CA agencies discontinue some AI projects aimed at making government more efficient
Several California departments have discontinued generative artificial intelligence projects previously touted by the Newsom administration to help make state government more efficient.
Half of the initial eight projects — which emerged as part of a 2023 executive order from Gov. Gavin Newsom — are still under contract, but three others did not make it past the pilot phase. And one of the contracts was not renewed because department leaders determined the time-savings gained from the AI tool was not worth the cost. California has spent at least $5.8 million on these projects so far.
The mixed outcomes of these AI initiatives reflect a new approach to government technology and contracting, said Government Operations Secretary Nick Maduros.
“We’ve got to try new things and try new ways of doing things if we’re going to better serve the public,” Maduros said.
These projects are a way for departments to experiment with new technologies in real time and try to find ways to improve public services, with little risk to the state, he said, and if they don’t work out as planned, departments still learn from the process.
In the years since Newsom announced his executive order, he has pointed to these projects and other initiatives as evidence of his administration’s attempts to improve state operations.
“In the Golden State, we know that efficiency means more than cutting services to save a buck, but instead building and refining our state government to better serve all Californians,” the governor said in a news release about the projects one year ago.
Since the governor’s executive order, the Newsom administration has assembled a council to provide advice on how California can use the technology responsibly; rolled out an AI-powered “digital assistant” that government employees can use to find policy information; and unveiled training for state workers on artificial intelligence.
The administration proposed eight different pilot projects in two phases. The first round, announced in 2024, included projects aimed at improving traffic safety on California roads, enhancing language access to public programs for non-English speakers and answering taxpayers’ questions more efficiently. Later that year, Newsom announced the second round, which included projects to help the Finance Department more efficiently analyze legislation and assist the Labor and Workforce Development Agency to more accurately predict when a recession will occur.
In their pilot phases, the projects effectively cost the state nothing. But when half those projects moved into the second contracting phase, departments paid outside vendors to use these technologies. Of the projects that the state has paid for, the feedback has been mixed. For example, some users reported an AI tool that analyzes the cost of legislation is helpful, while other reported errors with the technology.
Four departments have signed contracts with outside vendors to pay for generative AI technologies, which include:
- The California Department of Tax and Fee Administration paid $445,000 for a year-long deal with SymSoft Solutions.
- The Finance Department expects to spend $565,000 over two years on contract with Authorium, Inc.
- The California Health and Human Services Agency is currently involved in a two-year $1.3 million contract with the company Smartling.
- The California Department of Technology has spent at least $3.5 million on two contracts with Deloitte Consulting and Accenture.
Projects sunset
CDTFA’s call center assistant, one of the AI tools to receive state funding, was helpful, but ultimately officials deemed it was not necessarily worth the cost of the product.
That AI tool tuned into CDTFA employees’ calls with taxpayers and transcribed their conversations while offering potential answers to callers’ questions by searching the state’s vast library of tax policies. It was meant to serve as a training ground for other state government call centers and department leaders hoped it would speed up the call center’s work, ideally eliminating the need to shift employees around the department during peak tax filing months to meet demand.
Maduros, who served as the director of CDTFA until he was appointed to the governor’s cabinet in early 2025, said that SymSoft Solutions custom-built the tool for the department’s needs.
“Even though the solutions worked in practice, they didn’t quite save as much time as we had hoped,” he said. “So the bulk of the time savings came from some of the tools that are available off the shelf.”
Instead of renewing the contract with SymSoft Solutions, officials decided to use a similar tool provided by Amazon Web Services, which was part of a larger contract CDTFA already had, a department spokesperson said.
Maduros said that in the time since this project was first started, the “off-the-shelf” tools provided by companies like AWS have improved and can now do some of the same services the custom-built technology was contracted to provide CDTFA employees.
SEIU Local 1000, the largest representative of state workers, including some CDTFA call center employees, said that members have reported that AI tools have added to their workload. Anica Walls, the union’s president, said that when new technology that aims to help workers is introduced, then those impacted should have a “real voice in how these tools are developed and used.”
“These AI programs can’t handle the complexity of the public’s needs and don’t bring the flexibility and care that state workers provide every day,” Walls said in a statement.
Other projects never made it past the pilot phase, including a tool for the Department of Housing and Community Development that was meant to track the state’s housing initiatives.
The California Department of Public Health had also initially planned to develop a tool that would streamline the labor-intensive process of inspecting healthcare facilities. A CDPH spokesperson said that the department did not move forward with the project this fiscal year because funding was unavailable.
EDD also decided not to move forward with a project that planned to use AI for enhanced statistical modeling to better forecast recessions and employment trends. An EDD spokesperson said in a statement that the department “found the better value right now is to pursue an internal development effort.”
From concept to contract
Departments are continuing to refine the four projects that are still under contract, though at least one of those initiatives has received mixed feedback from employees who tested it.
It’s not clear how well other efforts are progressing. Two of those are overseen by Caltrans – one that uses AI to study and enhance traffic management and another that hopes to use the technology to make dangerous roads safer for vulnerable users. That department did not respond to questions about the status of those initiatives.
Another project, a joint venture between the Finance Department and the technology company Authorium, Inc., was renewed for second year to continue improving the technology, with the goal of analyzing bills presented to the Legislature and estimating their associated costs.
The effort is meant to improve how efficiently the Finance Department can analyze legislation — over 1,700 bills were introduced in the 2026 legislative year — but the department emphasized that staffers are still involved in the process.
“Finance is not using GenAI to develop independent cost estimates, form policy recommendations, or identify political ramifications,” reads an FAQ document recently published by the department.
Finance deployed the first phase of the contract in June 2025 and has since completed a round of testing with 40 users. Feedback from those who tested the product was mixed.
One individual wrote that the tool was “a very promising step towards reducing bill analysis workload for the department,” according to feedback shared by the Finance Department.
Others said the tool was not helpful: “At this point it misses a lot of things or has inaccuracies, so it still needs to be double-checked.”
Christian Beltran, deputy director of legislation for the Department of Finance, said in a statement that the department is continuing to improve the tool and plans to test it a second year.
While not all the departments have continued with these projects, Maduros said the effort has been a success because it has enabled agencies to innovate and experiment.
“The idea of this is to actually start working and trying things and see what works in a way that’s cost-effective, rather than spending years and millions and millions of dollars planning,” he said.
