Newsom touts growing California economy in final State of the State

SACRAMENTO, Calif. (CN) — Governor Gavin Newsom on Thursday praised California as a beacon to emulate while slamming the federal government, drawing a bright line between the Golden State and President Donald Trump in his final year in office.

Delivering his final State of the State address in the Assembly, Newsom pointed to his state’s successes while condemning Trump’s actions. He praised California’s development in artificial intelligence and its move to raise the minimum wage for fast food and health care workers.

In comparison, Newsom called the daily machinations of Trump’s White House a “carnival of chaos.”

“It comes down a simple question,” Newsom said. “What do you stand for? Who do you stand for?”

California has made investments in its people as Trump’s White House has pushed for egregious immigration enforcement, Newsom said. Trump believes might makes right and that courts are speed bumps instead of stop signs, the governor added.

Immigration enforcement has led to smashed windows, along with American citizens being detained and shot. Trump’s administration emanates purposeful chaos and censors facts, Newsom said, a problem exacerbated by good people who remain silent.

“But in California, we’re not silent,” Newsom said. “We’re a beacon.”

Foreshadowing a first peek at his budget proposal set for Friday, Newsom said he’d deliver a budget totaling $248.3 billion. Additionally, tax revenues are some $42.3 billion higher than initially forecast.

“Why? Because our economy’s growing,” Newsom added.

Newsom’s initial budget rarely aligns with the predictions of the Legislative Analyst’s Office, which in November estimated the state’s deficit to reach $18 billion.

That’s a far cry from the $68 billion deficit the analyst foresaw in December 2023. But while an $18 billion gap isn’t as bad, larger deficits in future years are expected.

Newsom made no mention of a deficit in his State of the State.

However, he did acknowledge the issue of affordability — an issue Assembly Speaker Robert Rivas said in late 2024 would dominate the current legislative session.

“By the way, affordability, it’s not a word we just discovered,” Newsom said in another dig at Trump. “It’s not a hoax.”

The governor called the cost of housing California’s original sin. The state in 2019 imposed the nation’s strongest renter protections. It’s working to advance the controversial high-speed rail project, which he said would reduce commute times.

But more work is needed, Newsom added. He said lawmakers should focus on reducing the cost of building homes. He decried the purchase of thousands of homes at a time by large companies, forcing rents to become “too damn high.”

California has responded with an increased earned income tax credit, along with child tax credits and foster youth tax credits. Programs like Homekey and Roomkey have gotten homeless people off the streets. Newsom emphasized that the state saw a 9% reduction last year in its unsheltered population.

“For those with California derangement syndrome, it’s time to update your talking points,” Newsom declared.

The governor contrasted what he sees as California’s successes with Trump’s actions. Praising U.S. Representative Doug LaMalfa, a North State Republican who died during a medical emergency this week, Newsom said California’s congressional delegation unanimously supported a funding request of the federal government. The money is needed in response to the deadly Los Angeles-area fires last January.

Trump needs to act like the president of “all the United States,” Newsom said.

“We’re about persistence,” the governor said, ending his address. “And so we continue on.

“We built the future,” he added.

California Republicans were quick to chide Newsom over his speech, both before it started and afterward.

State Senator Rosilicie Ochoa Bogh, a Yucaipa Republican, said the results didn’t match Newsom’s rhetoric.

“While the governor takes victory laps, families are taking extra shifts,” Ochoa Bogh said in a statement. “While speeches sound optimistic, budgets at the kitchen table don’t add up. California is the world’s fourth-largest economy. We should be doing better.”

Assembly Republicans in a prebuttal slammed Newsom on his anticipated budget, as well as on the issue of affordability — a key issue going into the 2026 midterm elections.

“Governor Newsom has made big promises and launched endless new initiatives,” said Assembly Minority Leader Heath Flora, a Lodi Republican, in a statement. “But no matter what he says [Thursday], Californians are paying more and getting less, because his policies keep driving up the cost of everyday life.”

Republicans said Newsom has broken promises and failed to deliver affordability in the Golden State. They pointed to skyrocketing home costs, prices at the pump that are the highest in the country and the mismanagement of wildfire prevention.

“Was that a State of the State address, or the opening act of a campaign speech?” state Senator Tony Strickland, a Huntington Beach Republican, said in a statement. “Californians want honesty and accountability, not more rhetoric from a governor with a failing record of leadership.”