Gov. Gavin Newsom follows Jerry Brown’s path in last budget
Like his predecessor Jerry Brown, outgoing Gov. Gavin Newsom intends to leave state finances better than he found them when he leaves office early next year.
The state is expected to close its structural deficit and maintain a balanced budget through July 2028, according to Newsom’s final revised budget proposal, which he presented Thursday.
“We’re cutting deficits, not corners,” he told reporters.
He attributed the balanced budget to $16.5 billion in projected capital gains taxes from artificial intelligence companies Anthropic, OpenAI and SpaceX, all three of which are expected to go public in the next year.
Newsom spoke glowingly about the trifecta, calling them “California startups that are now dominant businesses,” referring to their massive wealth and proximity to power in Silicon Valley and the White House.
The governor’s ties to Big Tech date back to when he used to let Google founders Larry Page and Sergey Brin crash on his couch in the 1990s. Newsom defended the state’s reliance on AI companies’ revenues by contrasting it with his signing last year of a major bill regulating the technology.
“We’re the first (state) to regulate large language models and frontier models, the first safety regulation in America, the first to do a big executive order before the Biden administration,” he said. “You also know my position on (social media usage for children) 16 and younger, I’ve been very clear on that, and very proud of California’s nation-leading efforts to regulate, at the same time, not to over regulate so we continue to inspire more innovation.”
The news that Newsom could leave office with a balanced budget is a major turnaround from January, when his finance officials projected a nearly $3 billion shortfall. Last year, Newsom came under fire for pausing Medi-Cal expansion for undocumented residents and imposing a $30 monthly premium on existing enrollees to cover holes in the budget.
Those policies are expected to take effect next year. And the $30 premium could be $50 if the Legislature approves Newsom’s proposal by the June 15 deadline.
Newsom said he was following in the footsteps of Brown, who left office in 2019 not only with a balanced budget but an $8.8 billion surplus.
“Jerry was one of the first to do that in a long time. You know, in the past, it was just short-termism,” he said, seemingly referring to the budgetary crisis of the later Schwarzenegger years. “It was just, ‘get the hell out of Dodge,’ and that didn’t service the state. And so I think it’s deeply part of (Brown’s) legacy, and I want it to continue.”
There are other motives for Newsom, whose tenure has been marked by COVID-19, devastating wildfires, and a failed recall campaign, to leave office with a rosy financial picture.
Unlike Brown, who retired in 2019 at age 80 to his family’s Colusa County ranch after 16 years of service, Newsom, 58, is reportedly eyeing a run for president in 2028.
He declined to say anything when reporters asked if he was running and what he planned to do after leaving office in January.
Instead, he pulled up a generated photo of the proposed gilded White House ballroom with a photo of himself as president in the center of the room.
