With California facing deep budget uncertainty and widening economic divides, Gov. Gavin Newsom on Friday vowed to protect residents on both ends of the income spectrum \u2014 from wealthy business leaders he fears could leave the state to unhoused Californians relying on state-funded services.<\/p>\n
That balancing act was on display as Newsom sharpened his criticism of a proposed ballot measure to tax billionaires, a measure opponents say may push tech companies and other businesses out of the state and wound California\u2019s economy.<\/p>\n
\u201cIt’s already had an outsized impact on the state,\u201d said Newsom, speaking to reporters in San Francisco’s Mission District.<\/p>\n
Newsom is trying to head off a union\u2019s plan for a November ballot measure that would put a one-time tax on billionaires. If approved by voters, it would raise $100 billion by imposing a one-time wealth tax of 5% on fortunes.<\/p>\n
Service Employees International Union-United Healthcare Workers West, the union behind the proposal, wants to raise money to help millions of Californians affected by widespread healthcare cuts by the Trump administration.<\/p>\n
California political leaders, facing a tough budget year, warn that the state does not have the financial capacity to backfill those cuts.<\/p>\n
Newsom, who is working behind the scenes with SEIU-UHW in an effort to stop the ballot measure, on Friday appeared doubtful that a deal could be struck with proponents of the measure.<\/p>\n
\u201cI don’t know what there is to compromise,\u201d said Newsom, calling the measure \u201cbadly drafted\u201d and arguing the money raised wouldn\u2019t be spread among other groups.<\/p>\n
\u201cIt does not support our public educators. Does not support our teachers and counselors, our librarians. It doesn’t support our first responders and firefighters. Doesn’t support the general fund and parks.”<\/p>\n
Two top Newsom advisors, Dan Newman and Brian Brokaw, are raising money and have formed a committee to oppose the measure.<\/p>\n
The billionaire tax measure is dividing political leaders in California and the rest of the country, with both Rep. Ro Khanna (D-Fremont) and Sen. Bernie Sanders (I-Vermont) supporting the tax.<\/p>\n
“It’s a matter of values,” Khanna said on X. “We believe billionaires can pay a modest wealth tax<\/a> so working-class Californians have the Medicaid.”<\/p>\n Already, some prominent business leaders are taking steps that appear to be part of a strategy to avoid a potential levy.<\/p>\n On Dec. 31, PayPal co-founder Peter Thiel announced that his firm had opened a new office in Miami, the same day venture capitalist David Sacks said he was opening an office in Austin.<\/p>\n Suzanne Jimenez, chief of staff for SEIU-United Healthcare Workers West, called it a myth that billionaires are leaving the state and criticized Newsom.<\/p>\n “Right now, his priority seems to be protecting roughly 200 ultra-wealthy individuals,” she said. “Healthcare workers are focused on protecting emergency room access and lifesaving care for all 39 million Californians.”<\/p>\n The proposed tax has reverberated throughout the Silicon Valley and Bay Area, home to some of the world’s most lucrative tech companies and financially successful venture capitalists.<\/p>\n Newsom was in San Francisco on Friday, where he served two terms as mayor, to address a separate, more pressing concern for Californians on the opposite end of the economic spectrum \u2014 those living in poverty and on the city streets.<\/p>\n Newsom, who is weighing a 2028 presidential run, spoke at Friendship House, a substance-use treatment provider, where the governor said California is turning around the state’s homelessness crisis.<\/p>\n He pointed to a recent 9% statewide drop in unsheltered homelessness as evidence that years of state investment and policy changes are beginning to show results.<\/a><\/p>\n That was the first such drop in more than 15 years on an issue that is a political vulnerability for the two-term governor. California still accounts for roughly a quarter of the nation\u2019s homeless population, according to the Public Policy Institute of California.<\/p>\n Newsom said Friday that the decline reflects years of expanded state investment in shelter, housing and behavioral healthcare, combined with stricter expectations for local governments receiving state funds. He said the state’s efforts contrast with what is happening elsewhere, pointing to homelessness continuing to rise nationally.<\/p>\n The governor\u2019s budget proposal<\/a>, which was released Jan. 9, includes $500 million for California\u2019s Homeless Housing, Assistance and Prevention program, which provides grants to cities, counties and local continuums of care to prevent and reduce homelessness.<\/p>\n That money is paired with investments from Proposition 1, a 2024 ballot measure backed by Newsom and approved by voters. The measure authorized billions in state bonds to expand mental health treatment capacity and housing for people with serious behavioral health needs.<\/p>\n Following Newsom\u2019s budget proposal, legislators, housing advocates and local officials said the funding falls short of the scale of the problem.<\/p>\n That concern is unfolding against a constrained budget backdrop, with the governor\u2019s finance director warning that even as AI-related tax revenues climb, rising costs and federal cuts are expected to leave the state with a projected $3 billion deficit next year.<\/p>\n The nonpartisan Legislative Analyst\u2019s Office said Newsom\u2019s plan leaves California financially exposed<\/a>, noting that the administration\u2019s higher revenue estimates exclude the risk of a stock market correction that could significantly worsen the state\u2019s budget outlook.<\/p>\n The analyst’s office said those risks are compounded by projected multiyear deficits of $20 billion to $35 billion annually, underscoring what it called a growing structural imbalance.<\/p>\n Newsom on Friday called the LAO’s projections about the budget too pessimistic, but said the office is “absolutely right about structural problems in the state.”<\/p>\n Newsom\u2019s budget does not include significant funding to offset federal cuts to Medicaid and other safety-net programs under President Trump and a Republican-led Congress, reductions that local officials warn could have far-reaching consequences for local governments and low-income residents.<\/p>\n Addressing those broad concerns, the governor defended his budget and suggested the spending plan will change by May, when the state’s financial outlook is more clear.<\/p>\n Times staff writer Seema Mehta and Caroline Petrow-Cohen contributed to this report.<\/p>\n