Newsom

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.

WASHINGTON — Los Angeles Mayor Karen Bass and L.A. County Supervisor Kathryn Barger met privately with President Trump and administration officials Wednesday to press for federal support and yet-unpaid wildfire recovery funding as the region continues to rebuild from the 2025 fires.

“This afternoon we met with President Trump and Administration officials to advocate for families who lost everything,” Bass and Barger said in a statement. “We had a very positive discussion about FEMA and other rebuilding funds as well as the support of the President to continue joining us in pressuring the insurance companies to pay what they owe — and for the big banks to step up to ease the financial pressure on L.A. families.”

Barger said the two leaders had a “high-level discussion” with the president in the Oval Office, sharing stories about what fire survivors are experiencing day to day. She added that “we left details behind with the President,” but did not specify whether Trump made any funding or policy promises during the meeting.

“First and foremost, today’s meeting was to thank the President for his initial support of infusing federal resources to expedite debris removal, as well as his recent tweet about insurance companies, which have already proven fruitful,” she said in a statement provided to The Times.

Bass was similarly reserved about the discussions, telling reporters that “we will follow up with the details,” but signaled progress is being made on federal support.

“I think what’s important is that we certainly got the president’s support in terms of, you know, what is needed, and then the appropriate people were in the room for us to follow up. And that was Russ Vought, who is the head of the Office of Management and budget,” Bass told KNX on Wednesday.

The meeting comes on the heels of a yearlong standoff between California leaders and the Trump administration over wildfire recovery funding, disaster response and whether the federal government should have a say in local rebuilding permitting.

California leaders, led by Gov. Gavin Newsom, have accused the Trump administration of withholding billions in critical wildfire aid, prompting a lawsuit over stalled recovery funds. Officials allege political bias in the delay of billions of dollars from the Federal Emergency Management Agency.

Newsom visited Washington in December. When he made his rounds on Capitol Hill, he met with five lawmakers, including three who serve on the Senate and House appropriations committees, to renew calls for $33.9 billion in federal aid for Los Angeles County fire recovery.

But the governor said he was denied a meeting with FEMA and would not say whether he had attempted to meet with Trump to discuss the issue.

Bass, meanwhile, appears to have found a path to the president on a subject that has been paramount for her community.

The fruitful meeting comes after Trump lobbed insults at the mayor at a news conference earlier this year, where he called her “incompetent” for how she handled last year’s wildfire recovery efforts. He alleged that under Bass’ leadership, the city’s delay in issuing local building permits will take years when it should have taken “two or three days.”

California officials, including Newsom, have urged the Trump administration to send Congress a formal request for the $33.9 billion in recovery aid needed to rebuild homes, schools, utilities and other critical infrastructure destroyed or damaged when the fires tore through neighborhoods more than 15 months ago.

What Bass and Barger’s meeting with the president ultimately produces remains to be seen.

The billions in recovery aid have not yet materialized, but the meeting could potentially give those discussions new momentum.

The White House did not immediately respond to a request seeking comment about the meeting.

Earlier this month, Trump criticized insurance provider State Farm on Truth Social for its handling of the devastating Los Angeles County wildfires. He accused the insurance giant of abandoning its policyholders when tragedy struck.

“It was brought to my attention that the Insurance Companies, in particular, State Farm, have been absolutely horrible to people that have been paying them large Premiums for years, only to find that when tragedy struck, these horrendous Companies were not there to help!” Trump wrote.

But the rebuke didn’t come out of the blue. It stemmed from a controversial February visit to Los Angeles by Trump administration officials.

Trump tapped Environmental Protection Agency Administrator Lee Zeldin in an effort to strip California state and local governments of their authority to permit the rebuilding of homes destroyed in the Eaton and Palisades fires.

Within the week, Zeldin was in Los Angeles, bashing Newsom and Los Angeles officials at a roundtable with fire victims and reporters, saying that residents were suffering from “bureaucratic, red tape delays and incompetency” and that leadership was “denying them … the ability to rebuild their lives”.

During the trip, officials heard direct complaints from local leaders and fire victims about insurers being slow, restrictive and insufficient with their claim payouts.

After these meetings, Trump directed Zeldin to investigate the insurers’ responses. State Farm, facing roughly $7 billion in fire-related claims, is also under formal investigation by California’s insurance commissioner over its handling of the crisis.

Despite tensions with the administration, Bass and Barger appeared confident that progress was being made on the insurance and funding issues.

“Our job is to fight for our communities,” their joint statement concluded. “When it comes to this recovery, our federal partners are essential, and we are grateful for the support of the President.”

SACRAMENTO — Before it all came crashing down, Eric Swalwell appeared on the cusp of rising to the top of the Democratic field in the California governor’s race.

Swalwell had just announced a statewide tour and aired his first ad. The former prosecutor and Dublin city councilman launched his campaign on “Jimmy Kimmel Live!” in November, a comfortable setting for a politician who’d built a national reputation by appearing on cable news shows to attack President Trump.

Influential forces in Sacramento had begun coalescing behind the then-Bay Area congressman, including some consultants and advisors close to Gov. Gavin Newsom. Newsom hasn’t endorsed, but his associates’ involvement lent credibility to Swalwell.

Swalwell’s campaign quickly collapsed with the explosive allegations that he sexually assaulted a former staffer and had acted inappropriately with other women who were just beginning political careers. Swalwell denies the allegations but dropped out of the race for governor and resigned his seat in the House.

The whiplash over Swalwell’s rapid rise and fall has Democratic leaders facing questions about whether they had a blind spot about his alleged behavior.

His onetime allies in Congress are being asked whether they knew about his conduct, which has been described as an open secret on Capitol Hill. Unions who backed Swalwell have fled, and political consultants are returning donations.

Lorena Gonzalez, president of the California Federation of Labor Unions, speaks to Kaiser Permanente nurses and healthcare workers at the Kaiser Permanente Zion Medical Center in San Diego on Jan. 26.

(K.C. Alfred / San Diego Union-Tribune via Getty Images)

California Federation of Labor Unions President Lorena Gonzalez, whose group endorsed Swalwell and three others in the race, said she confronted Swalwell more than a month ago after hearing rumors about womanizing and illicit photos.

“He’s a liar,” Gonzalez said. “He’s just a very skillful politician who did not tell the truth even when asked directly.”

Though he was little known in much of California, Swalwell, 45, was a youthful and fresh face in a field of candidates, many of them veteran politicians, when he entered the contest.

A little more than a week ago, his campaign was on an upward trajectory. His first statewide ad emphasized his hometown roots and concerns faced by Californians, including rising costs at his favorite doughnut shop in his hometown of Dublin. He rolled out new endorsements from state and federal elected officials almost daily.

Former and current advisors close to Newsom were also helping Swalwell’s campaign, multiple sources told The Times. Others associated with the governor are also helping rival candidates.

Other Democrats in the race said the warnings about Swalwell should have been investigated more thoroughly by the powerful California politicians and interest groups that backed him.

Antonio Villaraigosa, the former mayor of Los Angeles, called him a “flash in the pan” — someone who lacked substance.

“People thought just because he was popular on TV that maybe he had been vetted,” Villaraigosa said. “He had not been vetted.”

Gubernatorial candidates Katie Porter and Antonio Villaraigosa share a moment while participating in a candidate forum in Los Angeles on Jan. 10.

(Christina House / Los Angeles Times)

Swalwell’s entrance into the race last fall came at a time when elected officials and leaders of powerful interest groups in Sacramento were unimpressed by the field, particularly after big-name Democrats including former Vice President Kamala Harris, Sen. Alex Padilla and state Atty. Gen. Rob Bonta had passed on running.

Steven Maviglio, a Sacramento-based Democratic consultant, said there was pressure to find the “perfect candidate” for the state’s most powerful office.

“Democrats are looking for a fighter against Trump, and he fit the bill,” Maviglio said. “That was enough for most people.”

As with most members of California’s congressional delegation, Swalwell was an unfamiliar figure to many Californians living outside his Alameda County district, even though he had a lighthearted, robust presence on social media.

He’d never held statewide office when he was elected to Congress after a career that included serving on the Dublin City Council and working as a criminal prosecutor for Alameda County.

But he appeared to be close to former House Speaker Nancy Pelosi (D-San Francisco), who selected him to be an impeachment manager for the case against President Trump in 2021.

Former House Speaker Nancy Pelosi (D-Calif.) addresses the crowd at the California Democratic Party State Convention in San Francisco on Feb. 21, 2026.

(Christina House/Los Angeles Times)

At a forum in Washington this week, Rep. Pelosi rejected suggestions that Democrats looked past the accusations.

“None whatsoever,” she said, when asked what allegations she’d heard about.

Sen. Adam Schiff (D-Calif.), who previously worked alongside Swalwell on the House Judiciary Committee and endorsed him, said on MS NOW that he felt betrayed and “sickened” by the allegations.

“My paramount feeling is that I’m grateful these women came forward,” Schiff said. “I’m grateful that they did so when they did — it prevented our state from making a potentially terrible mistake.”

Sara Azari, an attorney for Swalwell, said in a statement that he denies all of the allegations of sexual misconduct and assault and will pursue “every legal remedy” against those making the claims.

“These accusations are false, fabricated and deeply offensive — a calculated and transparent political hit job designed to destroy the reputation of a man who has spent twenty years in public service,” Azari said.

Attorney Lisa Bloom reaches toward a photo at a news conference where Lonna Drewes, left, is seen with former Rep. Eric Swalwell, at a news briefing in Beverly Hills on Tuesday. Drewes detailed a 2018 encounter in which she claimed Swalwell drugged and sexually assaulted her after offering professional mentorship.

(Myung J Chun/Los Angeles Times)

On Tuesday, Lonna Drewes accused Swalwell of drugging and raping her in 2018 while she worked as a model, an allegation now being investigated by the Los Angeles County Sheriff’s Department.

Azari, in an interview on NewsNation, said of Drewes’ allegation: “Two adults consenting, which is our position is, is not against the law.”

California Democratic Party Chairman Rusty Hicks declined to answer questions this week about whether the scandal hurts the party’s credibility, saying only that the allegations are “clear for voters: [Swalwell] is not a suitable choice.”

In an interview with The Times, Hicks said the party relies on delegates to vet candidates before endorsement votes at the party convention. While no gubernatorial candidate reached the necessary level of support to earn the endorsement at the February gathering, Swalwell had the largest share with 24%.

Gonzalez, of the labor federation, said she called Swalwell in the first week of March after being contacted by several people about his sexually inappropriate behavior.

She described the awkward conversation — and his immediate denials. None of it was true, he said. If there was anything sordid to find in his past, it would have been dug up by Trump and conservatives who went after him when he was helping to try and impeach the president, he said.

At the union group’s endorsement meeting, members grilled Swalwell about several issues, including his claimed residency in Livermore, his involvement with a nonunion film production, and his ability to manage his own finances.

The issue of inappropriate sexual behavior never came up at the endorsement, Gonzalez said.

“We were in a position, like so many, of trying to figure out who this guy was with all these red flags, but being told by a lot of surrogates that they were his choice — whether it’s people in Congress or folks who knew him from home,” Gonzalez said.

Other institutional players also threw in their support. The California Medical Assn. endorsed Swalwell early in February. The group represents more than 50,000 physicians in the state and spends heavily in elections.

“It definitely was a nod that that’s where the establishment should head,” Maviglio said.

California Medical Assn. spokesperson Erin Mellon said the group met with candidates and backed Swalwell “based on the information available to us” at the time.

Behind the scenes, Swalwell was courting attention. He began hanging out at the Grange, a favorite hotel bar in Sacramento for state lawmakers and lobbyists, trying to make connections, according to a source who ran into him there.

Months earlier, he sent a text to a California political consultant with questions about who should help his campaign. He asked about the well-known firm of Bearstar Strategies, according to the text exchange, which was viewed by The Times.

Swalwell texted, “would you recommend having our IE go to them?” to the consultant, a reference to an “independent expenditure,” which is an outside committee that raises money in support of candidates but is barred from coordinating with their campaigns.

Bearstar Strategies ultimately launched an independent committee to support Swalwell, which in recent weeks raised more than $7 million from political action committees for the California Medical Assn., DaVita and other medical industry groups, as well as Uber.

Antonio Villaraigosa, left, shakes hands with Tom Steyer during a gubernatorial candidate forum in Sacramento on April 14, 2026.

(Godofredo A. Vásquez / Associated Press)

Bearstar Strategies, whose members have long advised Newsom, also provides media consultants for a committee running attack advertisements against environmentalist Tom Steyer, another candidate in the race. Swalwell would have benefited from the committee’s spending.

Jim DeBoo, a consultant and Newsom’s former chief of staff, is helping on the anti-Steyer committee, according to multiple sources, which has raised $14 million from real estate agents’ and utility industry groups. DeBoo didn’t respond to a request for comment, and a representative for Bearstar declined a request for an interview.

No one has claimed that any of those consultants or individuals knew about Swalwell’s alleged behavior. Bearstar Strategies said in a statement last week that it had suspended all activity on Swalwell’s independent expenditure.

Jamie Court, president of the nonprofit Consumer Watchdog, said institutional groups backed Swalwell because they thought he could win and they wanted to maintain the status quo in Sacramento.

“They picked the wrong guy,” Court said.