The Brief

It’s Gavin Newsom’s final year in office as California governor — and his last chance to use his role as governor to audition for the national stage.

The governor, who will address the Legislature and present his budget proposal this week, has spent the past seven years pushing an ambitious agenda. Now in his final year, numerous interest groups will clamor for him to pass their preferred policies, nix the regulations they fear and protect the programs they favor. How he responds will follow him into his expected presidential primary run.

Will he, with his recent focus on affordability, make a dent in Californians’ housing and health care costs? Will he make progress on reducing homelessness? Will he continue pushing green energy as voters demand cheaper gas? Will he weather another dismal budget deficit without punishing cuts that would alienate the progressives whose programs he has championed?

“This really is a pivotal year for him,” Democratic political consultant Kelly Calkin said. “What do voters in the rest of the country want to see? They’re feeling the pinch of affordability. … He’s probably going to look through that lens on what helps shape his agenda for the next year.”

It’s also his final opportunity to make headway on some of the lofty goals Newsom made when he ran for governor in 2018 that he hasn’t always met.

He vowed to tackle homelessness, which has only gotten worse over his seven-year tenure, despite the more than $24 billion his administration has poured into it. He started off his term with an initial, headline-grabbing proposal to grant new parents six months of paid leave, but quickly pared it back to a two-week increase, for a total of eight weeks, and gradual boosts in how much the program pays.

In 2021 he said the state would add 200,000 new subsidized child care slots by this year, but the plan been delayed for two years and remains tens of thousand of slots short; he has since promised to resume the expansion this year.

He campaigned on establishing a single-payer public health care system, even calling out “politicians saying they support single-payer but that it’s too soon, too expensive or someone else’s problem.” Then he pivoted to “universal coverage,” with the state slowly expanding coverage for low-income Californians, including undocumented immigrants, but abruptly halted that amid a budget deficit last year.

He spoke, like so many before him, of evening out the state’s boom-and-bust tax system that over-relies on stock market returns, but has largely quashed other proposals to raise revenue as the state stares down a deficit.

‘It never seems like enough’

Newsom’s penchant for big promises and first-in-the-nation ideas has been both a blessing and a curse for the ambitious politician. Advocates of those policies say the lofty goals have made a difference, even if the state ultimately falls short of achieving all of them.

Newsom has left his mark on state government: He started new programs like the expansion of public school to all 4-year-olds, created an office to control rising health care costs, flexed the state’s regulatory powers to achieve its greenhouse gas-reduction goals — only to run into resistance with the Trump administration — and pushed state leaders into overseeing thorny issues like homelessness and the mental health care system that had long been left to local and county governments.

“I don’t think there was a lot of stuff lacking,” said Anthony Rendon, the former Assembly speaker who led the chamber during Newsom’s first five years in office, of policy issues the governor has yet to address. After years of working with Newsom’s predecessor Jerry Brown, who was focused mostly on fiscal restraint and building up the state’s reserves, Rendon and former Senate President Pro Tem Toni Atkins recalled Newsom starting off his first term in 2019 pleasing the mostly Democratic Legislature with a long list of progressive ideas and a willingness to spend on them.

“In retrospect, it never seems like enough,” Rendon said.

Coral Street in Santa Cruz has become a prominent hangout for the unhoused community, who find resources at the Housing Matters shelter during the day.

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Manuel Orbegozo

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CalMatters

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A framer works to build the Ruby Street apartments in Castro Valley on Feb. 6, 2024.

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Camille Cohen

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CalMatters

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Transitional kindergarten instructional assistant Nancy Espino reads a book about crickets to children at Silverwood Elementary School in the Mt. Diablo Unified School District in Concord on Aug. 11, 2025.

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Laure Andrillon

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Case in point: housing. It’s perhaps the most visible measure by which Newsom will be judged after he leaves office and it comprises a bulk of the recent national Democratic platform focused on lowering the cost of living. About 40% of California households are “burdened” by their rent or mortgage, Census data shows, a policymaker benchmark meaning housing eats up more than a third of their income.

Newsom ran on lowering those costs by boosting production and said it was “achievable” for the state to build an ambitious 3.5 million new homes by 2025. In 2024, the state added just under 120,000 new units, about a fifth of the annual rate needed to meet that goal. In media appearances the governor now downplays his original figure as a “stretch goal.”

Yet those who favor building more say he’s still accomplished more than any other governor on housing. They blame local resistance to housing density, high interest rates and the persistently high cost of building as reasons for the slow progress.

“You can’t solve a systemic problem overnight or even in seven years, but what you can do is change the trajectory of the issue,” said Ray Pearl, executive director of the California Housing Consortium, a nonprofit that advocates for building affordable housing.

A pivot to modular housing this year?

Pearl pointed to actions Newsom has taken, like an early budget move to quintuple the state’s tax credit for low-income housing construction, backing laws that relax rules on where housing can be built and picking legal fights with cities that refuse to plan adequate housing units for their populations.

“Leadership sets the tone,” he said. “It’s changed the focus and the conversation to where the state of California has finally gotten serious in planning for and producing affordable housing.”

Pearl said in Newsom’s final year in office he hopes the governor will support a proposed $10 billion bond lawmakers want to put on this year’s ballot to boost a state affordable housing fund.

Newsom acknowledges California has yet to see his promised building boom, and last month expressed interest in alternative forms of construction, such as modular housing, as another solution. On The Ezra Klein Show, he hinted at an upcoming legislative debate over how the state can promote modular housing, a cheaper way to build in which houses are assembled in factories then shipped to sites to be installed. An Assembly committee chaired by one of Newsom’s allies on housing, Democratic Oakland Assemblymember Buffy Wicks, is set to discuss the method this year. Its use in the Bay Area has already exposed familiar debates about the use of union labor in housing.

“This holds a lot of promise. It holds a lot of political peril, in the context of the politics within labor. And that has to be accommodated and dealt with,” Newsom said. “By the way, if there’s a big preview for California in my last year, it’s in this space legislatively to take it to the next level.”

It’s the closest Newsom has come in recent weeks to stating a new policy goal or proposal. Izzy Gardon, Newsom’s spokesperson, would not provide any details on his housing or any other agenda, telling CalMatters only to “stay tuned.”

Gardon refused interview requests to discuss the governor’s policy goals for his final year. Newsom is expected to deliver his State of the State address on Thursday.

Tough times for health care and social services

Already, advocates for the comprehensive safety-net services that Newsom has championed — another hallmark of his tenure — are urging him to maintain those programs as he stares down another tough budget deficit estimated at $18 billion. The agency overseeing those services accounts for nearly 40% of the state’s general fund spending and many of its programs are projected to lose significant federal funds through President Donald Trump’s tax and spending bill.

Gov. Gavin Newsom marches with a group of supporters towards the state Capitol for his second inauguration on Jan. 6, 2023.

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Miguel Gutierrez Jr.

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CalMatters

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During Newsom’s two terms, he added subsidized child care slots, boosted cash assistance for the poor, installed a state surgeon general who has focused on childhood trauma and the racial health gap and most significantly, incrementally expanded health care coverage to different groups of undocumented immigrants.

The latter, a controversial and costly policy, has allowed the governor to pivot from his original promise of a universal, state-paid health care system that was the pie-in-the-sky dream of progressives and still say he was achieving “universal access.” After passage of the Affordable Care Act, more than 90% of Californians were insured by the time Newsom took office. His expansions, first for immigrant young adults and then for older ones, pushed it to nearly everyone in 2023.

Policy allies generally don’t fault Newsom for shifting away from a single-payer system, which would have required billions more in state funds and complex agreements with an increasingly un-aligned federal administration. They are particularly satisfied that his administration has laid some of the groundwork for such a proposal by attempting to rein in the growth of health care costs through price limits imposed by the Office of Health Care Affordability. But now, they’re worried he’ll walk away from his expansive coverage goals altogether.

Last year, facing higher than expected costs in the Medi-Cal program and needing to close a $12 billion deficit, Newsom undid coverage for the last group of undocumented residents to become eligible: working-age adults. A freeze on new enrollment of adults took effect Jan. 1. Later this year, undocumented immigrant adults will lose Medi-Cal dental coverage and next year most will face monthly premiums that are expected to force some off coverage, to the disappointment of health advocates who are urging Newsom to reverse the cuts.

Amanda McAllister-Wallner, executive director of the advocacy group Health Access California, said she’s worried the administration will consider further cuts this year, after Newsom has come out heavily against other proposals to raise revenue for the health system, like a nurses’ union proposal for a wealth tax. She doesn’t like that the governor appeared willing to back down on coverage at the same time the state’s provision of social services for immigrants became an increasing political controversy nationally.

“The hope was that the Health for All expansion would be considered the baseline, that that would be something we budget for long term because it’s just something that’s part of who we are as a state,” said McAllister-Wallner. “Health care has been an area where the governor has really made a name for himself in a way that I think he can and should be very proud of, and to see … a backing-off of those commitments would be the biggest disappointment for me.”

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

The Trump administration says it’s planning to freeze about $10 billion in federal support for needy families in California and four other Democrat-run states, as the president announced an investigation into unspecified fraud in California.

The plans come on the heels of the Trump administration announcing a freeze on all federal payments for child care in Minnesota, citing fraud allegations against daycare centers in the state.

The state’s Democrat governor, Tim Walz — who ran for vice president against Donald Trump’s ticket in 2024 — announced Monday he was dropping out of running for reelection. He pointed to fraud against the state, saying it’s a real issue while alleging Trump and his allies were “seeking to take advantage of the crisis.”

On Monday, the New York Post reported that the administration was expanding the funding freeze to include California and three other Democrat-led states, in addition to Minnesota. Unnamed federal officials cited “concerns that the benefits were fraudulently funneled to non-citizens,” The Post reported.

Early Tuesday, President Trump alleged that corruption in California is worse than Minnesota and announced an investigation.

“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud Investigation of California has begun. Thank you for your attention to this matter! PRESIDENT DONALD J. TRUMP,” the president wrote on his social media platform Truth Social.

He did not specify what alleged fraud was being examined in the Golden State.

LAist has reached out to the White House to ask what the president’s fraud concerns are in California and to request an interview with the president.

“For too long, Democrat-led states and governors have been complicit in allowing massive amounts of fraud to occur under their watch,” said an emailed statement from Andrew Nixon, a spokesperson for U.S. Department of Health and Human Services, which administers the federal childcare funds.

“Under the Trump administration, we are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money.”

Gov. Gavin Newsom’s press office disputed Trump’s claim on social media, arguing that since taking office, the governor has blocked $125 billion in fraud and arrested “criminal parasites leaching off of taxpayers.”

Criminal fraud cases in CA appear to be rare for this program

Defrauding federally funded programs is a crime — and one LAist has investigated, leading to one of the largest such criminal cases in recent years against a California elected official, which surrounded meal funds.

When it comes to the federal childcare funds that are being frozen, the dollar amount of fraud alleged in criminal cases appears to be a tiny fraction of the overall program’s spending in California.

A search of thousands of news releases by all four federal prosecutor offices in California, going back more than a decade, found a total of one criminal case where the press releases referenced childcare benefits.

That case, brought in 2023, alleged four men stole $3.7 million in federal childcare benefits through fraudulent requests to a San Diego organization that distributed the funds. All four pleaded guilty, with one defendant sentenced to 27 months in prison and others sentenced to other terms, according to authorities.

It appears to be equivalent to one one-hundredth of 1% of all the childcare funding California has received over the past decade-plus covered by the prosecution press release search.

Potential impact on California families

The plans call for California, Minnesota, New York, Illinois and Colorado to lose about $7 billion in cash assistance for households with children, almost $2.4 billion to care for children of working parents, and about $870 million for social services grants that mostly benefit children at risk, according to unnamed federal officials speaking to the New York Times and New York Post.

In the largest category of funding, California receives $3.7 billion per year. The program is known as Temporary Assistance for Needy Families, or TANF.

 ”It's very clear that a freeze of those funds would be very damaging to the children, families, and providers of California,” said Stacy Lee, who oversees early childhood initiatives "at Children Now, an advocacy group for children in California.

 ”It is a significant portion of our funds and will impact families and children and providers across the whole state,” she added. “It would be devastating, in no uncertain terms.”

About 270,000 people are served by the TANF program in L.A. County — about 200,000 of whom are children, according to the county Department of Public Social Services.

“Any pause in funding for their cash benefits – which average $1000/month - would be devastating to these families,” said DPSS chief of staff Nick Ippolito.

Ippolito said the department has a robust fraud prevention and 170-person investigations team, and takes allegations “very seriously.”

It remains to be seen whether the funding freeze will end up in court. The state, as well as major cities and counties in California, has sued to ask judges to halt funding freezes or new requirements placed by the Trump administration. L.A. city officials say they’ve had success with that, including shielding more than $600 million in federal grant funding to the city last year.

A union representing California childcare workers said the funding freeze would harm low-income families.

“These threats need to be called out for what they are: direct threats on working families of all backgrounds who rely on access to quality, affordable child care in their communities to go to work every day supporting, and growing our economy,” said Max Arias, chairperson for the Child Care Providers United, which says it represents more than 70,000 child care workers across the state who care for kids in their homes.

“Funding freezes, even when intended to be temporary, will be devastating — resulting in families losing access to care and working parents facing the devastating choice of keeping their children safe or paying their bills.”

Federal officials planned to send letters to the affected states Monday about the planned funding pauses, the New York Post reported. As of 3 p.m. Tuesday, state officials said they haven’t gotten any official notification of the funding freeze plans.

“The California Department of Social Services administers child care programs that help working families afford safe, reliable care for their children — so parents can go to work, support their families, and contribute to their communities,” said a statement from California Department of Social Services spokesperson Jason Montiel.

“These funds are critical for working families across California. We take fraud seriously, and CDSS has received no information from the federal government indicating any freeze, pause, or suspension of federal child care funding.”

Housing officials in the city of Los Angeles say a pandemic-era voucher program is set to run out of money later this year, putting thousands of renters at risk of homelessness.

The federal Emergency Housing Voucher program was launched in 2021 as a way to get vulnerable people off the streets and into housing during the COVID-19 crisis. The city of L.A. received more than 3,300 of the vouchers.

With federal funding now running out, the city is preparing to wind down the program. On Monday the city’s housing authority said it had told 2,760 tenant households and 1,700 landlords that unless new funding is found, vouchers will expire by November or December of this year.

“We are providing this notice nearly a year in advance because our families deserve the respect of time to prepare, but this is not a notice of resignation,” said L.A. Housing Authority President Lourdes Castro Ramírez said in a news release. “We are exhausting every avenue — at the local, state and federal levels — to bridge this funding gap.”

The Housing Authority said each household using a voucher had an average of 1.58 members. That puts more than 4,000 Angelenos at risk of losing their housing later this year.

Homelessness progress could be reversed

Congress originally intended the program to continue through 2030, but last year, the Trump administration announced funding would end sooner. The program’s demise risks reversing L.A.’s reported progress at stemming the rise of homelessness.

After years of steady increases, the city has registered slight reductions in the number of people experiencing homelessness for the past two years. In 2023, the region’s homeless services authority reported 46,260 people experiencing homelessness in the city of L.A. By 2025, that number had fallen to 43,695.

The accuracy of those official counts has been questioned by local researchers, but elected officials have cheered the numbers as a sign that the tide is turning in addressing one of L.A.’s most vexing problems.

With thousands of renters now at risk of losing a key resource helping them afford the city’s high rents, sharp increases in homelessness could be on the horizon, said Mike Feuer, a senior policy advisor with the Inner City Law Center.

“They're going to fall into homelessness, and they're going to increase L.A.'s homeless population by almost 10%,” Feuer said. “Those are the implications of what the Trump administration is doing.”

Voucher holders have low incomes; many have kids

According to L.A.’s Housing Authority, about 1-in-4 voucher holders has children and 1-in-5 is elderly. And about 40% are disabled. These households have an average income of less than $14,000 per year, and they receive an average of $1,789 per month in rental subsidy while paying about $350 out of their own pockets.

The loss of federal funding for Emergency Housing Vouchers is distinct from the issues facing renters using Housing Choice Vouchers, another federally funded program often referred to as Section 8. Existing vouchers in the Section 8 program have continued to be funded, but federal funding reductions have caused city officials to cut the amount of rent new vouchers in that program can cover by 10%.

L.A. Housing Authority officials said they have dedicated staff reaching out to tenants to explore other housing resources that might keep them housed after the vouchers expire.

Manuel Villagomez, an attorney with the Legal Aid Foundation of Los Angeles specializing in subsidized housing, said with city and state budgets strapped, tenant advocates are not counting on California to find alternative funding sources to continue the program.

“It seems like it's a tragedy in the making,” Villagomez said. “We're preparing for the worst.”