California’s urgent issues loom over Newsom campaign and his would-be successors

Newsom’s interview Monday on MS NOW, the cable channel beloved by Democratic politicians and activist voters, implied anew that his final year as governor will be dominated by his all-but-certain bid for the White House in 2028. He spent much it criticizing President Donald Trump for refusing aid to Los Angeles fire victims and cracking down on undocumented immigrants.

Newsom’s preoccupation will color whatever he and the legislature do about a deficit-ridden state budget and a half-dozen or so other stubborn issues that have emerged or become more acute since Newsom took office seven years ago.

In past years Newsom has been lackadaisical about delivering the annual State of the State message to the legislature that the state constitution requires. But he’ll perform the chore later this week, then unveil his response to the projections of semipermanent, multibillion-dollar deficits.

Gabe Petek, the legislature’s budget analyst, sees an immediate $18 billion gap between income and outgo that could mushroom to $35 billion if not closed. He’s warned that Newsom and legislators can’t count on a sluggish economy to solve their problem.

They have used a variety of gimmicks, including raids on emergency reserves, off-the-books loans and deceptive accounting gambits to stave off the day of fiscal reckoning, but the shortfall, born of overspending revenues, has continued.

“If our estimates hold, the legislature will face a fourth consecutive year of budget problems — all during a period of overall revenue growth,” Petek said in a November analysis. “As it stands — with larger forecasted deficits and many fewer tools available to address them — California’s budget is undeniably less prepared for downturns.”

The legislature’s leaders, pressed by a powerful progressive contingent, don’t want to reduce the health care and income support services they so willingly enacted after Newsom declared, erroneously, that the state had a $97.5 billion surplus three years ago.

Progressives and their allies in public employee unions and other left-of-center groups want to close the budget gap with new taxes and are sponsoring two ballot measures, one to extend a surtax on the highest-income taxpayers that’s due to expire and a second to impose a new wealth tax on the state’s billionaires.

Newsom has steadfastly rejected tax increases to deal with the deficit, unwilling, obviously, to become a pro-tax presidential candidate. But neither has he offered, so far, anything other than gimmicks to solve the problem his wildly off-base 2022 surplus declaration created.

The state’s stubborn budget deficit is just one of the issues that continue to defy resolution as Newsom’s final year begins. Other issues include high levels of homelessness and poverty, a housing shortage that’s just as acute as when he took office in 2019, an insurance crisis born of chronic wildfires, a woebegone bullet train project, soaring costs of living, persistent water supply uncertainties and a looming shortage of gasoline as refineries close due to hostile state regulation.

On top of everything, California’s $4 trillion economy is more or less stuck in neutral, with the nation’s highest unemployment rate, no net job growth since the COVID-19 pandemic and severe employment cutbacks in signature sectors, such as film and TV production technology.

The stark existence of such issues during Newsom’s final year as governor is not only a potential drag on his presidential campaign, but it colors the cast-of-thousands campaigns to elect a successor.

Will the would-be Democratic governors be willing to point out Newsom’s leftover issues — especially the budget deficit — and tell voters how they would approach the challenge? Or would they merely joust over who can be the loudest?

Dan Walters has been a journalist for more than 60 years, spending all but a few of those years working for California newspapers. He began his professional career in 1960, at age 16, at the Humboldt Times. CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics. He can be reached at dan@calmatters.org.