition from many of the state’s most powerful political forces.

A labor union spent $31 million gathering signatures to qualify the measure for the ballot in an effort to offset federal healthcare funding cuts that will affect millions of California’s most vulnerable residents. A representative for the campaign supporting the ballot measure pushed back at opposition to the effort as self-entitled wealthy Californians and entrenched Sacramento interests.

“While a few morally bankrupt billionaires and their buddies in Sacramento want to see California’s hospitals close, and tax breaks for billionaires protected — I assure you, the vast majority of voters do not,” said Debru Carthan, a spokesperson for the Billionaire Tax Now Coalition, which is funded by the Service Employees International Union-United Healthcare Workers West, the sponsor of the proposal.

The California secretary of state is expected to officially certify the measure for the Nov. 3 ballot on Thursday evening.

Carthan said their effort has support in public opinion polls, and from lawmakers, unions, community organizations and volunteers across the state, “something the billionaires and their buddies will never have.”

However, a coalition of healthcare, education, public safety, housing, business and labor leaders opposed to the proposal warned that it would make the state’s notoriously unstable budget even more unpredictable.

“The dangerous wealth tax directly threatens vital funding for education and schools, healthcare and clinics, public safety, and infrastructure projects by making California’s revenue even more volatile,” the leaders of the California Medical Assn., the California Primary Care Assn. and the California School Boards Assn. said in a statement. “That’s why so many leaders – both Democrats and Republicans – are joining us and saying NO. We look forward to ensuring voters have the facts, know the stakes, and resoundingly reject this reckless experiment in November.”

Supporters of the one-time proposed 5% tax on the assets of the state’s wealthiest residents pitched the effort as a stop-gap measure to offset devastating federal healthcare funding cuts passed by the GOP-led Congress and signed by President Trump nearly one year ago. The federal legislation is expected to result in $100 billion in cuts that would affect California’s most vulnerable residents.

The proposed tax, which would be retroactive to billionaires who lived in the state as of Jan. 1, drew predictable opposition from the wealthy, notably Silicon Valley tech leaders.

But it notably divided liberals. While Sen. Bernie Sanders (I-Vt.) and Rep. Ro Khanna (D-Fremont) supported the proposal, Gov. Gavin Newsom was among the Democrats who opposed it because of fears about the potential impact on the state’s volatile budget.

Despite being the fourth largest economy in the world — the home of Hollywood and Silicon Valley — California’s budget is extremely dependent on the state’s most prosperous residents.

Newsom and others who generally support increasing taxes on the wealthiest Americans also argued that the proposed billionaire tax in California was poorly crafted and that any such levies ought to be enacted nationally, because varying state policies would be ineffective.

Opponents also argued that the political priority in the 2026 midterm election should be squarely focused on efforts to make sure Democrats regain control of Congress to serve as a counter balance during the final two years of Trump’s presidency.

“It’s disappointing. This is a critical election where we need to concentrate on flipping the house and undoing the damage that was done” by Trump’s legislation that led to the healthcare funding cuts, said Jodi Hicks, chief executive and president of Planned Parenthood Affiliates of California. The wealth tax “is short term and doesn’t address what is the long-term problem. And I’m not even sure the policy is a viable solution. It’s so critical to be sending the right message — holding Congress accountable and how we need to find long-term solutions to make sure Californians have access to healthcare.”

Rob Lapsley, co-chair of Californians Against Tax Increases and president of the California Business Roundtable, argued that the proposed wealth tax would ultimately affect every Californian.

“Strip away the spin, and this measure forces every California taxpayer, not just billionaires, to file a sworn declaration of their net worth with the Franchise Tax Board under penalty of perjury,” Lapsley said in a statement. “And it hands the Legislature the power to extend the wealth tax to all Californians and every kind of property, including home equity, retirement savings without ever returning to the voters – effectively gutting” voter-approved caps on property tax increases.

Supporters of the tax submitted nearly 1.6 million signatures in April to qualify the proposal for the ballot, roughly double the number required. However, support for the effort has grown increasingly shaky. Newsom’s team created a broad coalition of opponents, including healthcare and education activists, that undercut the foundational argument for the tax.

The union that crafted the proposal responded last week by proposing a legislative alternative that would create a 2% tax on billionaire’s assets. It was flatly refused by the Newsom administration. No deal was reached by the Thursday evening deadline for the union to withdraw the proposal from the November ballot.

Two efforts that were crafted to sink the proposed billionaire tax — dubbed as poison pills — also qualified for the Nov. 3 ballot, according to the California Secretary of State’s office. One would bar new state taxes on personal property, while the other prohibits any new taxes being exempted from existing state spending rules and to be regularly audited. If the billionaire tax proposal is approved by voters but either of the other proposals receives more votes, the tax measure would be voided.

The proposed billionaire tax would apply to more than 200 Californians, some of whom proactively left the state or moved their companies out of California because of the proposal.

The prospect of the wealthy fleeing the state is among the reasons that prominent Democrats such as Newsom opposed it, given California’s budget being so reliant on the state’s most prosperous residents.

Sergey Brin, a co-founder of Google, is among the billionaires who have reportedly moved out of California because of the tax proposal. He donated at least $82 million to an organization that is funding efforts to invalidate the proposed billionaire tax.

Ballot measure proponents had a Thursday evening deadline to withdraw their proposals.

Other policy proposals that will appear on the Nov. 3 ballot include:

• Requiring government-issued voter identification to cast ballots in elections.
• Reforming the California Environmental Quality Act, once a third-rail in Democratic politics that has become increasingly scrutinized in the rebuilding in the aftermath of the Palisades and Eaton wildfire.
• Creating a $11.3-billion affordable housing bond.

Two notable proposals were pulled off the ballot after negotiations between the California Hospital Assn. and labor unions:

• An effort to limit healthcare executives’ compensation.
• A union proposal by the same union backing the billionaire tax that would have required many healthcare clinics to spend 90% of their revenue to serve low-income and underserved residents.

Reporting from Sacramento — Gov.-elect Gavin Newsom on Thursday announced he will place his ownership interest in the collection of wineries, hotels, restaurants and other investments that made him a millionaire into a blind trust, a step he said “goes beyond anything required by law.”

Since his election in November, Newsom has been weighing how to handle his array of assets in the hospitality business, collectively known as the PlumpJack Group, a multimillion-dollar business enterprise that grew from a wine shop he opened in San Francisco in 1992. Those holdings have the potential to create ethical conflicts between Newsom’s job as California’s chief executive and his business interests.

“Governor-elect Gavin Newsom is announcing today that he will be the first governor in the history of California to release his tax returns every year, just as he has done as a candidate,” Newsom’s spokesman Nathan Click said in a statement. “Newsom will also disclose his personal and business holdings each year on his statement of economic interest and separate himself from the PlumpJack Group wine and hospitality businesses that he has built.’’

Bob Stern, coauthor of California’s 1974 Political Reform Act that dictates the state’s conflict-of-interest laws, praised Newsom’s decision.

“That’s as much as anybody could ask him to do, except for selling all the properties, which I wouldn’t recommend him doing,” Stern said Thursday.

Stern added, however, that placing those assets in a blind trust does not remove the potential that Newsom could face a possible conflict of interest as governor. Under the law, Newsom is required to disclose all assets in the blind trust until those assets are sold, Stern said.

Newsom is in the process of transferring title to and control of the businesses into the blind trust, Click said. Newsom selected family friend Shyla Hendrickson, an attorney and certified public accountant with more than two decades of experience in the investment management business, as trustee, he said.

Under the terms of the blind trust, Hendrickson will have total authority over the assets, Click said, including the power to sell off Newsom’s business ownership without consulting him. She also is barred from discussing those decisions with Newsom.

Picking a family friend to serve as trustee is allowable under state law, Stern said, adding that the fact that Newsom’s sister, Hilary Newsom Callan, serves as president of the PlumpJack Group is “not a problem” under the law.

State law does not require Newsom to divest from PlumpJack Group or release the names of his business associates. And Newsom can legally sign bills or take executive action beneficial to his companies if those decisions affect all Californians or a significant segment of the population in the same way they affect him.

Newsom has yet to announce any details about the financial interests of his wife, documentary filmmaker Jennifer Siebel Newsom, whose foundation could also raise questions for the incoming governor.

Siebel Newsom’s foundation, the Representation Project, which helps fund her documentaries along with education programs and community outreach “to challenge limiting gender stereotypes and shift norms,” has in the past received financial support from Pacific Gas & Electric Co. and AT&T. PG&E and its foundation reported donating $100,000 to the Representation Project in 2017, $85,000 in 2016 and $10,000 in 2015, according to federal tax records and a list of PG&E’s charitable donations on the utility’s website.

As president of the foundation, Siebel Newsom received a salary of $150,000 in 2016, according to the most recent publicly available disclosures filed with the Internal Revenue Service. The foundation also reported paying Girls Club Entertainment, Siebel Newsom’s production company, $150,000 that same year. Newsom’s spokesman said the board of directors of the Representation Project is in the process of determining her future role with the foundation.

In 2018, PG&E also donated $58,400 to Gavin Newsom’s gubernatorial campaign and $150,000 to Citizens Supporting Gavin Newsom for Governor 2018, an independent expenditure committee that backed his candidacy.

Next year, the California Legislature is likely to consider a bill to provide financial relief for any utility whose equipment was involved in a wildfire in 2018. PG&E could face billions in potential liability costs for the deadly Camp fire near Chico, which killed at least 86 people and destroyed thousands of homes.

If approved by lawmakers, the bill would land on Newsom’s desk.

This isn’t the first time Newsom has had to address the intersection of his political and business lives. After he was elected mayor of San Francisco in 2003, Newsom sold his interests in the PlumpJack Group businesses in San Francisco to his longtime friend and business partner, oil heir Gordon Getty, for $1.7 million, according to a financial disclosure filed with the city. But Newsom held on to his investments outside the city limits, including in Napa Valley wineries and a hotel and gift shop at the Squaw Valley ski resort near Lake Tahoe.

“The mayor chose to take this unprecedented action because he feels it is in the best interest of San Francisco for its chief executive not to own businesses that operate in the city,” Newsom’s then-press secretary, Peter Ragone, told the San Francisco Chronicle in April 2004.

As governor, Newsom could face an array of potential ethical dilemmas as long as his assets in the PlumpJack Group remain in the trust.

For example, a corporation could conceivably try to curry favor with the new governor by renting out a bank of rooms at the PlumpJack Squaw Valley Inn or by throwing lavish parties at the Forgery bar in San Francisco, both among Newsom’s holdings. In those scenarios, the spending would likely not have to be disclosed.

Newsom has held campaign events at his restaurants and other businesses for years. His gubernatorial campaign spent more than $83,000 at his businesses from 2015 through election day, campaign finance records show.

In 2014, the California Democratic Party held a fundraiser at Newsom’s CADE Estate Winery in Napa Valley, paying the business $4,229. Just after Newsom was elected mayor of San Francisco in 2003, two Bay Area labor groups spent more than $1,000 at PlumpJack Wines, Newsom’s wine store.

Newsom has vowed to issue an executive order prohibiting state executive branch agencies from doing business with PlumpJack entities. He will also divest from all common stock that he owns in publicly traded companies. According to his latest financial disclosure, Newsom held stock in Intel Corp. and Merck & Co. worth $4,000 to $20,000 in total.

Napa Valley wineries have brought in hundreds of thousands of dollars in income for Newsom annually, according to financial disclosure records and business filings with the secretary of state’s office. Three wineries in the PlumpJack Group founded by Newsom and Getty generated nearly $800,000 in just one year for Newsom, according to his 2015 federal tax returns. Newsom and Getty — who are connected through Getty’s friendship with Newsom’s late father, who once managed Getty’s family trust — share multiple business interests.

Under state law, Newsom will not have to declare a conflict of interest when making a decision — whether to sign legislation or approve an administrative action — unless it “explicitly” affects one of his companies or investments, according to state Fair Political Practices Commission regulations.

For example, Sen. Scott Wiener (D-San Francisco) is sponsoring a bill that would allow bars in San Francisco, Los Angeles and seven other cities to serve alcohol until 4 a.m. The legislation passed this year but was vetoed by Gov. Jerry Brown. If the bill passes again in the new legislative session, Newsom’s restaurants and bars would benefit financially if he signs it. But he still would be able to so without declaring a conflict of interest because the rules would apply to all restaurants and bars in those cities, not just his.

“He’s certainly allowed to sign bills dealing with wineries or dealing with restaurants,” Stern said.

In this 2004 photo, then-San Francisco Mayor Gavin Newsom, left, Gordon Getty and then-Oakland Mayor Jerry Brown enjoy a pre-dinner glass of wine during an event at Newsom’s PlumpJack Winery in Oakville.

(Eric Risberg / Associated Press)

Although Newsom might be one of the wealthiest governors ever to serve in California, the issues posed by his assets aren’t new to the office, Stern said.

Former Gov. Arnold Schwarzenegger sold off stock and many other investments, placing the proceeds in a blind trust, although he had also disclosed investments outside the trust, including his Hollywood entertainment firm, Oak Productions.

While in office, Schwarzenegger was criticized for accepting a consulting job for a publisher of health and bodybuilding magazines — Muscle & Fitness and Flex — because a significant portion of the publications’ revenue came from advertising by makers of nutritional supplements. Schwarzenegger vetoed a bill that would have created a list of banned substances for interscholastic sports and barred supplement manufacturers from sponsoring school events.

Rob Stutzman, a GOP strategist and former communications director for Schwarzenegger, said it was difficult to wall off some of Schwarzenegger’s business interests because they were tied to the “personal brand” of the Hollywood action star and former champion bodybuilder.

The best option in those cases is asking full disclosure from public officials, he said.

“I don’t think [Schwarzenegger’s situation] is unique. I think it’s just a matter of scrutiny and watching it,” Stutzman said.

“In Newsom’s case, if he can’t sell PlumpJack or other things he owns, he’s not going to be blind,” said retired attorney Colleen McAndrews, a former member of the state Fair Political Practices Commission who advised Schwarzenegger on setting up a blind trust when be became governor.

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Local government politicians are most affected by the state’s conflict-of-interest law because cities and counties approve regulations, permits, land use restrictions and other items that could affect a single business or part of town. It would be rare to see a conflict arise under state law for the governor, however, because most of the action taken by the state’s chief executive affects all Californians equally, McAndrews said.

“You don’t have to recuse if a decision affects the public the same way it affects you,” she said.

Rick Scott, the wealthiest governor in Florida history who in November was elected to the U.S. Senate, came under intense scrutiny after he placed his assets in a blind trust. Multiple Florida news outlets reported that Scott’s blind trust made identical investments in a separate, private account for his wife, raising questions about just how “blind” the governor was to the trust.

GateHouse newspapers reported this year that the couple’s financial holdings in the pharmaceutical company Gilead Sciences, which makes drugs to combat hepatitis C, had grown substantially. Florida’s Medicaid program has spent millions on those drugs, the report found.

Jamie Court, president of the nonprofit Consumer Watchdog, said that regardless of what the incoming governor decides to do regarding his assets, Newsom should provide full disclosure of all his financial interests.

“I think the governor has to be very open about his business relations, even beyond what the law calls for,” Court said. “If he hides anything, believe me, we will find out later and it won’t be good.”

Times staff writer Maloy Moore contributed to this report.

phil.willon@latimes.com

Twitter: @philwillon

WASHINGTON — Jennifer Siebel Newsom has spent more than a decade cultivating an identity distinct from her husband, Gov. Gavin Newsom, as an active documentary filmmaker and gender equity activist with her own organizations, staff and salary.

The 51-year-old calls herself California’s “first partner,” a title she coined herself to signal an equal footing with the governor and gender inclusivity.

Her independent streak has generated her a steady income. She earns money from a set of organizations she founded or controls. They include the Representation Project, a nonprofit that advocates for gender equity through film and education programs; Girls Club Entertainment, a for-profit production company she owns that holds the copyrights to her documentaries; and the California Partners Project, a second nonprofit that works closely with her government office and receives donations solicited by the governor.

Since its creation in 2020, the California Partners Project has received nearly $5.1 million from so-called “behested payments,” raising alarms over the years about the influence large companies have amassed in Sacramento.

California law allows officials to solicit donations to specific charitable or governmental causes when the payments are reported within 30 days. The public donation system, however, came under scrutiny in 2020 when payments made at Newsom’s behest — to a variety of organizations, not just the California Partners Project — ballooned to an unprecedented $226 million to help fund the response to the COVID-19 pandemic.

With no limit on how much money can be donated by organizations or individuals at the behest of the governor, millions of dollars flowed in to prop up public services during the pandemic and fund Newsom’s favored programs, including an effort to address homelessness and a public safety campaign promoting the importance of wearing masks. The top donor of Newsom-behested payments in 2020 was tech giant Facebook, which gave $27 million for gift cards that went to front-line healthcare workers and for public health ads.

“It’s not illegal, but it certainly pushes the bounds of campaign finance law, and the first couple has been doing this for some time,” said David McCuan, a political science professor at Sonoma State University. “In this battle between Newsom and [President] Trump this makes their [the first couple’s] actions, these payments and the operation of the nonprofits a rich target for scrutiny.”

The Newsoms’ financial arrangements are now the subject of renewed scrutiny. The governor has accused the Trump administration — specifically, the FBI and the Internal Revenue Service — of questioning their friends and former employees about him and his wife. The governor said the probes are politically motivated, a personal vendetta because he’s considering a run for president in 2028.

Newsom said he and his wife have nothing to hide, and promised to release all of his recent tax returns — though he has not announced when.

In turn, the governor has demanded that the Department of Justice release all records pertaining to the probe.

“The American people deserve to know who ordered this abuse of power and how far it goes,” the governor wrote on social media last week.

“These are dark days in our nation’s history when the leader of the free world spews animus openly and without shame — aiming to silence and destroy not only his political opponents, but their friends, colleagues, and families,” Siebel Newsom said in a statement to The Times. ”My husband and I will continue to push back on this vindictive attack — and I certainly will not let this distract me from the important work ahead to protect the health, wealth, and safety of women and children and give California kids the best start in life. Together, we can set an example of strong leadership that protects people rather than preys on them.”

To better understand the finances, here is a breakdown of how Siebel Newsom’s company and nonprofits are working.

The Representation Project

Alongside the release of her first documentary, “Miss Representation,” in 2011, Siebel Newsom created her nonprofit, which originally shared the same name as her film. The organization licenses her films and reimburses costs to her production company.

The nonprofit earns some revenue from licensing the first partner’s documentaries for use in classrooms, college campuses and workplaces. Licensing for film screenings at schools starts at $49, while corporate licensing for her films starts at $995; purchase of screening rights also comes with curricula to facilitate discussions.

The Representation Project has earned more than $5.2 million in revenue from film screenings, licensing and speaking fees since 2011, according to a review of its tax filings.

The Representation Project is not required to disclose its donors but has received at least $2.6 million since 2014 from various charitable foundations that disclosed the gifts in their own tax filings. Several corporations that have had business before the state have donated to Siebel Newsom’s nonprofit, including Pacific Gas & Electric Co., AT&T and Kaiser Permanente.

Its past donors also include entrepreneur and progressive donor Susie Thompkins Buell, who is credited as a producer on several of Siebel Newsom’s documentaries, as well as the Marin Community Foundation and Onward Together, the political action organization founded by Hillary Clinton.

Four months after Newsom took office in 2019, the state Department of Education recommended that high schools screen two of his wife’s films, “Miss Representation” and “The Mask You Live In,” a move that has garnered criticism from conservative media outlets. The state said the films “can help facilitate a discussion about the impact of mass media and gender socialization on self-image and relationships with others.”

Though it does not specify where its films have been licensed, the nonprofit boasts in annual impact reports that its films and curricula have “reached over 2 million students” and “are being used in over 5,000 schools in fifty U.S. states.”

Since founding the Representation Project in 2011, Siebel Newsom has received more than $1.9 million in compensation from the nonprofit organization, according to a review of federal tax records. Her separately owned film production company, Girls Club Entertainment, has collected about $2.2 million in independent contracts from the nonprofit, records show.

Combined, the two streams of money total about $4.1 million flowing from the charity to Siebel Newsom personally or to entities she controls over the span of a little over a decade.

Her current annual salary is $161,250 for a 40-hour workweek, records show. Siebel Newsom earns income from both her production company and her nonprofit, according to state financial disclosures.

Jeff Tenenbaum, a nonprofit attorney with 30 years of experience advising nonprofit, tax-exempt organizations, declined to comment on Siebel Newsom’s specific case. But generally, he explained the legal framework that would apply to an arrangement like the one described in the filings.

Under federal tax-exempt organization law, he said, the “private benefit doctrine” governs whether a nonprofit’s overall activities unduly benefit any single individual — including through indirect payments to entities they own. The tax law asks whether too much benefit flows to one person or entity.

This is separate and distinct from the “private inurement” doctrine, which prohibits nonprofits from paying greater-than-fair market value compensation to insiders, including founders, and which requires that such compensation arrangements be approved by individuals with no conflicts of interest.

“Theoretically, a situation like this could raise some private benefit concerns,” Tenenbaum said, when the structure of the arrangement was described to him.

The doctrine does not prohibit all private benefit, he said, only what the federal tax code calls “impermissible” private benefit.

“There has to be too much benefit compared to the benefit to the public,” he said. Whether that threshold is crossed here, he said, would require a fuller review of the organization’s finances, contracts, and other considerations, including copyright ownership issues relating to the films produced.

Girls Club Entertainment

An actress and documentary filmmaker, Siebel Newsom founded her production company to develop independent films with a focus on combating gender stereotypes and empowering girls and women. She serves as the company’s chief creative officer.

She has written, produced and directed five films exploring themes of inequality and traditional gender roles. Siebel Newsom is best known for her 2011 documentary “Miss Representation,” which focused on the few and narrow representations of girls and women in American media.

Tax records show that the production company owns the rights to “Miss Representation” and has licensed the film to the Representation Project for a minimum of seven years for the purpose of distributing and screening the film in public. Costs associated with film production — including the writer, director and producer fees — have been reimbursed by the Representation Project, tax filings show.

Her latest documentary, “Miss Representation: Rise Up,” examines “the rising backlash against women’s progress and the hostile landscape of technology designed to harass and, ultimately, silence women.” The film premiered this month at the Tribeca Film Festival.

California Partners Project

In 2020, Siebel Newsom founded the California Partners Project, a nonprofit focused on improving gender equity in the workplace and the safety and well-being of children in online spaces. She does not collect compensation from the nonprofit or serve on its board.

It hosts an annual “gender equity summit” and provides resources for parents on issues such as social media safety and child mental health.

In the fall of 2024, Siebel Newsom and the California Partners Project hosted representatives from TikTok, Meta, Pinterest and other social media platforms for an event about children’s online safety. A day before the panel, state Atty. Gen. Rob Bonta took a more forceful tack to go after the tech industry by joining with 13 other states in a lawsuit against TikTok that accused the platform of exploiting young app users with its addictive features.

In September of 2024, the governor signed a bill to prohibit internet services and applications from providing “addictive feeds,” defined as media curated based on information gathered on or provided by the user, to minors without parental consent.

The California Partners Project also does not publicly disclose its donors in its tax filings, but much of the nonprofit’s funding appears to come from behested payments. Siebel Newsom does not receive a salary from the organization.

Since its founding, the Newsoms have steered more than $5 million to the nonprofit via behested payments, according to a review of the disclosures. While many donations to the California Partners Project come from charitable foundations, it also received hundreds of thousands from companies including Silicon Valley Bank, Pinterest and the charitable arm of Blue Shield of California.

Its biggest funder is the Federated Indians of Graton Rancheria, a Sonoma County tribe that operates a casino in Rohnert Park and spends heavily in state and federal elections. The tribe has given $2.3 million to the nonprofit since 2022. In June 2023, Newsom appointed tribal Chairman Greg Sarris to the University of California Board of Regents. Newsom has also supported efforts by the tribe to block a smaller tribe from building a casino in nearby Vallejo.

Blue Shield, which has reported giving $100,000 to Siebel Newsom’s nonprofit, also has a cozy relationship with her husband. The nonprofit health insurer was an early donor to Newsom’s 2018 campaign for governor and later received a $15-million no-bid contract to distribute COVID vaccines. State regulators in 2024 also signed off on the nonprofit’s request to restructure and establish a new parent corporation out of state, a move that raised alarm among healthcare advocates.

The California Partners Project did not respond to questions about its donors and spending.

SACRAMENTO — Gov. Gavin Newsom and Democratic leaders of the California Legislature plan to approve a proposed constitutional amendment this week that would ask voters to give them more flexibility over state spending and allow them to save money that could otherwise go back to taxpayers.

The proposal seeks to exempt deposits into state savings accounts from a spending limit that voters adopted through a series of ballot measures dating back to the late 1970s and to increase the share of tax revenue that can be put into the rainy day fund.

“Putting money aside to protect ourselves from future uncertainties isn’t just good government; it’s common sense,” Newsom said in a statement. “California is strong and resilient, but we’re not immune to economic headwinds. At a time when our essential services are under pressure, we have a responsibility to safeguard the programs and investments that Californians rely on.”

Assembly Constitutional Amendment 20, which Democrats are calling the “Save for California’s Future Act,” could receive push back from taxpayer advocates.

Under an existing state appropriations restraint, also known as the Gann limit, lawmakers cannot spend more than an amount determined by a formula that takes into consideration annual tax proceeds and changes to the population and cost of living. Tax revenue above the limit must be divided between schools and refunds to taxpayers.

With few exceptions, the limit applies to most appropriations of tax revenue, including money that lawmakers tuck away into the rainy day fund and other reserves. California voters have also capped the amount of money lawmakers can set aside in the rainy day fund to 10% of general fund proceeds in a given year.

Since taking office, Newsom has argued that it doesn’t make sense for savings to count as spending under state law.

State budget revenue is subject to dramatic swings from year to year based on stock market activity. The law, Newsom has said, prevents the state from saving more money in good years to stave off cuts to programs in bad years.

The proposed changes would exempt deposits into the rainy day fund and a short term reserve, called the “Projected Surplus Temporary Holding Account,” from the state appropriations limit. The cap on the rainy day fund would grow from 10% of general fund tax revenue to 20%.

“Californians live by a simple, bipartisan truth: set money aside when times are good so you’re ready when they’re not,” Assembly Speaker Robert Rivas (D-Hollister) said in a statement. “The Save For California’s Future Act is what responsible leadership looks like — and future taxpayers will thank us for it.”

The measure could incentivize Democrats to save more money because funds tucked away in the rainy day fund would no longer be considered expenditures counted toward the spending limit. By allowing lawmakers to set aside more money that is not subjected to state spending limits, it could also allow them to hold onto money that would be returned to taxpayers under current law.

The measure is slated for a vote Thursday. If approved by two-thirds of lawmakers, voters will consider the proposal on the November ballot.

The U.S. Department of Justice — make that the U.S. Department of “Justice” — is sniffing around Gavin Newsom and his wife, Jennifer Siebel Newsom.

This is widely seen as a throw-me-in-the-briar-patch gift from President Trump, coming as California’s governor edges ever closer toward a 2028 run for the White House. The presumed effort to cut down a political foe could instead boost Newsom’s chances of winning the Democratic nomination, or so it’s being suggested.

After all, look at how Trump’s verbal bludgeoning elevated former Rep. Adam Schiff. The House has typically been a dead end for lawmakers seeking statewide office in California. Today, the former Burbank congressman and Trump tormentor is a United States senator.

In truth, however, it’s far too early to say how the investigation of Newsom and his wife plays out politically, not least because it’s unclear whether there’s merit to the probe or if it’s merely a fruitless search-and-destroy mission by Trump’s Department of Retribution, Vengeance and Settling Old Scores

Beyond that, the first ballots of the 2028 campaign won’t be cast for roughly a year and a half. The Democratic National Convention, where the party will install its nominee, doesn’t begin for another 778 days.

Your friendly political columnist won’t resort to that hoariest of cliches about such-and-such duration being a lifetime in politics. But for some perspective, let’s go back 778 days.

President Joe Biden was running for reelection and about to challenge Trump to a pair of early debates. Trump was sequestered in a New York City courtroom being prosecuted on 34 felony counts.

A lot happened in the weeks and months that followed, including Biden’s self-immolation on the debate stage and Trump’s criminal conviction. A lot more will happen in the weeks and months to come. There’s no telling what. But it’s safe to say the fight for the 2028 Democratic presidential nomination will not be decided by anything that’s taken place in June 2026.

Still, Newsom is once again sunning himself in the national spotlight and for that he has Trump to thank.

With his exquisitely tuned political antennae, the governor jumped out front of the president by announcing last week the feds were targeting him and his wife. (Naturally, Newsom’s revelation was accompanied by a rage-bait email — subject line: “Because I am thinking of running for president” — that denounced the “political witch hunt” and asked for money.)

“After calling for my arrest last year, Donald Trump directed his Department of Justice to investigate me,” Newsom said in a 4 ½-minute, direct-to-camera video that framed the investigation before prosecutors had the chance. “And just in the last week, I’ve learned his campaign has reached my own home: To get me, he’s coming after my wife, Jen.”

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Newsom and his wife both adamantly denied any wrongdoing and, of course, they must be presumed innocent until and unless proven otherwise.

But there was something a bit disingenuous about the governor’s chivalrous defense. Siebel Newsom, a documentary filmmaker who calls herself California’s “First Partner,” is no mere housewife baking cookies and holding teas, in the famous words of Hillary Rodham Clinton. (Hold the outrage, folks, this is not some retrograde criticism of career-seeking women.)

Among her many public-facing activities, Siebel Newsom heads The Representation Project, a nonprofit focused on challenging gender stereotypes. The organization has faced criticism for accepting donations from companies that lobby the governor, so it’s not unreasonable to ask whether those interests have improperly sought to influence Newsom by giving money to Siebel Newsom’s causes.

My Times colleagues reported that an investigation related to Siebel Newsom has been underway for about a year and was launched by federal prosecutors in Sacramento based on whistle-blower information provided in California. It was not, their source said, the result of a directive out of Washington.

A second probe, they reported, is related to Newsom’s ex-chief of staff, Dana Williamson, who pleaded guilty last month to bank and wire fraud involving a scheme to steal campaign funds from Xavier Becerra, the Democratic candidate for governor.

The problem with all this federal sleuthing is the utter lack of credibility attached to Trump’s Justice Department. Which is what happens when you turn the department into an arm of Trump’s malevolent fiefdom and deploy its prosecutors as henchmen targeting the president’s perceived enemies.

“This is a huge problem,” Randall Eliason, former chief of the Public Corruption Section of the U.S. Attorney’s Office in Washington, told Politico. “In any political corruption prosecution, the defense almost always claims it is a ‘political witch hunt,’ that prosecutors are targeting him or her for some political reason.

“The best defense to that has always been [the Justice Department’s] tradition of independence from politics and long track record of pursuing corruption cases based only on the facts and law, without regard to political considerations,” Eliason said. “The Trump administration has abandoned that independence without even trying to hide it.”

The probe of Newsom and his wife presents more questions than answers.

It’s grody, but not criminal on its face, for lobbyists to curry favor with the governor by throwing cash at his wife’s endeavors — if, in fact, that’s been the case. Special interests spending money to gain access and influence is about as common in Sacramento and other capitals as statues, domed buildings and manicured lawns.

So why then are the feds investigating Newsom? Why now? Is there any fire, or is it all a lot of smoke?

Perhaps most important, where can you turn to get an impartial answer?

SACRAMENTO — Gov. Gavin Newsom vetoed legislation to require proposed data centers to provide estimates of their water usage last year, saying he was “reluctant to impose rigid reporting requirements” without understanding the impact on businesses and consumers.

Opposition to the mammoth tech hubs and their massive thirst of water, power and land has only escalated throughout the state and nation ever since. In just a matter of months, Newsom again could find himself in the political crosshairs.

Several bills to regulate the facilities and increase public transparency on their impacts are progressing in the California Legislature, which could create a conundrum for a governor who has long aligned with the tech industry but also paints himself as an environmental and social justice advocate.

“I think the governor is in a fragile position,” said Megan Mullin, a public policy professor at UCLA. “Tech has been a long backer of his, but at the same time there is this growing national outcry against data centers.”

Data centers have existed for decades but are rapidly expanding due to the worldwide boom in artificial intelligence. The newer centers built to power AI are far larger than their original counterparts and require immense amounts of water and energy.

The facilities also contribute to fossil fuel emissions, with Cornell University researchers estimating last year that AI growth could add 24 to 44 million metric tons of carbon dioxide to the atmosphere annually by 2030. Fossil fuel emissions are drivers of climate change and linked to a range of health conditions, including asthma, various cancers and birth defects.

Environmental Protection Agency Administrator Lee Zeldin announced last week that the Trump administration will not set national environmental requirements or recommendations for the data center industry, leaving it to state lawmakers to determine best policies.

Thad Kousser, a political science professor at UC San Diego, said the nation will likely look to the Golden State for guidance.

“California’s laws will create a national model,” he said. “We’re the home of Silicon Valley and we’re just a massive state — the way we regulate data centers will set the tone.”

The political landscape around data centers has since changed since Newsom’s veto in October, said Dan Schnur, a political science professor who teaches at UC Berkeley and USC.

“No one should assume he will automatically act in the same way,” Schnur said. “Newsom is an incredibly savvy politician so he is clearly aware that voters are a lot more upset or concerned about data centers than they were a year ago.”

A Gallup poll released last month found 7 out of 10 Americans oppose data centers being built in their area.

The facilities can create thousands of jobs for construction workers and generate significant revenue for local governments due to sales and property taxes. The artificial intelligence they power is also — at least temporarily — boosting the stock market, leading to more tax dollars for California.

But residents who live near hyperscale centers have expressed outrage over a range of issues, including health impacts, spiking utility bills, constant noise, dropping water pressure and concerns about potentially losing their land through eminent domain. Meanwhile, community meetings about data centers are growing contentious, with police arresting a farmer in Oklahoma, three women in Wisconsin and a man in California.

Earlier this month, residents of Monterey Park voted overwhelmingly to ban data centers, making the San Gabriel Valley city the first in the nation to do so by public vote.

“Six months ago, politicians of both parties were falling all over each other to bring data centers into their states,” Schnur said. “Now that the public backlash has erupted, they are working just as hard to distance themselves from these projects.”

With Newsom eyeing a presidential bid in 2028, he might be reluctant to brand himself as a defender of an increasingly unpopular industry.

But Schnur said the governor likely also has concerns about angering one of his biggest backers.

“The tech community is a critical part of Newsom’s donor base, so he has to keep fundraising in mind when he makes these decisions,” Schnur said.

A spokesperson for the governor’s office declined to comment on data centers or pending legislation.

Newsom, during an interview at a Center for American Progress conference in May, said the concern that data centers may drive up electricity costs for Californians is a “legit issue,” but not the main one.

“The tech genie is not going to go back in the bottle,” Newsom said. “Just saying that you should not or cannot build a data center is not going to slow this technology down. What can be, will be. Nature of technology. And so we just have to steer it and not make the mistakes we made with social media.”

Among the measures in the Legislature are two bills from Sen. Steve Padilla (D-San Diego). SB 886 would create a corporate tariff to cover the cost of data center-related grid upgrades. SB 887 would ban data centers from receiving ministerial exemptions from the California Environmental Quality Act, known as CEQA.

Neither bill picked up support from Republicans, but both cleared the Senate and were recently referred to the Assembly Utilities and Energy Committee.

Padilla represents Imperial County, a farming community near the border of Mexico where plans for a 950,000–square–foot data center face fierce opposition from residents. The county exempted the proposal from CEQA, which requires projects to undergo an extensive state environmental review before breaking ground.

The city of Imperial sued the county earlier this year, arguing the project should not have received an exemption. The San Diego Chapter of the Sierra Club joined the lawsuit last month. The county board of supervisors last week approved a 45-day moratorium on all new data centers to allow the county to evaluate proposed data center development.

Two other data center-related bills recently passed the Assembly, each picking up support from a few Republicans. They now await action from the Senate.

AB 2619 from Assemblymember Diane Papan (D-San Mateo) would require data center owners to provide an estimate under penalty of perjury about expected water usage and sources before applying for a business license. AB 1577 from Assemblymember Rebecca Bauer-Kahan (D-Orinda) would require data center owners to submit monthly information to a state commission about water and fuel consumption.

Ben Green, an assistant public policy professor at the University of Michigan who is researching how data centers impact communities, said reporting requirements are a “bare minimum” type of regulation, making it especially noteworthy that Newsom vetoed a similar measure last year.

For comparison, several states are weighing more restrictive bills — New York recently sent legislation to the governor’s desk that would enact a one-year moratorium.

“It seems that there was a ton of lobbying pressure that he was getting,” Green said. “The tech industry doesn’t want to have any restrictions.”

Green said data centers could be a hot topic in upcoming elections, as Americans on both sides of the aisle are expressing valid concerns.

“There’s not an easy fix for getting the public on board with data centers because their critiques are grounded in reality,” he said. “This is not just some sort of reactionary NIMBY-ism or pearl clutching.”

After Gov. Gavin Newsom announced this week that the U.S. Department of Justice may be investigating his wife, Jennifer Siebel Newsom, media and pundits pounced on millions in charity payments he has solicited for nonprofits, including ones she is involved in.

Those donations, known as “behested payments,” aren’t illegal in California, but, long before Newsom started asking for them, many have found them unsavory — with good cause. A behest, after all, is by definition a command or at least a strong suggestion.

Anytime a politician is commanding money, regardless of the purpose, there is at least the appearance that the giver — Meta, Google, Blue Shield for example — may expect something in return.

It may seem absurd that the Trump administration could be investigating Newsom for questionable ethics, when Trump has hawked everything from crypto-coins to sneakers from the Oval Office. But the problem Newsom now faces is that behested payments are actually skeevy, and legal or not, they make an excellent target for pummeling the presidential contender. Especially because some of the charities are tied to his wife.

“The Newsom case has blown it wide open, but this has been an issue for years,” Sean McMorris told me. He’s the transparency, ethics and accountability program manager at Common Cause, a nonpartisan organization that has been raising alarms over behested payments for more than a decade.

McMorris said that while these payments don’t violate any laws, they are “ripe for abuse” because companies and people likely aren’t ponying up cash just to be good citizens. If you or I called up PG&E and asked them to give a few million to our favorite cause, I doubt we’d have much luck, even if it involved kittens, puppies or small children in need.

The entire system, McMorris points out, “doesn’t really work unless you’re shaking down people who you know need things from you as a politician.”

Jerry Brown used behested payments to get millions for charter schools he supported. Lesser luminaries such as mayors (including Antonio Villaraigosa, Eric Garcetti and Karen Bass, just to name the last three in L.A.) have used them for all kinds of stuff from jobs programs to fixing up official residences.

And it’s far from a Democratic thing. Arnold Schwarzenegger, a Republican, used them to pay for travel and after-school programs. Republican James Gallagher, who recently won a congressional seat, used them to fund computers for schools while he was in the state Legislature. Senate Minority Leader Brian Jones has raised millions, including helping to get $800,000 in donations to fund a replica of a historic ship for the maritime museum in his San Diego district.

Trump himself could be considered king of behested payments, with his corporate-paid ballroom and birthday bash.

Literally, folks, find me a politician with an itty-bitty bit of clout, and I’ll show you a trail of behested payments stretching through their pet projects. For that reason alone, it’s unlikely that California legislators will take any action to curb them, especially now when doing so would appear as a criticism to Newsom and Democrats in general.

And, to be fair, behested payments can do a lot of good. Newsom supercharged behested payments during the pandemic, raising hundreds of millions for programs to get Californians through that social disaster.

For that reason and others, not all experts find them terribly troubling. Jessica Levinson, a Loyola Law School professor with an expertise in election and governance issues, points out that money in politics is nothing new and at least behested payments are (mostly) required to be acknowledged. Anything over $5,000 and the politician has to report it to the California Fair Political Practices Commission, which keeps a public database.

That makes behested payments far more transparent than, say, dark money donations to a mysterious political action committee. And at least the money is going to a good cause, be it historical ships or computers for kids.

“I actually don’t think that they’re the evil mechanism that other people do,” Levinson said. “I mean, my feeling is like, let’s live in reality, right? People are going to want to give as much money to or close to powerful people as possible, and I think that we have a choice between money going to independent expenditure groups or political committees or going to nonprofits.”

So behested payments in and of themselves might not be much of a headache for Newsom. But some of the payments Newsom solicited went to nonprofits Siebel Newsom is involved with, and which have paid her a salary. That proximity is uncomfortable for many of us. There is no distinction for a behest given to a charity with direct ties to the politician, but maybe there should be.

Still, salaries being paid by behested payments also aren’t illegal, and it’s been done before, even by Newsom. Villaraigosa was paid through behested funds for his work as the state “infrastructure czar” back in 2022. Bass considered paying former L.A. Police Commissioner Steve Soboroff through behested-funded nonprofits for his work after the recent fires before public scrutiny pushed him to forgo the funds.

None of that is to say the Newsoms are off the hook in a federal investigation. Newsom’s office said that along with the FBI, agents from the IRS have been knocking on doors and asking questions. All of us — probably the Newsoms included — will just have to wait to see if the fine-tooth combs of the feds pick up any dirt.

If there is any lesson to be learned at this point, it’s about ambition and hubris. Behested payments are easy money for California politicians and business as usual — everyone does it. But maybe they shouldn’t. It’s not black or white.

Newsom is learning quickly what it means to have a powerful enemy like Trump, one who has shown he will use the full power of the American government for his own purposes. One who can tip the scales and slide white to gray and gray to felony.

Federal investigators do not like to come up empty-handed, and the wink-wink nature of behested payments creates just that kind of ambiguity that provides reasonable cause for investigation — a self-inflicted vulnerability that surely has every California politician nervous.

California’s political watchdog commission on Thursday finalized a $31,500 fine against Gov. Gavin Newsom, alleging that the Democratic leader failed to report three dozen behested payments totaling $5.5 million mostly to support wildfire recovery by the deadline under state law.

The Political Reform Act requires elected officials to disclose payments of $5,000 or more that they solicit or direct others to give to a charitable, legislative or governmental purpose within 30 days.

The California Fair Political Practices Commission said 34 of the violations were for failing to report on time that Newsom and his staff directed outreach from companies and foundations that wanted to help after the Los Angeles wildfires to the California Fire Foundation. The nonprofit was started in 1987 by the California Professional Firefighters to support the families of fallen firefighters and communities impacted by fire.

The donations include $1 million from the Chuck Lorre Foundation and $500,000 apiece from Lockheed Martin, the Anthem Blue Cross Foundation and BlackRock, among others gifts.

The governor also failed in 2024 to report on time two behested payments, totaling $100,000 from the Schmidt Family Foundation and Schwab Charitable Funds to the Institute for Local Government, a nonprofit within the League of California Cities.

The commission said the governor reported all of the payments “prior to public discovery” or contact from its enforcement division, which it considered a mitigating factor. Newsom also signed the stipulation and agreed to the fine.

Tara Gallegos, a spokesperson for Newsom’s office, said the issue involved late paperwork at a time when the governor’s staff was focused on emergency response and supporting survivors. She also underscored the fact that the reports were filed before he was contact by the FPPC.

Gallegos said the fine is unrelated to an alleged investigation into the governor and his wife by the Department of Justice, which Newsom announced this week.

Newsom alleged Monday that Trump is using the government as political weapon to target him and his wife, Jennifer Siebel Newsom. Newsom announced the investigation after he learned that the FBI and Internal Revenue Service asked his associates questions about nonprofits and businesses related to the couple.

The governor’s office characterized the investigation as a fishing expedition. The Trump administration declined to comment.

A source familiar with the matter, who requested anonymity because they were not authorized to discuss it publicly, said two federal probes have been going on for about a year, and that they originated not from Washington, D.C., but from conversations between whistleblowers and federal prosecutors based in Sacramento. The probes are linked to Newsom’s former chief-of-staff, Dana Williamson, and Siebel Newsom’s taxes, the source said.

The FPPC violations mark the second time Newsom has reported payments late, which increased his penalty for the new infractions. The commission fined Newsom in 2024 for failing to timely report 18 payments totaling $14.4 million.

SACRAMENTO — Gov. Gavin Newsom did something this week that most politicians would only in a nightmare: He announced that the federal government is investigating him and his wife.

The revelation, delivered in a direct-to-camera 4½-minute video set against a backdrop of U.S. and California flags, became a top headline across the country.

In the upside-down politics of the Trump era, that was exactly as intended.

“He seems to be wearing this as a badge of honor because his brand is being the strongest opponent of Donald Trump,” said Thad Kousser, a professor of political science at UC San Diego. “The ability to show that you’re going on offense and that you know how to effectively fight back against this president is part of making your case for office.”

As he eyes a run for president in 2028, an antagonistic relationship with President Trump is Newsom’s political currency.

So when friends and former employees said the FBI and Internal Revenue Service had knocked on their doors and asked about him and his wife, Jennifer Siebel Newsom, last Wednesday, the governor took advantage of the situation to boost his political profile.

“Mr. President, come after me,” Newsom said in the video he posted online. “I’m not going anywhere, and the country is watching.”

Newsom, who is in his final year as California’s governor, has not declared his intent to run for president, though his claim that Trump is targeting him because he’s considering a bid for the White House was an open acknowledgment of his thoughts about the future. Announcing the probe himself — before federal authorities had a chance to describe it on their terms — allowed him to get ahead of and try to discredit any findings as a “personal vendetta” long before potential charges are brought.

Celinda Lake, a Democratic strategist and national pollster, said Newsom publicly defending his wife could also play well with voters.

“He’s positioned himself as the front-runner because he’s the one who’s under attack,” Lake said. “Primary voters love it when he engages Trump, and I think the combination of engaging Trump and then also the sexism of going after your wife is just a real home run for a primary electorate that’s 59% female.”

The video released Monday seemed similar to a speech Newsom delivered after Trump sent federal troops to Los Angeles last summer.

That address, in which he countered Trump’s version of events and challenged the president to come after him instead of women and child immigrants, made Newsom the captain of the Democratic response to the unprecedented deployment and ended his attempt to play the part of respectful statesman and ease political tensions following the 2024 election.

Liberals have since seemed to relish Newsom’s near-constant derision of the president on social media.

But David McCuan, a professor of political science at Sonoma State University, said casting the case as another instance of Trump’s political weaponization ignores questions about the murky timeline and origin of the investigation.

Newsom’s aides point to Trump saying that the governor should be arrested during last summer’s anti-ICE protests as evidence that he personally called for the inquiry. The claim has gained oxygen — and been echoed by other Democratic leaders in the state — while going largely unchallenged by federal officials. The Justice Department has declined to comment, as has the White House.

A source familiar with the matter, who requested anonymity because they were not authorized to discuss it publicly, said two federal probes have been going on for about a year, and that they originated not from Washington, D.C. but from conversations between whistleblowers and federal prosecutors based in Sacramento. The probes are linked to Newsom’s former chief-of-staff, Dana Williamson, and Siebel Newsom’s taxes, the source said.

Newsom’s critics have also noted that federal prosecutors under the Biden administration had pursued questions about his involvement in a state lawsuit against Activision Blizzard Inc., a major video game distributor, before Trump retook office.

“This is something that could lead to other elements that blow up, so there’s a risk,” McCuan said.

Newsom’s aides described the investigation as a fishing expedition, with federal authorities searching for anything they can use against the governor.

They said federal authorities appeared to initially investigate allegations that turned up nothing about the Activision case before refocusing their questions on nonprofits and other entities tied to the couple. Investigators also asked about personal information related to the family’s household, Newsom’s office said.

McCuan said three nonprofits that surround the couple have received millions of dollars from donors and political interests and are not subject to campaign finance limits.

The California Partners Project is a nonprofit that promotes gender equity. The Representation Project is an avenue for Siebel Newsom’s documentary films. The California State Protocol Foundation uses private donations to pay for gubernatorial expenses and was founded under former Republican Gov. Arnold Schwarzenegger.

“It’s a long-running game,” McCuan said. “It’s just the Newsom first couple has perfected it and moved it forward.”

Newsom getting out ahead of prosecutors and framing their probes as nothing but a “witch hunt” — borrowing a phrase often used by Trump during his own previous prosecutions — carries risk.

If prosecutors do turn up evidence of wrongdoing, Newsom’s decision to parade his indignation could backfire.

Publicly challenging Trump also runs the risk that the president could instruct the Justice Department to dig in deeper on an investigation that might have otherwise petered out.

But Lake and others said there’s no placating Trump, who has targeted Newsom and other Democrats.

While traditional politics suggest facing federal charges could sink Newsom’s political ambitions, the rules have been thrown out under Trump.

“You know the last person who got tied up in courts on the campaign trail?” Kousser asked. “That was Donald Trump, and nothing elevated Donald Trump more than doing courthouse press appearances and being seen as the target of an unfair political prosecution.”

Gov. Gavin Newsom on Monday accused the Justice Department of launching — at President Trump’s request — a baseless and politically-motivated investigation into him and his wife, First Partner Jennifer Siebel Newsom.

“After calling for my arrest last year, Donald Trump directed his Department of Justice to investigate me,” Newsom said. “And just in the last week, I’ve learned his campaign has reached my own home: to get me, he’s coming after my wife, Jen.”

Newsom adamantly denied any wrongdoing by him or his wife. The White House referred questions to the Justice Department, which declined to comment.

A source familiar with the matter who requested anonymity because they were not authorized to discuss it publicly told The Times that there are two probes underway, one related to Newsom’s former chief of staff, Dana Williamson, and one related to Siebel Newsom’s taxes.

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The source said both investigations have been ongoing for about a year; were launched by prosecutors in Sacramento based on information provided by whistleblowers and other local sources in California; and were not the result of directives out of Washington or the White House.

Newsom said that in recent days, “federal agents have knocked on the doors of family friends and former employees,” and have been “demanding records,” “digging through years and years of random documents” and “abusing the grand jury process” in a quest to find any kind of wrongdoing by him or his wife.

“Not because they found a crime. Because they are simply trying to find one,” he said.

Newsom did not describe the specific nature of the alleged probe, the line of questioning faced by friends and employees or the types of records taken or reviewed by federal investigators. But he alleged that Trump instigated the probe because Newsom is considering running for president in 2028, and because Trump “hates that I’ve consistently called him out — over and over again — for his lies and deceit.”

“He has turned the levers of government into his own personal power ministries to reward cronies and to try to jail his opponents,” Newsom said.

Newsom cited Justice Department investigations of several other of the president’s political opponents, including Sen. Adam Schiff (D-Calif.), New York Atty. Gen. Letitia James, former FBI director James Comey, former Federal Reserve Chair Jerome Powell and former vice presidential candidate Minnesota Gov. Tim Walz.

“One by one, anyone who has challenged Donald Trump has ended up on his hit list,” he said. “And today, I proudly join that list.”

This article will be updated.

To the surprise of few, President Trump has once again claimed without evidence that Democrats are somehow cheating to win California’s primary elections — writing on social media late Wednesday that federal prosecutors in Los Angeles are investigating the matter.

“The Dumocrats are at it again! They are trying to STEAL THE GOVERNOR OF CALIFORNIA PRIMARY, AND THE MAYOR OF LOS ANGELES, PRIMARY, AWAY FROM TWO GREAT REPUBLICAN CANDIDATES. Here we go with the very late and massive numbers of MAIL IN BALLOTS,” Trump posted to his social media platform Truth Social.

“There’s BIG cheating by the Dumocrats in California. Votes are all tied up. May not be in for weeks. Under investigation by the U.S. Attorney’s Office in Los Angeles,” he wrote in a second post. “Why the vote counting DELAY???”

A spokesperson for the U.S. attorney’s office in Los Angeles — run by Trump loyalist First Assistant U.S. Atty. Bill Essayli — declined to comment Thursday morning on Trump’s claims of an investigation.

California Secretary of State Shirley Weber’s office also did not immediately respond to a request for comment.

Gov. Gavin Newsom’s office responded directly to Trump late Wednesday with its own social media post, writing, “Trump is lying about California again — time to take the phone away from grandpa and put him to sleep.”

On Thursday morning, Newsom’s office wrote that there “is a lot of misinformation floating around about California’s election — including from the President,” and recommended people watch a CNN video about California’s election process. It concluded that delays in vote counting in the state are essentially a result of state leaders deciding that providing voters with “last minute options” for casting ballots is more important than a quick count.

“And yes, for the record: we wish the votes were counted faster, too,” Newsom’s office wrote — a nod to the fact that the issue isn’t new.

In an email, Brandon Richards, Newsom’s deputy director for rapid response, said Trump’s claims are part of “a tinfoil hat level conspiracy theory that has been debunked repeatedly.”

The president’s claims of cheating were predicted before the election by both elections experts and Democratic leaders in California, who dismissed them in advance as more baseless bluster from a president beset by low approval ratings.

A worker puts ballots in a counting machine at the Los Angeles County Ballot Processing Center on Wednesdayin City of Industry.

(Kayla Bartkowski/Los Angeles Times)

Those same experts and Democratic leaders acknowledge that California’s system for counting votes takes a long time and should be quickened, but stress that is not because of anything nefarious. Rather, it is because California allows voters to cast ballots by mail up until election day — and then has to count those ballots, which can number in the millions and are subject to manual signature verification.

Trump has long dismissed such explanations. An election denier since he first entered politics more than a decade ago, Trump has pushed skepticism about elections he and his party lose time and again since — most notably when he claimed, again without evidence, that the 2020 election he lost to Joe Biden was stolen.

Trump even challenged Biden’s victory in court, but his claims were rejected completely because neither he nor his attorneys could produce any evidence substantiating them.

He has combined his tactic of targeting undocumented immigrants for political gain with his skepticism of election integrity by claiming, again without evidence, that such immigrants somehow vote in large numbers, particularly in big blue states such as California, despite experts saying there is no evidence of that.

He has alleged that mail ballots — such as those used by the majority of California voters — are a particularly rich source of voter fraud, despite again having no basis for the claim and it being disputed by experts.

A consistent feature of his election fraud claims is that they arise and target races only when Republicans lose or lose ground.

And, he has tried to use the power of his administration to make sweeping changes to election laws to bar mail ballots and require strict voter ID and proof of citizenship measures, despite the control of elections and their rules being constitutionally given to the states.

Those efforts have prompted a wave of litigation between the Trump administration and California and other blue states, with multiple cases pending in the courts over voter ID, proof of citizenship, mail balloting and the role that the U.S. Postal Service may be allowed to play in processing such ballots.

Trump’s latest remarks came as additional vote counting on Wednesday narrowed the advantage of Republican Steve Hilton over his Democratic challengers in the California governor’s race and closed the gap in the L.A. mayoral race between the MAGA-aligned candidate Spencer Pratt, currently running second, and City Councilmember Nithya Raman, who is running third.

The trend was anticipated. Elections experts warned before vote counting began of the potential for a “red mirage,” wherein earlier voting among Republicans and late voting among Democrats — many of whom were unsure of whom to vote for in the two high-profile races — would create an early illusion of Republican victories despite large volumes of liberal votes from major population centers still to be counted.

It is a trend that has played out repeatedly in past elections, and one that does not come as a surprise to careful elections watchers.

Elections officials in California knew such claims were going to be made, as they’ve been made in the past. Some local elections officials made a point of preparing their staffs for baseless claims of election fraud in advance of this year’s primaries. State officials made repeated efforts to explain the reasons why California elections take time, precisely to undercut claims amid counting that the delays were the result of fraud.

But those claims have come regardless, and not just from Trump.

Above an X post Wednesday suggesting Pratt was losing ground to Raman as more counts came in, Florida Gov. Ron DeSantis wrote, “California keeps dumping votes. Odds are shifting because the vote dumps always seem to go one way. Count until you get the result you want?”

Above another X post Wednesday noting that the California count would take time, Katie Miller, a former Trump administration official and conservative podcaster married to Trump’s top advisor Stephen Miller, wrote, “The Democrats are about to steal the LA mayoral race once again using mail-in voting.”

Both of the posts that DeSantis and Miller were responding to were from Polymarket, a prediction market where people can bet on the outcomes of political races, pop culture events and a slew of other subjects.

Such emerging financial markets, which process billions of dollars in bets, are causing rising concerns about political meddling for profit — including by campaign staffers and other individuals with insider knowledge of polling and other campaign information, or by politicians and their operatives, whose public remarks about politics can swing those markets.

SACRAMENTO — Gov. Gavin Newsom has threatened to tax 100% of the money Californians receive from President Trump’s “anti-weaponization” fund for his political allies.

Trump’s Justice Department had announced last week that it would establish a $1.776-billion fund to compensate allies of the president who claim they have “suffered weaponization and lawfare” under the Biden administration’s Justice Department.

“Anyone from California that receives any of those funds, we want to tax 100% of those proceeds,” the governor told reporters Thursday.

“That’s an action the state of California can take …[and] it’s an action we look forward to taking.”

Just how Newsom would do so remains unclear. He indicated that he would need action from the Democratic-led California Legislature to impose the new tax. If adopted, the measure would likely face legal challenge.

The fund has prompted outrage from Democrats and some Republicans — including Sen. Mitch McConnell (R-Ky.), who said in a statement that the “slush fund,” which would “pay people who assault cops,” was “utterly stupid.”

Newsom’s remarks about Trump’s settlement fund came on Thursday as he signed a bill designed to prevent election interference ahead of Tuesday’s primary.

The bill, Senate Bill 73, restricts law enforcement agencies and officers — including those from federal agencies — from interfering with state and local election officials, such as confiscating ballots, voter rolls or voting machines without a warrant.

The governor said the bill is meant to address “legitimate anxiety” over threats to election integrity after Riverside County Sheriff Chad Bianco’s decision to seize ballots from the county’s voter registrar as part of a fraud probe. Bianco, a long-time Trump supporter, is one of the top Republicans running to succeed Newsom after the end of his second and final term as governor.

Newsom also pointed to ICE and Border Patrol’s decision last November to stage an event near Dodger Stadium, calling it a “show of force designed to intimidate free expression and free speech.”

“That’s why we have to step up and we have to draw the line,” Newsom said. “We have to clarify the rules of engagement… there are fines associated with this, criminal fines and jail time of three years, so that’s a warning [to] the folks out there that think they can do the bidding of the Trump administration.”

Newsom said he expects Trump to interfere with the upcoming election — noting that the president has falsely claimed that he “won” California in the last election.

“Every single thing that Donald Trump is saying only suggests that he will do more, not less, to intimidate and to impact the outcome of this election,” Newsom said. “I absolutely expect the worst again, because we’ve been on the receiving end of it.”

SACRAMENTO — Human rights advocates on Tuesday rallied outside the state Capitol to push back on Gov. Gavin Newsom’s proposed budget plan to reduce state-sponsored healthcare coverage for undocumented immigrants.

“We are here to demand a budget that protects California’s values,” said Kiran Savage-Sangwan, executive director of California Pan-Ethnic Health Network. “We are fighting for a budget that rejects Medi-Cal cuts, seeks new revenues and strengthens our safety net reserve to keep families whole.”

Newsom last week unveiled his revised budget proposal, which would further move away from his previous policy to provide free healthcare coverage to all low-income undocumented immigrants.

His proposal would require monthly premiums for undocumented immigrants receiving coverage from Medi-Cal, the state’s version of the federal Medicaid program. It would also continue to block new adult applications, a cutback imposed last year.

The governor has explained that his original policy was more costly than expected and that difficult decisions must be made as the state could soon face an economic downturn.

Speakers at Tuesday’s rally argued this was unacceptable.

The cuts would force many immigrants to choose between putting food on the table or visiting a doctor, said Savage-Sangwan. She said certain groups, including refugees, older adults and those with disabilities, would be left especially vulnerable.

“These are the kinds of actions we would expect from a federal government that scapegoats immigrants and sends violent ICE forces to terrorize our community,” she said. “Instead, these proposals were made by our own governor in a state that claims to value immigrant communities. We know California is better than this.”

The governor’s office did not respond to a request for comment about the rally.

The event drew about 100 attendees, including Anahi Araiza, a policy researcher with Imperial Valley Equity and Justice. She told The Times that many immigrants in their community struggle to afford medical care and subsequently put off doctor visits.

“They wait until it’s an absolute emergency,” she said. “We’ve heard stories where people delay care and then get diagnosed with Stage 4 cancer.”

The event was supported by several organizations, including California Pan-Ethnic Health Network, Survivors of Torture International, Communities Organized for Relational Power in Action, Health4All Coalition, and Organizing Rooted in Abolition, Liberation and Empowerment.

One man carried a large sign with an image of the Virgin Mary that read “Safety Net For All.” Other marchers donned flowing monarch butterfly wings. The orange-and-black insect became a symbol for the pro-migrant movement years ago because it travels long distances between Mexico and the United States.

Meanwhile, another group gathered outside the Capitol for a news conference to raise awareness about the instability caused by federal healthcare cuts.

Assemblymembers Patrick Ahrens (D-Sunnyvale), Robert Garcia (D-Rancho Cucamonga) and Tina S. McKinnor (D-Hawthorne) joined several doctors and nurses to call for a $500-million state investment into public hospitals.

“Public hospitals are the backbone of our healthcare system,” Ahrens said. “It is estimated that federal cuts will strip over $3 billion a year from the California public hospital system — we cannot balance our budget on the backs of the most vulnerable Californians.”

The Republican-backed “Big Beautiful Bill” signed by President Trump last year shifted federal funding away from safety-net programs and toward tax cuts and immigration enforcement. During a legislative hearing this year, healthcare professionals warned state lawmakers the cuts would harm all patients, including those with private insurance.

SACRAMENTO — Hours before Gov. Gavin Newsom is expected to present his budget plan on Thursday, his office released new projections of a $16.5-billion state revenue windfall over three years and offered a rosy outlook on California’s fiscal position during his final year in office and the year after.

Newsom’s office provided few details about his plan to reduce spending or other adjustments that he would need to propose in combination with the increase in revenue to eliminate projected deficits from 2026-27 through 2027-28.

The unusual early look at his budget proposal comes as Newsom begins to wind down his time at the state Capitol and considers a run for president in 2028.

Two weeks ago, the Legislative Analyst’s Office issued an analysis of state spending that said California could not, in the long term, afford to pay for existing services and the new programs that Newsom and Democratic lawmakers have enacted since he took office in 2019. State spending has outpaced California’s strong revenue growth by about 10%, creating a perennial budget shortfall, defined as a structural deficit.

California’s spending problem threatens to define Newsom’s fiscal legacy and could provide ripe fodder for his critics. If projections of the unexpected tax windfall, which analysts attribute to stock market interest in artificial intelligence companies, bear out, the upswing could mark a lucky break for Newsom.

The governor has largely resisted adopting new across-the-board tax increases or sharply curtailing his expensive policy proposals in order to align state spending with revenue.

His budget proposal includes a call to increase taxes on corporations by limiting state tax credits to no more than $5 million, or 50% of a company’s tax liability, beginning in the tax year 2027. No estimates were offered to explain how much revenue the new cap would bring in to support the state budget.

The preview of his budget has several new spending proposals, including providing $300 million to help low-income Californians keep $0 monthly premiums on healthcare coverage through the Affordable Care Act in response to cuts by the federal government, as well as $100 million to help wildfire victims afford construction loans to rebuild their homes. Two days before Mother’s Day, Newsom also introduced a plan to provide 400 free diapers for every California newborn at select hospitals beginning this summer.

Newsom is expected to present his budget in more detail late Thursday morning in Sacramento.

SACRAMENTO — Gov. Gavin Newsom will propose a new $100-million fund to help wildfire victims afford loans to rebuild their homes under a revised budget plan set to be released Thursday.

The Newsom administration estimates that thousands of victims of the Los Angeles wildfires cannot afford to rebuild, blaming a lack of access to affordable loans and a gap between insurance payouts and the cost to build again.

“We have been on the ground in L.A. since Day One of recovery from these fires, and we aren’t turning our backs now,” Newsom said in a statement. “This community deserves continued support to help them get back on their feet, and rebuild their homes and their lives. “

The new fund would be designed to cover loan-loss guarantee to lenders, in which the state would commit to paying back a percentage of a loan amount if a borrower defaults, in order to lower the risk for lenders and encourage them to award construction loans to borrowers who might not otherwise qualify or only be eligible for loans at high interest rates. The money would also be available for homeowners to buy down their interest rates during the construction period, according to Newsom’s office.

The Eaton and Palisades fires killed 31 people and destroyed over 16,000 structures in January 2025.

A recent survey of the wildfire victims found that homeowners estimate they need more than $600,000 on average above their insurance payouts to rebuild their homes, according to a report from a wildfire recovery nonprofit called the Department of Angels. The gap in Altadena was about $550,000, and between $1.19 million and $1.73 million in Pacific Palisades and Malibu.

Under Newsom, California has also provided mortgage relief to more than a thousand wildfire survivors under CalAssist, a program that provides grants to eligible homeowners to cover mortgage payments for 12 months up to $100,000.

The governor’s new proposal will be included in his funding plan for the upcoming 2026-27 budget year that begins July 1.

State revenue from income tax collection is higher than initially forecast, a boon that is expected to wipe out a projected deficit in the year ahead. Analysts attribute the revenue increase to an artificial intelligence boom in the stock market.

Though likely temporary, the extra funding is expected to give Newsom enough cushion to balance the state budget without major cuts and lower a projected shortfall in 2027-28.

The proposal to create the rebuilding fund requires support from both houses of the California Legislature and would move forward as a trailer bill accompanying the state budget. The funding would be available to disaster survivors, though details on eligibility will be determined during the legislative process.

Vice President JD Vance said Wednesday that the Trump administration is deferring $1.3 billion in Medicaid reimbursements to California over concerns the state is allowing “fraudsters” to drive up costs to taxpayers, including by pushing unnecessary medications on unsuspecting patients.

“There are California taxpayers and American taxpayers who are being defrauded because California isn’t taking its program seriously. But also, you have people who’ve been prescribed medications that they don’t even need,” Vance said. “Sometimes they’ve had drugs put into their bodies that they don’t need because fraudsters have actually encouraged false prescriptions and false administration and medications.”

Vance, standing alongside Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, said the administration is also sending letters to all 50 states informing them that if they do not “effectively and aggressively prosecute Medicaid fraud in their states,” they will see federal funding cut off as well.

“We want California to get serious about this fraud,” said Vance, who President Trump named his “fraud czar” last month.

Oz called out what he said was widespread fraud in hospice services and similar in-home care programs nationally — and particularly in the Los Angeles region — and announced a six-month moratorium on new Medicare enrollment for hospices and home health agencies.

“A third of all these programs in the entire country are in Los Angeles. Ask yourself, how is that possible? It’s not,” Oz said. “They’re not that many people dying in Los Angeles. We’re not talking about California, just Los Angeles.”

He said he and others in the administration determined that “at least half of the hospices, in the entire area around Los Angeles, are fraudulent,” and had shut down 800 of them that last year had “charged the federal taxpayer $1.4 billion,” which “will no longer be paid.” That is a major increase from the 450 providers the administration said it had suspended as of last month.

The announcement was the latest attempt by the Trump administration to highlight and rein in fraud in federal healthcare benefits programs, particularly in blue states. The actions were met with immediate push back from California officials.

“We hate fraud. But that’s NOT what this is,” Gov. Gavin Newsom’s office posted on the social media site X. “Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.”

Newsom’s office said that the growth of In-Home Supportive Services placements in California was “simple,” and due to California “keeping more people OUT of far more expensive nursing homes!”

Such services cover assistants who help people with daily tasks such as bathing, laundry or cooking; provide needed care such as injections under the direction of a medical professional; and accompany them to and from doctor’s appointments. A 2020 report by the California state auditor found that nearly three-quarters of IHSS caregivers assist a family member.

Newsom’s office wrote IHSS care costs $30,000 a year, while nursing home care costs $137,000 a year. “SAVING TAXPAYERS: $107K per person,” it wrote.

California Atty. Gen. Rob Bonta also criticized the administration’s moves.

“Once again, California appears to be targeted solely for political reasons,” Bonta said. “The Trump administration is planning to defer over $1 billion in Medicaid funding for vital programs that helps seniors and people with disabilities remain safely in their homes.

“My team is carefully reviewing all available information. We have not hesitated to challenge unlawful actions by the Trump administration, and we will continue to act whenever Californians’ rights or access to critical services are threatened,” he said.

Democratic Sen. Alex Padilla also lashed out at the Trump administration.

“The Trump Administration is attacking California over claims that they can’t back up,” Padilla wrote on social media. “Let’s be real, this isn’t about fraud — it’s about punishing a state that didn’t vote for him. Political retribution plain and simple.”

Fraud in California’s hospice industry has been a problem for years.

Authorities in the state promised to crack down on the issue after a Times investigation in late 2020 revealed that unscrupulous providers were billing Medicare for hospice services and equipment for patients who were not actually dying — with the hospice industry in the state exploding in size.

California’s Medicaid program, known as Medi-Cal, is expected to cost about $222 billion for the budget year starting July 1, including both state and federal funding. Roughly 15 million Californians, more than a third of the state, are on Medi-Cal.

Vance, a potential 2028 presidential hopeful, has taken up his work as “fraud czar” with vigor, traveling around the country to drive home the idea that the Trump administration is working diligently to bring down healthcare costs by addressing waste, fraud and abuse that is rampant across the system.

He has said that waste and abuse is particularly prevalent in Democratic-led states such as California, New York and Minnesota.

“We have red states and blue states that go after fraud aggressively, but we also, unfortunately, have some states, mostly blue states, unfortunately, that do not take Medicaid fraud very seriously,” he said Wednesday.

Vance specifically threatened to cut off what he said is billions in federal funding for state-run fraud control units that are meant to prosecute people who abuse the system, but which he said aren’t doing the work. “This is a tool that we want the states to use, but unfortunately, a lot of states aren’t using these tools at all,” he said.

The focus on fraud comes against a backdrop of criticisms that other policy measures pushed by the administration have driven healthcare costs up or made it harder for people to access healthcare — including cuts to Obamacare subsidies and new work requirements in Medicaid, which are expected to strain hospitals around the country and led to millions of people losing healthcare coverage.

Democrats and Republicans have argued over who is to blame for rising healthcare costs, and Vance and Oz have clashed with California leaders before.

In January, Newsom filed a civil rights complaint against Oz after he posted a video accusing Armenian crime groups of carrying out widespread healthcare fraud in Los Angeles. In the video, Oz was shown driving around Van Nuys, saying about $3.5 billion worth of Medicare fraud had been perpetrated by hospice and home care businesses — and “run, quite a bit of it, by the Russian Armenian mafia.”

Newsom called Oz’s claims “baseless and racist.”

The administration previously launched investigations into potential healthcare fraud in at least five states — California, Florida, Maine, Minnesota and New York — and halted some $243 million in Medicaid payments to Minnesota over fraud concerns.

The Centers for Medicare & Medicaid Services has also acknowledged using errant figures to justify a fraud probe in New York, deepening concerns in the administration’s methods for identifying problematic activity.

Vance said the deferral of funds to California and the letters warning other states to get serious is not about political retribution, but a wake up call. He said the Trump administration wants to help states root out fraud and abuse, including with new technologies — but can’t do so if they are not “willing to help themselves” first.

“We don’t want to turn off any money. What we want to do is ensure that people are taking fraud seriously. We want to protect Medicaid, we want to protect Medicare,” Vance said. “But we can’t do that if the states that are administering those programs are allowing those programs to be fleeced by fraudsters.”

The Associated Press contributed to this article.

SACRAMENTO — Newborns won’t be leaving the hospital empty-handed in California.

Gov. Gavin Newsom announced on Friday that the state is partnering with Baby2Baby to provide 400 free diapers to every newborn. Baby2Baby is a national nonprofit based in California that provides clothing and other basic necessities to children.

The governor said it would help families with the rising cost of living.

“Since the pandemic, we have seen the cost of diapers go up by 45%,” said Newsom, speaking at a press conference in San Francisco. “One out of four families skip meals to pay for diapers.”

The new program, dubbed the Golden State Start, will launch this summer. Participating hospitals will distribute the diapers to families at the time of discharge. Forty million diapers will be distributed during the program’s first year, with a goal of later expanding the program to provide 160 million.

Newsom said the state will prioritize hospitals that serve large numbers of parents enrolled in Medi-Cal, California’s version of the federal Medicaid program providing healthcare coverage to low-income Americans. The state plans to later expand to additional hospitals and birthing centers.

The governor described the program as the first of its kind in the nation.

“We are not imitating; we are a model to others,” he said.

Kim Johnson, secretary of the California Health and Human Services Agency, said the initiative would help families enjoy their first few weeks at home with a new baby.

“The first days at home with a newborn should be focused on the love, connection, and joy of an expanded family, not stress about affording diapers,” Johnson said in a statement. “This program helps ensure families can begin that journey with greater stability and peace of mind.”

The National Diaper Bank Network, a national nonprofit that tracks diaper insecurity, found about 60% of low-income families nationwide struggle with the cost of diapers and rely on less-frequent changes to get by. The organization said dirty diapers leave babies at risk of developing rashes or urinary tract infections.

SACRAMENTO — Gov. Gavin Newsom said his administration is “moving forward aggressively” to continue laying the groundwork for a giant tunnel beneath the Sacramento-San Joaquin River Delta to replumb the state’s water system.

“We got to move faster. Move faster,” Newsom said to regulators during a speech Thursday at a conference held by the Assn. of California Water Agencies. “We all have to be held to a higher level of accountability.”

California’s 40th governor provided a chronological look back at his water policies since taking office in 2019 and asserted the need to continue his effort to modernize state infrastructure to provide for cities and farms into the future.

Newsom cast the tunnel as a “climate adaptation project,” noting that climate change is projected to shrink the amount of water the state can deliver with its current infrastructure.

With his term expiring at the end of the year, Newsom acknowledged that he will soon “pass the baton” on water policy to the next governor. Democrat or Republican, that person could decide the fate of his signature water project.

“The Delta Conveyance, if we had it last year alone, would have provided enough water, in terms of what we could have captured with an updated system, enough water for 9.8 million Californians’ needs for over a year,” Newsom said. “We’ve got to get that done.”

Water has been a focus of the Newsom administration since his first day in office, when the governor took his cabinet to Monterey Park Tract, a rural Central Valley community that lacked access to safe drinking water.

Described by Newsom as “the forever problem” in California, water policy is also among the most politically contentious issues in the state.

The tunnel would create a second route to transport water from new intakes on the Sacramento River to the south side of the Delta, where pumps send water into the aqueducts of the State Water Project.

The project is particularly acrimonious, drawing out geographical battles between north and south and thorny fights between officials who want to build the tunnel and environmentalists and Delta residents seeking to protect the local ecosystem and their way of life.

Newsom and other supporters have said the tunnel would protect the state’s water system as climate change intensifies severe droughts and deluges. Opponents call the project a costly boondoggle, arguing it’s not necessary and would destroy the Delta.

It’s been mired with regulatory hurdles and other challenges for years.

The State Water Resources Control Board is considering a petition by the Newsom administration to amend permits so water could be tapped where the tunnel intakes would be built.

There have also been other complications. A state appeals court in December rejected the state’s plan for financing the project, and the California Supreme Court in April declined to take up the case. The state Department of Water Resources said it still plans to issue bonds to finance the project.

Other court challenges by Delta-area counties and environmental groups are also pending.

Whether the project is ultimately built may hinge on whether large water agencies, including the Metropolitan Water District of Southern California, decide to participate and pay for its building.

State officials have said that the tunnel, called the Delta Conveyance Project, ultimately would be paid for by participating water agencies.

The state estimated in 2024 that the tunnel would cost $20.1 billion, while opponents say it could cost three to five times more than that.

In the last seven years, California has invested $11 billion in water infrastructure, Newsom said.

The Democratic governor reflected on other parts of his water policies, saying he has prioritized securing funds to provide clean drinking water to more communities where Californians live with contaminated tap water.

He said while there has been progress in bringing safe drinking water to more communities, there is still “a lot more work to be done.”

Newsom touted his administration’s investment in replenishing groundwater in the Central Valley and its efforts supporting plans to build the Sites Reservoir near Sacramento.

Newsom said the Sites Reservoir is critical for the state’s future, and he indicated some frustration about the pace at which it’s advancing.

“We’ve got to do the groundbreaking at Sites,” he said. “If you can’t agree to an off-stream investment in this world of weather whiplash, we’re as dumb as we want to be.”

He said his administration has also made progress on environmental projects including restoring wetlands around the shrinking Salton Sea, removing dams on the Klamath River, and developing a strategy to help salmon, which have suffered major declines in recent years.

Touching on issues that generate heated debate, Newsom talked about a controversial plan for new water rules in the Delta that relies on so-called voluntary agreements in which water agencies would contribute funding for wetland habitat restoration projects and other measures.

Newsom described the approach, called the Healthy Rivers and Landscapes program, as a solution to break away from the traditional conflict-ridden regulatory approach and improve the Delta’s ecological health.

“Got to maintain the vigilance on these voluntary agreements. At peril, we go back to our old ways,” he said.

Environmental advocates argue that the proposed approach, which is widely supported by water agencies, would take too much water out of the Delta and threaten native fish that are already in severe decline.

Newsom said climate change is increasingly driving “weather whiplash” in California and that the state must prepare. He noted that his tenure included the extreme drought from 2020-22, followed by extremely wet conditions in 2023, which revived Tulare Lake on thousands of acres of farmland.

He said the state needs to manage water differently because the effects of climate change have been apparent over the last several years: “The hots were getting a lot hotter, the dries were getting a lot drier, and the wets were getting a lot wetter.”

SACRAMENTO — One of Gavin Newsom’s top goals as he winds down his final year as California governor is to leave the state with a balanced budget.

After years of the state spending more money than it brings in, it’s Newsom’s last opportunity to fix a chronic deficit or dump the problem on the next governor.

How far he goes to solve the state’s structural spending imbalance will define his legacy as a steward of trillions in taxpayer dollars. As a potential candidate for president in 2028, he could also have a political incentive to do as little as possible.

“Any cuts you make are going to cause people to scream,” said Darry Sragow, a veteran Democratic strategist. “Any increases in taxes are going to cause people to scream and in terms of what’s best for a presidential run, it would be nice if people weren’t screaming.”

As California’s 40th governor, Newsom expanded publicly funded healthcare to income-eligible undocumented immigrants, increased state-subsidized child-care slots and provided free meals for schoolchildren among a wishlist of progressive wins since he took office in 2019.

His achievements have helped struggling Californians live in an increasingly unaffordable state and given him bona fides to tout to voters if he launches a bid for the White House.

But the state could never afford to pay for existing services and the new programs that Newsom and Democratic lawmakers enacted, according to an analysis of ongoing state spending since before the pandemic released by the Legislative Analyst’s Office last week.

Spending from the state’s principal operating fund has grown about $100 billion since Newsom’s first full fiscal year in office in 2019-20, mostly due to the growing cost of existing programs that he inherited. State spending has outpaced California’s strong revenue growth by about 10%, creating a perennial budget shortfall — a structural deficit — that Newsom and the Democratic-led Legislature solve with largely temporary fixes each year.

Instead of making across-the-board program cuts or raising taxes to align spending with revenue, Democrats have tapped into reserves designed to preserve social services for the state’s most disadvantaged communities during economic downturns.

While the California economy remains stable and state revenue has increased, Newsom and lawmakers have taken $12.2 billion from the rainy day fund. Democrats have borrowed $28 billion more from other state funds to cover their spending in recent years, according to the LAO.

“Taken together, these trends raise serious concerns about the state’s fiscal sustainability,” Legislative Analyst Gabriel Petek wrote in a review of Newsom’s January budget proposal.

Fiscal watchdogs have warned that the spending trends will leave California in a precarious position if the stock market tanks and tax receipts bottom out.

Personal income taxes are driving higher-than-expected revenue now, which analysts attribute to an artificial intelligence boom on Wall Street, and suggest the state could have no deficit in the upcoming year. In January, the Newsom administration anticipated significant operating deficits in the years ahead: $27 billion in 2027-28, $22 billion in 2028-29 and $23 billion in 2029-30.

The LAO, the Legislature’s nonpartisan fiscal advisor, said the state has already solved $125 billion in budget problems over the last three years with mostly short-term solutions.

“This issue is really whether they’re going to take seriously the structural deficit that is several years in the making now, where the spending has outpaced revenue, and to address that, they’re going to either have to make some fairly deep cuts or raise revenue and or both,” said former state Controller Betty Yee, who worked as a budget aide under Gov. Gray Davis and recently dropped her own campaign for governor. “But they have to be real. I think resorting to these one-time solutions has really exacerbated the problem.”

How Newsom wants to address the state’s financial challenges will be revealed on May 14 when he is expected to present his revised budget plan in Sacramento. His January budget proposal did not include any significant reductions or cuts to programs.

H.D. Palmer, a spokesperson for the California Department of Finance, said the governor is looking to solve the budget problem with more than a temporary fix.

“Although he is still finalizing his proposal that he’ll put forth to the Legislature, as he has said, he wants those solutions to be durable, and he wants them to have an impact beyond a single fiscal year,” Palmer said.

To stabilize California’s budget, Democrats will probably have to raise taxes or fees to generate new revenue and cut programs, according to the LAO. At least 40 cents for every dollar in revenue is dedicated to education under the state Constitution, requiring policymakers to find between $30 billion and $60 billion annually in additional revenue to cover projected shortfalls in 2027-28 and beyond if relying on new taxes alone.

President Trump’s cuts to healthcare are adding to the problem.

HR 1 will add $1.4 billion in state costs to the general fund. Newsom’s January budget proposal did not include a plan to help millions of low-income Californians who are expected to lose access to healthcare under the federal cuts.

To temper those cuts in California, other groups proposed a new tax on billionaires that appears poised to qualify for the November ballot.

Spearheaded by Service Employees International Union-United Healthcare Workers West, the initiative would apply a one-time 5% tax on taxpayers with assets exceeding $1 billion. If approved by voters, the tax would generate roughly $100 billion, which would fund healthcare programs.

The measure has divided unions and Democrats at the state Capitol.

Newsom has criticized the initiative, citing concerns that increasing taxes on the wealthy will have the opposite intended effect and drive the highest earners out of California. Under a progressive tax structure, the state budget is dependent on income taxes paid by the ultra-rich on earnings largely from capital gains.

Larry Page and Sergey Brin, the co-founders of Google, have already purchased residences in Florida, along with others looking to escape the tax if it goes through in November. Billionaires launched their own ballot measure campaign to undercut the tax proposal.

State lawmakers are also considering avenues to raise revenue, which include repealing a “water’s edge” tax break. Under the change, multinational companies would no longer be allowed to shield the income of their foreign subsidiaries from state taxes. California loses about $3 billion in revenue from the tax break each year.

In its budget plan released in April, the state Senate proposed a new fee on the largest corporations in the state to provide $5 billion to $8 billion annually for Medi-Cal.

The upper house said 42% of Medi-Cal enrollees are full-time workers who are not enrolled in their company’s healthcare plan because their wages are low enough to qualify for state-subsidized healthcare. As a result, corporations aren’t paying for healthcare for many of their employees and instead taxpayers are picking up the bill through Medi-Cal.

SEIU California, the powerful state union council representing over 700,000 workers, endorsed the plan. The union said Trump’s tax policy will reduce corporate taxes by $900 billion, while 3 million Californians lose healthcare.

“In this urgent moment, California’s workers need to see our leaders show us what they’re made of,” said Tia Orr, executive director of SEIU California. “The Senate is showing the courage to demand corporations pay their fair share, rather than making working people pay with their lives.”

The change is being described as a more politically palatable “fee” and not a tax.

“We explored multiple revenue options, and this was the one that felt more narrow, it felt more focused, and it also felt like it was directly going for the subsidy that’s being lost because of the Trump HR 1 cuts,” said Senate President Pro Tem Monique Limón (D-Goleta), who leads the upper house of the Legislature.

Limón said her caucus believes it’s important to address potential revenue streams because of the depth of federal healthcare reductions.

“If we don’t address the structural deficit, we are looking at severe cuts,” she said. “You are looking at people without health insurance. You are looking at hospitals closing down. You are looking at medical providers not being able to take more patients. You are looking at our emergency rooms over capacity, with not enough medical providers. I mean, you’re looking at a place that’s really, really, really difficult, and we feel like we have to, at least, look at what are viable options that are conditional on these cuts coming.”

Newsom has not commented publicly on the Senate’s plan. As governor, he’s been reluctant to embrace new taxes and fees.

Newsom could reject all the proposals for new taxes or fees and continue what he’s done before: take advantage of higher-than-expected tax collections, shift funds around, delay program implementation and borrow money to knock the deficit down to zero, or forecast a surplus, for his last budget year that begins July 1.

If he doesn’t take on California’s larger budget imbalance, then the problem would be the next governor’s to solve. A stock market crash, or economic recession, could force his successor to make drastic cuts across the board with limited reserves to support programs.

Kicking the can again would cement Newsom’s fiscal legacy as a governor who championed bold headline-making policies that bolstered the safety net for low-income Californians, but who failed to provide a solution to pay for his agenda.

“Not only has he not come up with a plan, he has pretended we don’t need one,” said Patrick Murphy, a professor of public affairs at the University of San Francisco.

Newsom’s interest in running for president could seemingly discourage him from slashing the budget and raising attention to the state’s financial woes, Sragow said. Newsom is setting himself up as a potential front-runner for his party. He has said he remains undecided about officially launching a 2028 campaign.

As a Democrat from California, his opponents would automatically label him as financially irresponsible and tax-happy. Calling out the massive budget problem on the horizon, raising taxes and making painful cuts will give them ammunition.

“There’s a long list of things that he’s going to be charged with, and this is likely to be one more,” Sragow said. “But I guess the question is, is he going to be charged with a political misdemeanor or a political felony?”

Former state Sen. Steve Glazer said Newsom is standing on political quicksand either way. State budget projections are based on assumptions about the future that often don’t bear out, leaving his choices exposed to criticism that he went too far, didn’t do enough, and everything in between.

“Whatever the governor decides to do in his May revise and in his final budget, it’s fraught with political risks, because it can be manipulated so easily by all sides,” Glazer said.

If Newsom ignores the spending problem, his successor could blame him for California’s financial woes when they take office in January and provide their own outlook of the state’s fiscal future. At the time, Newsom could be trying to convince America to make him the nation’s next president.

Murphy said Newsom has championed major policies and been reluctant to back off them later when revenue doesn’t pencil out.

In terms of spending, he’s governed similarly to the men who led California before him, with the exception of Jerry Brown, who cut programs to reduce a deficit he inherited in his second stint in the governor’s office and left Newsom with a surplus.

“It’s not all that different than most of the governors have done, which is finding it very hard to say no and finding it very hard to take on a tough choice of going to the ballot to ask for more money or raise taxes,” Murphy said.

On taxation, Newsom is perhaps most similar to former Gov. George Deukmejian, who opposed general tax increases for most of his administration.

Deukmejian left a budget disaster for his successor, Gov. Pete Wilson. Deukmejian publicly claimed he passed a balanced budget in his final year and blamed an economic downturn for the problems Wilson encountered.

When Wilson announced a record $13-billion budget deficit early in his first year in office in 1991, he said the Persian Gulf War, an economic downturn and natural disasters added to a structural deficit in the budget.

The Legislature and Deukmejian, Wilson said, had “papered over” the problem.

In a treehouse nestled in redwoods north of San Francisco, Gov. Newsom stood cold and hungry as Sergey Brin, the world’s fourth-richest man, and his wellness-influencer girlfriend told him they were leaving the state.

It was late in the evening at a Christmas party hosted by crypto titan Chris Larsen — featuring singer Janelle Monáe and a towering abominable snowman with glowing red eyes — when Brin and his partner, Gerelyn Gilbert-Soto, confronted Newsom about a new proposal to tax billionaires in California, according to people who’ve spoken with the governor. Such a levy could hit Brin’s stake in Alphabet Inc. and his $272.6 billion fortune.

Newsom, who opposes the wealth tax, was still telling people about the lengthy exchange at the party months later, complaining of a lingering cold the pair had given him, according to the people, who asked not to be named discussing private conversations with the governor.

Brin, meanwhile, followed through. He left the state, bought a lakeside mansion in Nevada, and started bankrolling a billionaire political uprising in California.

Newsom, through a spokesperson, declined to comment on the interaction. “The governor has been very clear with everyone, no matter who they are, that this effort will do serious damage to the state, including for public safety workers and schools, at the expense of one special interest group,” Izzy Gardon, a spokesperson, said.

A representative for Brin didn’t respond to requests for comment.

Brin’s political push reflects a broader awakening among California’s ultrawealthy. Over the past six months, the proposed billionaire tax and a heated governor’s race have drawn tech titans and business leaders more directly into the state’s affairs — a space many of them have traditionally kept at arm’s length.

Prior to this year, Brin’s last contribution in a California election cycle was 2010 when Arnold Schwarzenegger was governor and the Google co-founder largely backed climate causes. He’s now spent more than $58 million in the last four months, including an extra $9 million disclosed late Friday, but more importantly has helped mobilize a network of fellow tech titans in a push to sway state issues.

“The wealth tax was a wake up call, it was a fire that just lit up Silicon Valley literally in a matter of weeks,” said Steven Maviglio, a veteran Democratic strategist. “I’ve never seen anything like it.”

Altogether, ultrawealthy donors have injected more than $270 million into California’s political scene in this election cycle. Outside of the wealth tax, billionaire Tom Steyer is emerging as a top Democratic candidate for governor after the downfall of former Representative Eric Swalwell following allegations of sexual assault. Steyer, a former hedge fund manager, has spent more than $140 million in his election bid, crowding TV airwaves with ads and labeling himself a “class traitor” with a campaign modeled after Vermont Senator Bernie Sanders.

Ballots for the June 2 primary election start going out next week. Brin and a cohort of the ultrawealthy including Coinbase CEO Brian Armstrong and venture capitalists Vinod Khosla and John Doerr have plowed millions into supporting Matt Mahan, a Silicon Valley mayor, with a back-to-basics agenda and a penchant for taking on the state’s Democratic establishment.

That money has helped Mahan buy airtime and attracted controversy, but his polling numbers remain stuck in the single digits while Steyer’s well-funded progressive campaign is gaining favor with voters. Brin has also backed Republican Steve Hilton, who’s currently leading polls.

“You have two polar opposites going on. You have a billionaire running who has actually fully adopted an agenda that the vast majority of voters agree with: Taxing billionaires, funding healthcare, fighting back against ICE,” said Lorena Gonzalez, head of the state’s largest union group, the California Federation of Labor Unions. “And then you have billionaires pushing a candidate whose talking points are apologetic to the tech industry.”

The billionaire political activism in California mirrors larger shifts in Silicon Valley and the nation. President Donald Trump has given tech billionaires broad access to the White House, inviting Brin and other industry captains over for dinner and to join advisory boards.

Back in September, Trump singled out Gilbert-Soto as Brin’s “really wonderful MAGA girlfriend” at a White House dinner also attended by Mark Zuckerberg, Tim Cook and Sam Altman. She has publicly supported Republican Steve Hilton for California governor, a candidate Trump endorsed and Brin has also donated to.

In California, Brin’s newfound political action was catalyzed by the wealth tax proposal, which would levy a one-time 5% tax on billionaires to help offset federal healthcare cuts. In a Signal group chat earlier this year with other Silicon Valley elite, Brin floated the idea of raising hundreds of millions of dollars to influence California politics, according to a person who saw the message.

Brin left California for Nevada ahead of a Jan. 1 residency deadline for the proposed wealth tax. He moved to a $42 million mansion on the Nevada side of Lake Tahoe, featuring two glass-walled funiculars.

Shortly after leaving California, Brin contributed $20 million to a new group dedicated to fighting the tax while also pushing pro-business and housing affordability policies, Building a Better California, making him the single largest contributor. He added $37 million over the spring, as the group quickly started supporting a trio of anti-wealth tax measures that could nullify a billionaire tax if it gets passed in an election. One of the measures, the so-called Transparency Act, has enough signatures to qualify for the November ballot, its backers claimed on Monday.

Building a Better California “remains fixed on long-term reforms supported by most Californians: housing affordability, stable funding for education, infrastructure investments, and government accountability,” a spokesperson said.

Joining Brin in the effort were other billionaires, including former Google CEO Eric Schmidt, Stripe CEO Patrick Collison and venture capitalist Michael Moritz. Peter Thiel, who also left California ahead of the New Year’s Day deadline, gave $3 million to a separate committee opposing the wealth tax.

“They don’t trust California anymore,” said David Lesperance, a tax attorney who specializes in relocations and has helped move five families out of the state because of the wealth tax threat.

Brin and his fellow billionaires helped push up the costs to gather the more than 870,000 signatures required to qualify a ballot measure. This forced the union behind the wealth tax, SEIU-UHW, to spend more on their efforts.

Now, the union says it has succeeded in getting the signatures it needed, which will likely force the business leaders opposing it into further spending.

“A very small group of the most controversial billionaires on the planet tried to stop Californians from being able to save their local emergency rooms and hospitals — but our current signature tally proves frontline healthcare workers will prevail in bringing this commonsense proposal to voters,” said Suzanne Jimenez, SEIU-UHW’s chief of staff. “When our growing coalition files these signatures, David will have won the first round against Goliath.”

Other billionaires have bankrolled their own political initiatives, including Larsen, who set up his own network of influence groups with names like Grow California and Golden State Promise.

Many in Sacramento are skeptical that Brin and his fellow ultra-rich will succeed in swaying California state politics. They point to the failed candidacy of former eBay executive Meg Whitman, who spent around $144 million of her own fortune to become governor, or even venture capitalist Tim Draper’s longshot initiative to split California into six separate states.

“They’re trying to extrapolate from their own industry, which might have been fabulously successful, that they know something about political advertising, when they don’t,” said Garry South, a veteran Democratic strategist. “They think, ‘Hey, I’ve got money I can throw it around,’ and they don’t really do their homework.”

Political consultants describe their frustration with some wealthy tech donors, who often view their political giving through an investment lens, promising big checks and not following through if they don’t see momentum. That’s led to questions about whether the California billionaire activism would continue if Mahan’s governor bid fails and the wealth tax passes.

Even Larsen, who’s worth around $13 billion, has expressed anxiety that not enough business leaders are stepping into politics. “It’s a lot of talk, and they’re happy, but we don’t see the firepower we need to take on the SEIUs,” he said, referring to the state’s largest union.

Newsom, for his part, acknowledges that many of the state’s wealthiest residents are willing to donate significant sums of money, but want to do it on their own terms and not through a tax.

“Some will never give a penny away,” he said at a Bloomberg News event in January, not long after his encounter with Brin in the treehouse. “Some I respect. Some I don’t.”

Kamisher and Carson write for Bloomberg.