Newsom makes room for tech priorities despite budget woes

SACRAMENTO, California — Gavin Newsom based overmuch of his latest fund presumption astir distinguishing himself from Washington, blaming the “Trump slump” from tariffs successful portion for the state’s $12 cardinal shortage and knocking Elon Musk’s Department of Government Efficiency.

But determination was little daylight betwixt the California politician and the president erstwhile it came to his clasp of the Golden State’s prized tech sector.

Newsom’s fund program delivered connected galore of the priorities that tech and concern groups wanted. He followed done connected an earlier $25 cardinal committedness for a microchip plan facility, announced caller plans to walk $85 cardinal much connected generative AI and accusation exertion upgrades, and downsized a woody that would nonstop Google to money section newsrooms.

In doing so, the politician formed himself arsenic a steward of California’s tech-forward identity, weaving Silicon Valley buzzwords similar “iterative” and “sandbox” passim his presentation.

“We’re truly arrogant of the enactment we’ve done successful concern with immoderate of the world’s top companies,” helium said Wednesday.

Newsom took large lengths to differentiate his marque of economical argumentation from Trump’s on-again, off-again tariffs and brazen attack to national spending cuts nether DOGE: His caller AI-powered authorities “efficiency” investments physique connected collaborations antecedently launched with exertion from companies including Microsoft and Anthropic to, for instance, reduce traffic and respond to taxpayers.

But his connection highlighted the continued value of a assemblage that has traditionally lined the state’s coffers and that Washington has besides embraced: It came a time aft Trump trotted retired starring tech titans from California connected a travel to Saudi Arabia, including OpenAI’s Sam Altman, Nvidia’s Jensen Huang and Google’s Ruth Porat, arsenic good arsenic Musk.

Newsom faulted Trump’s unpredictable commercialized policies for volatility successful tech stocks, arsenic good arsenic a chilled concern environment, dampened occupation maturation and overmuch much pessimistic gross forecasts.

“Just virtually weeks ago, a $10 trillion plaything successful the markets. America is possibly up yesterday, down today. We'll spot wherever they are tomorrow,” helium said.

The state’s increasing reliance connected superior gains taxes has near it particularly susceptible to marketplace fluctuations. At slightest 1 tech manufacture group, the left-leaning Chamber of Progress, took their cues from the politician successful attributing the fund spread to the havoc that tariffs person wrought connected the largest tech companies.

“A steadfast California tech assemblage means a steadfast societal information net, but unfortunately, the other is besides true,” the group’s elder manager for California, Robert Singleton, said successful a statement. “Trump’s tariffs dealt a stroke to tech stocks, which drained dollars from California schools, hospitals, and nutrient banks.”

While Newsom dealt with his ballooning shortage by aiming the bulk of cuts astatine wellness care, acquisition and biology programs, it did not spare him from each tech assemblage criticism.

Ahmad Thomas, CEO of the Silicon Valley Leadership Group, said helium was “encouraged” to spot Newsom’s enactment for the spot plan halfway and broader statewide AI deployment but has “deep concerns” astir backing reductions for the University of California and California State University systems.

“These reductions hazard undercutting the endowment pipeline that powers California’s innovation economy,” Thomas said successful a statement. “Any limits successful concern successful our state’s starring tech assemblage could person semipermanent consequences for economical resilience and occupation creation.”

Still, adjacent those cuts ended up little severe than antecedently expected with a 3 percent chopped alternatively than 8 percent floated earlier successful the year.

California Department of Finance Director Joe Stephenshaw told reporters Wednesday that helium has not had immoderate conversations with tech companies, and that they person not “influenced our reasoning astir this fund oregon the interaction connected the economy.”

And yet: Newsom’s revised fund opens the doorway for Google to perchance prevention money, close arsenic the beleaguered hunt elephantine is taking vigor from Republicans successful Washington.

His latest fund program importantly scales backmost connected a erstwhile committedness to a first-in-the-nation woody with the hunt giant to enactment cash-strapped section newsrooms by promising conscionable $10 cardinal successful assistance for 2025 — a two-thirds simplification from the state’s archetypal pledge of $30 million.

That didn’t beryllium good with section quality advocates, who were already skeptical of the woody and person for years argued aggregators similar Google News are decimating their manufacture by diverting advertizing gross distant from media outlets. Newsom’s chopped comes aft a national justice ruled past month that Google held an amerciable monopoly successful online advertizing markets.

“Cutting [newsroom funds] by two-thirds moves California successful the incorrect absorption astatine a clip erstwhile section journalism is collapsing crossed the state," Rebuild Local News President Steven Waldman told POLITICO successful a statement.

A spokesperson for Google didn’t respond to questions astir the cut.

Assemblymember Buffy Wicks, an Oakland Democrat who led negotiations with Google, remains optimistic that Google volition instrumentality to its $110 cardinal committedness for newsrooms, spokesperson Erin Ivie told POLITICO successful an email.

“This down payment, combined with those of backstage and philanthropic partners, volition catalyze community-facing quality and accusation gathering crossed California,” Wicks said successful a statement, adding she was “grateful” for Newsom’s “essential” investment.

Newsom besides sided with tech lobbying groups implicit a authorities fiscal advisory bureau successful committing to walk $25 cardinal connected a Silicon Valley microchip plan halfway partnered with the national government. The hub was projected arsenic portion of a nationwide propulsion launched by erstwhile President Joe Biden to boost America’s semiconductor industry.

The nonpartisan Legislative Analyst’s Office had advised lawmakers to ditch the plan, citing the state’s “precarious” fund outlook and uncertainty astir the Trump administration’s committedness to the Biden-era initiative.

Stephenshaw defended the determination connected Wednesday, saying “this is an country wherever we cognize we person much enactment to bash fixed the alteration successful administration, but we subordinate it arsenic a triumph for the authorities that we’re inactive going to determination guardant and hoping that the Legislature volition agree.”

Companies and manufacture associations are lining up to get lawmakers connected board. Groups including the Silicon Valley Chamber Coalition, San Mateo County Economic Development Association, California Chamber of Commerce, Stanford University, arsenic good arsenic spot companies Intel and Synopsys program to nonstop leaders of the Legislature and fund committees a letter, urging them to o.k. Newsom’s petition oregon hazard “losing this installation to different state.”

Sprinkled done the governor’s fund connection were plans to marque good connected his ongoing propulsion to integrate artificial quality into authorities functions and modernize the state’s outdated IT infrastructure.

Newsom, gathering connected his tech-powered authorities “efficiency” effort, projected $8 cardinal successful caller spending connected a generative AI instrumentality that would streamline wellness installation inspections, positive different $53 cardinal to overhaul online conveyance registration services astatine the state’s Department of Motor Vehicles.

The politician has antecedently framed California’s efforts to streamline bureaucracy arsenic a foil to Musk’s melodramatic cost-slashing astatine the Department of Government Efficiency. He called it “DOGE but better” successful a property league past period touting partnerships that are leveraging exertion from OpenAI, Google Gemini and Anthropic’s Claude to tackle road congestion, postulation information and taxation solutions, respectively.

Newsom doubled down connected the examination Wednesday successful different evident jab astatine DOGE.

“We’ve been astatine this for years and years and years,“ Newsom said. “It’s a wholly antithetic attack than you're seeing with that four-letter connection retired of Washington.”