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Gov. Gavin Newsom promoted California as an antidote to the Trump agenda on Thursday, telling lawmakers during a wide-ranging State of the State address that California still leads in a host of critical areas such as manufacturing, technology, education and agriculture.
“Every year, the declinists, the pundits and critics suffering from California derangement syndrome look at this state and try to tear down our progress,” he said, instead pointing to technological advancements and engineering talent as a metric of his administration’s success.
“California’s success is not by chance — it’s by design. We’ve created the conditions where dreamers and doers and misfits and marvelers with grit and ingenuity get to build and do the impossible.”
He touted a 9% reduction in unsheltered homelessness, cheaper insulin and increased clean energy use in California as among his accomplishments, in a speech delivered with an eye toward higher office.
The address is his first State of the State to lawmakers in the Assembly chambers since 2020. He used it as an opportunity to highlight progress on some of his most ambitious promises on housing affordability, expanded health care coverage, universal pre-kindergarten and going fossil fuel-free. Some haven’t yet been met.
He targeted the Trump administration on a range of issues, including excessive policing and immigration raids, saying the state “faces an assault on our values unlike anything I have seen in my lifetime.” And in a common talking point for Newsom recently, he indirectly criticized the president for deprioritizing clean energy as China dominates electric vehicle production, and pointed to his own visits to international climate conferences.
“In California, we are not silent. We are not hunkering down. We are not retreating. We are a beacon. This state is providing a different narrative,” he said.
On homelessness, the reduction in the number of Californians sleeping on the street, in vehicles and in other places not meant for habitation is an important figure for the governor as he seeks to show improvement on one of California’s most stubborn challenges in his final year in office.
A humanitarian and public health crisis and the most visible consequence of California’s housing shortage, Newsom is sure to face national criticism on homelessness should he make an expected presidential run in 2028.
But the reduction came after years of increases in homelessness despite Newsom’s campaign promises to address the issue and his administration pouring over $24 billion into it during his two terms. In 2024, the year before the announced reduction, homelessness in California hit a record high: 123,974 were unsheltered while 63,110 were sheltered. That year, homelessness also spiked nationally.
Newsom did not announce the number who were homeless overall in 2025. The federal government in the coming weeks is expected to release the results of the 2025 homeless census for each state, including California. In the meantime, many California counties have already released their individual results. Several, including Contra Costa, San Diego and Los Angeles, indeed are showing progress.
He touted his administration’s focus on sweeping street encampments and building new mental health facilities paid for with Prop. 1, a $6.3 billion bond he promoted and which voters approved in 2024.
He also spoke about making the state more affordable, an issue over which Democrats and Republicans nationally are jockeying for credit after the 2024 presidential election showed voters were heavily motivated by the high cost of living.
He plans to seek out policies in his final year in office to crack down on large-scale investors buying up houses, forcing would-be homebuyers to compete — a day after Trump also announced a similar effort. It’s a new area for him in housing policy, after years seeking to boost construction. Newsom ran on a promise of building 3.5 million new housing units; the state has fallen far short of that.
Newsom also ran on a promise of a universal public health care system; he has since shifted to expanding access to Medi-Cal, the state health program for low-income residents that faces punishing federal cuts under Trump. On Thursday, he will tout the state’s production of $11 insulin as one way his administration has tackled health care costs.
Projecting a rosier budget outlook
The address was also a preview of Newsom’s last budget proposal, to be released Friday.
Though the state began the year facing an estimated $18 billion deficit and remains threatened by federal cuts, Newsom said revenues have come in $42 billion higher than expected — a “windfall” officials mostly attribute to stock market gains and the artificial intelligence boom.
That could allow him to avoid difficult fights with Democratic lawmakers over major cuts to programs in his final year in office, while maintaining funding for banner Newsom administration priorities like expanding public school to include all four-year-olds and providing more funding for community colleges.
With a rosier-than-expected financial picture, Democrats will be sure to jockey for additional funding for their favored programs or to reverse scheduled cuts to Medi-Cal coverage for low-income undocumented immigrant adults they made last year. But Newsom will propose instead to put $7 billion into reserves and $11 billion toward pension obligations.
And as Democrats debate a proposal to tax the wealthiest Californians to generate more revenue (an idea Newsom opposes), the governor instead will propose to renew a business development tax credit that has been often used by the technology and manufacturing sectors.
CalMatters’ Marisa Kendall contributed to this report.