Last week, California governor Gavin Newsom presented his State of the State address. It opened with a warning, juxtaposing the fascist threat of Hitler in 1939 that would ultimately start World War II with forces “threatening the very foundation of California’s success.” The themes of “darkness,” “chaos,” “fear,” and “destruction” created by the “poisonous populism of the right” appear throughout his address.
But where are these forces in California? With Democratic supermajorities in both state legislative houses, with Democrats elected in all eight state executive offices (governor, lieutenant governor, attorney general, school superintendent, insurance commissioner, secretary of state, treasurer, and state controller), and with Republicans representing only 24 percent of registered voters, California is perhaps the most politically liberal state in the country.
In terms of issues affecting the state, illegal migration is important for Californians, with 62 percent of registered California voters agreeing that the border is not sufficiently secure to prevent illegal entry, compared to 30 percent who viewed border protection as adequate.
The Pew Research Center estimated there were 1.85 million unauthorized immigrants living in California in 2021. The number may be higher now, as San Diego has become the most popular spot for illegal entry into the United States, with 37,370 encounters there with US Border Control in April alone.
Governor Newsom praised the state’s efforts at the border and criticized US Senate and House Republicans for not supporting a proposal by the Biden administration that would have increased funding for Immigration Control and Enforcement (ICE): “Unfortunately, California has largely had to go at this alone because Republicans in Congress, when presented with an opportunity to assist border states, have turned their backs. They’ve chosen inertia, politics, and pure political pandering.”
While criticizing national Republicans, Newsom did not mention that California is one of only 11 sanctuary states in the country and the only on the southern border. Nor did he refer to his 2019 inaugural address, when he stated that California would be a “sanctuary to all who seek it” or the fact that California’s Department of Justice shut down ICE access to California’s major crime data network because ICE would not agree to refrain from using information from the network to enforce immigration laws.
California’s sanctuary status is particularly problematic now because it provides cover for drug dealers, including fentanyl dealers, who almost exclusively arrive here from Honduras. One dealer stated the reason they come to California, and San Francisco in particular, is “because they don’t deport. . . . Many look for San Francisco because it’s a sanctuary city. You go to jail and you come out.”
Fentanyl is a significant problem within California, as its low cost has made it the opioid of choice among many users. Because of fentanyl’s potency (a teaspoon of pure fentanyl powder can kill over 2,500 people), it now accounts for the vast majority of opioid overdose deaths. Before California passed its sanctuary state law in 2017, there were around 200 fentanyl deaths annually, but fentanyl deaths have increased to about 11,000 per year in more recent data.
Fentanyl dealers in California can earn up to $350,000 per year, and these earnings are often repatriated to dealers’ families in Honduras, which is undergoing a construction boom in new housing, including gated mansions featuring the logos of the Golden State Warriors and San Francisco 49ers. California has confiscated a substantial amount of fentanyl, but removing California’s sanctuary protection would decrease the amount entering the state by reducing the attractiveness of California as a destination for illegal migration and criminal activity.
Newsom pushed back against the common claim that California’s economy is lagging and that taxes are high. “Here’s the truth Republicans never tell you: California is not a high-tax state,” he said, referencing how much the lowest earners in California are taxed compared to those in some other states. But many of the California earners he was referencing are near or below California’s poverty line, an income level where people naturally pay little in income taxes.
In contrast, the Tax Foundation, a nonpartisan research organization that is the standard source for analysis in taxation and public spending, identifies California as a very-high-tax state. With the top of the list representing the lowest taxation, they rank California 49th for state income taxes, 46th for state and local taxes, and 48th for overall state tax climate. They also report that California has the highest tax collections per person among all states. California collects $7,200 per person per year in state tax revenue, about 65% higher than the national average of $4,374.
Regarding California’s economic growth, Newsom stated that 16 percent of national job creation in May occurred in California. But examining California’s job growth over the longer term presents a more pessimistic picture. Between February 2020, just before the pandemic struck, and May 2024, the number of US jobs grew by over 6.2 million, while California lost about 402,000 jobs. In contrast, Texas and Florida, two states whose policies are frequently criticized by Newsom, added about 1.1 million and 700,000 jobs, respectively.
Newsom stated that “you shouldn’t have to be a CEO to live a decent life—and in California, you don’t have to be.” But living a decent life in California requires significantly higher household income than in most other states, particularly given California’s housing costs. While Newsom praised many new laws he signed during his tenure to expand housing supply, he did not reference his major 2018 campaign promise of a “Marshall Plan” for housing, with a goal of creating 3.5 million new units by 2025—about five times more than the number that have been built since he took office.
Since Newsom’s inauguration, housing permits have not increased but in fact are below the level that prevailed before he took office. This record is likely even worse than it appears, because in 2023, about 20 percent of new California homes were accessory dwelling units, which are very small homes (averaging around 600 square feet) providing space for one person, maybe two if they get along really well.
Because housing remains scarce, only 17 percent of Californians could afford the state’s median-priced home—$814,280 during the first quarter of 2024—compared to 37 percent affordability at the national level. And California’s affordability statistic is even worse today, as the median-priced home increased to $908,040 in May. Maybe you don’t need to be a CEO to lead a decent life in California, but CEO status clearly helps when it comes to buying a California home.
Newsom argued that the state is fiscally responsible, stating, “In California, you don’t have to be profligate to be progressive. We understand how to balance budgets while protecting working families, children, and the most vulnerable people in this state.” But it is difficult to believe in California’s fiscal responsibility when the state budget rose 63 percent between 2019 and 2024, despite a population loss of about 500,000. Or when a budget emergency was declared so that around $12 billion could be drawn from the state’s rainy-day fund to help balance the 2024–25 and 2025–26 budgets.
Regarding education, Newsom stated that California K–12 education policy reforms are “transformative” and the “most significant in our nation.” I hope he is right, because California K–12 schools have been underperforming for years, with only 25–30 percent of students reaching federal proficiency standards in math and language arts and 25 percent of them chronically absent.
California remains an extraordinary state, but it faces many significant challenges. These challenges are not threats from the political right; rather, they are policy-related problems that have increased the cost of living and reduced the quality of life, particularly for middle- and low-income households. These problems can be fixed, but only if they are recognized as such by the state’s political leadership.
