California Gov. Gavin Newsom highlighted economic development, increased educational funding, progress on the high-speed rail project, and a drop in homelessness in his State of the State Address at a joint session of the Legislature in Sacramento on Jan. 8.

But first, the governor criticized President Donald Trump’s policies, noting that his administration has filed suit against the Trump administration 52 times in less than a year.

Newsom painted a dark picture of Trump’s immigration policies, including Immigration and Customs Enforcement (ICE) operations, alleging that the president “believes that might makes right; that the courts are simply speed bumps, not stop signs; that democracy is a nuisance to be circumvented—secret police, businesses being raided, windows smashed, citizens detained, citizens shot, masked men snatching people in broad daylight, people disappearing, using American cities as training grounds for the United States military.”

The California spirit has always been strong enough to overcome challenges and adversity in the past, “but today that spirit is being tested,” he said in his first in-person address at the Legislature since early 2020.

“We face an assault on our values unlike anything I’ve seen in my lifetime. The federal government, respectfully, it’s unrecognizable—protecting the powerful at the expense of the vulnerable,” Newsom said.

“Their credo seems to be about fear, fear of the future, fear of the stranger, fear of change.”

He accused Trump and the White House of orchestrating “chaos,” with politics based on “some twisted nostalgia about restoring the dynamics of a bygone era.”

“None of this is normal,” Newsom said.

Flipping the script on Trump and his supporters, who have long accused radical left-wing activists of having “Trump Derangement Syndrome,” or TDS, Newsom accused his detractors of suffering from “California Derangement Syndrome.”

“If we’re going to keep the faith of the California spirit, we’ve got to do more than just resist what is wrong. We’ve got to keep building what’s right,” he said.

“We’re not defined by what we’re against. We’re defined by what we’re for: opportunity and dignity.

“California’s success is not by chance; it’s by design. We’ve created the conditions where dreamers and doers and misfits and marvels with grit and ingenuity come to build the impossible. We became a destination for the world’s first-round draft choices, the best and the brightest who come here from all over the world for riches and new beginnings.

“And, I’m not just talking about the tech CEOs and the founders in Silicon Valley or the producers and writers in Hollywood. I’m talking about the mechanics in Modesto, the farm workers in Salinas, and the police officers in El Centro.”

Child Care Funding

Newsom criticized the Trump administration for threatening to cut federal funding for child care and welfare benefits, including Temporary Assistance for Needy Families (TANF),  a federal–state program that provides cash aid and support services such as child care and job training to low-income families with children.

“Donald Trump just announced a couple days ago that he will illegally be cutting all federal funding for TANF and child care in, curiously, just five blue states in America, including California,” he said.

The curtailment comes in the wake of alleged widespread corruption in Minnesota’s daycare system and subsequent allegations of fraud in California and other blue states.

Newsom took several jabs at Trump and the federal government, claiming that California “preserved about $168 billion in illegally frozen federal resources,” which he said belong to schools and hospitals.

“Mr. President, you can’t cut off critical food assistance for millions of people. You can’t send the military into American cities without justification, and you cannot cruelly and illegally cut off funding for medical research, homeland security, or disaster response. That is wrong,” Newsom said.

Economic development

No state contributes more to American greatness, builds more ladders to success, or sees around more corners than California, according to the governor.

California has the biggest manufacturing economy and the most productive agricultural economy, he said.

“One half of America’s unicorn companies—those companies valued over a billion dollars ... are in the great state of California,” Neswom said.

He touted Fremont, San Jose, Irvine, San Francisco, and San Diego as consistently “happiest places on Earth,” which he partially attributed to their close proximity to “the greatest research institutions” and public higher education systems “anywhere in the world.”

Newsom highlighted the Jobs First programs, the tax credit system, and said he was proud to work with state legislators to raise the minimum wage for fast food workers to $20 per hour and health care workers to $25 per hour.

Educational Programs and Spending

The governor also dropped a few hints about his proposed budget for 2026–2027, which he is slated to announce on Jan. 9.

The state faces an estimated $18 billion budget shortfall for the 2025–2026 fiscal year, according to a Legislative Analyst’s Office (LAO) report released in November 2025. The LAO also warned that the 2027–2028 deficit could exceed $35 billion.

The new $248.3 billion general fund budget will include “the most significant investments in California’s education history,” including a record $27,418 per student in funding, according to Newsom.

The budget also includes $42.3 billion more in revenue than expected, which, he said, indicates that the economy and population are growing. The revenue windfall didn’t include December 2025 data, which recently came in at almost $3 billion above projection.

Newsom said California would propose another $1 billion investment in Community Schools programs in next year’s budget, adding to the $4.1 billion already spent to support more than 2,500 campuses statewide.

Drop in Homelessness

Early data show that the number of homeless in California dropped by nearly 9 percent in 2025, the first time in more than 15 years, according to Newsom.

“So the investments are paying off, and, of course, it’s not good enough, particularly for those living on the streets, self-medicating with drug and alcohol addiction [and] suffering from bipolar disorder, schizophrenia and paranoia,” he said.

But the state has changed its conservatorship laws to make it easier to get addicts and the mentally ill into treatment, the governor said.

Affordable Housing

Newsom said another urgent concern is institutional investors “snatching up homes by the hundreds and thousands at a time.”

“These investors are crushing the dream of home ownership and forcing rents too damn high for everybody else,” he said.

The cost of housing has been California’s “original sin” for decades, Newsom said, urging lawmakers to work together to help bring down construction costs.

“I think it’s shameful that we allow private equity firms in Manhattan to become some of the biggest landlords here in our cities in California,” Newsom said.

High-Speed Rail 

Newsom reported some progress on California’s High Speed Rail project.

“We want a 21st Century transportation network,” he said.

“Full environmental clearance is done. We built over 50 major structures. More than 60 miles of guideway have been completed, ready for immediate tracklaying in the Central Valley.

“This is one of the great economic investments in those regions of our state and will make commute times shorter and make life more affordable for the people of the Central Valley, and they deserve it.”

Republican Rebuttal

According to Republican critics, the speech was thinly veiled posturing for Newsom’s rumored 2028 presidential ambitions.

“This wasn’t a State of the State address. It was a political speech,” state Sen. Toney Strickland told The Epoch Times in an email. “This was a campaign speech for those outside of California.”

Strickland pointed to California’s high gas prices and net exodus of people, painting a stark contrast to the governor’s picture.

As gas prices drop in other states, they’re rising in California because state taxes, fees, regulations, and electricity costs are 50 percent higher than the national average, he said.

Newsom’s claim that homelessness has dropped by 9 percent is also questionable, he said.

“That’s laughable,” he said. “Think about the billions of dollars he spent. He spent $26 billion, and he’s been working on this since he was mayor of San Francisco.”

Strickland dismissed the governor’s efforts to place California’s budget woes on Trump.

“If you look at Texas and Florida, they have massive surpluses. And if it was the [Trump] administration’s fault, every state would be underwater,” he said. “California doesn’t have a revenue problem; It has a wasteful spending problem.”

As vice chair of the Senate Transportation Committee, Strickland said there’s no bigger critic of the High-Speed Rail project than himself and that “everybody knows ... the bullet train will never be built as proposed.”

Costs have spiraled upward from a $33 billion project to go from San Francisco to Los Angeles to a $128 billion project that goes from Merced to Bakersfield, he said.

“When they passed the high-speed rail back a few years ago, the entire budget was $98 billion. So you’re talking about one project being more expensive than the whole state budget,” Strickland said.

“If there’s an example of mismanagement of government, it’s high-speed rail,” he said.

“The problem in politics today is that no one can admit that they were wrong, and the billions that they’re spending is just putting it on life support.”

State Republicans said in a statement prior to Newsom’s address that the governor has failed to deliver on his promise to build 3.5 million new homes and that since 2020, the monthly cost of purchasing a home in California has soared by 75 percent, far outpacing wage growth and leaving housing affordability among the worst in the nation.

Republicans claimed that Newsom promised wildfire management and prevention, but then cut hundreds of millions of dollars from wildfire programs, causing fire insurance premiums to surge.

The bottom line is that “historic spending” under Newsom’s watch has led to a multibillion-dollar deficit, which could lead to higher taxes, fees, and utility bills for Californians, according to Republicans.

White House Response

Calling the governor’s policies “an abject failure” that have “completely destroyed the great state of California,” Abigail Jackson, a White House spokeswoman, rejected Newsom’s criticisms of the Trump administration.

“Instead of using his State of the State to lie about the president in hopes of courting left-wing voters ahead of his doomed-to-fail presidential campaign, he should’ve talked about how he planned to undo the damage he’s done to California,” Jackson wrote in an email to The Epoch Times.