New leader, new direction

After the victory music had quieted, after the introduction by his wife was done, Gavin Newsom took the stage at a Los Angeles nightclub and began to walk the fine line that likely will define his first year as California governor. Even as he laid out his vision for renewing California, calling it “a land of plenty but … far from perfect,” Newsom praised the man he will replace.

“For literally my entire life, Gov. Jerry Brown has been blazing his trail. He’s been a role model for me, and tonight we all owe him a profound debt of gratitude,” Newsom said to loud applause from the crowd that included many campaign donors, lobbyists and Democratic legislators.

It’s been more than 130 years since a Democrat followed another Democrat into the California governor’s office—and with this generational changing of the guard, Newsom will replace one who is particularly accomplished and popular. That means he’ll face a tension other recent governors have not: to both follow the path carved by his predecessor while also living up to his campaign slogan, “courage for a change.”

Newsom first ran for governor in 2010, an effort he abandoned and then relaunched in 2015 with the long, long campaign. Now that California voters have given the 51-year-old Democrat the job he has sought for eight years, he is about to discover that winning was the easy part.

The environment: Escaping Brown’s shadow

When it comes to environmental bona fides, Brown casts a long shadow. What might Newsom do to get out from behind it?

“He will definitely try to differentiate himself from Brown,” said Mary Creasman, chief executive officer of the California League of Conservation Voters. “But what I don’t think we will see is a departure from the big pieces—cap and trade, a commitment to 100 percent clean energy, those are consensus issues.”

It will fall to Newsom to reach the lofty goals Brown and the Legislature set. Nearly everyone agrees that the easy work is done, and what comes next will be painful and require the full attention of the state’s leader.

“The next governor has to be in the ‘how’ business,” Newsom told CALmatters, referring to mandates about electric cars, renewable energy and emissions reductions, among others. “The next governor actually has to deliver on all that. … This is very difficult, very challenging. The good news is I love this stuff. This is in my wheelhouse. It’s a point of passion.”

But Brown’s decades-long environmental legacy has not been comprehensive, and has been weighted toward pet projects.

Chief among them is the state’s cap-and-trade system of setting emissions limits on major industry and auctioning credits for companies that can’t operate under their pollution caps. Newsom favors maintaining the program, calling it “vital.” (Besides, the Legislature already extended the system to 2030.)

Nor is he inclined to dump plans for the state’s multibillion-dollar plumbing project, a proposed system of tunnels to channel water from the Sacramento-San Joaquin Delta south to connect to the thirsty farms in the Central Valley to the browning lawns in Southern California.

Newsom has rejected Brown’s long-sought plan for twin tunnels, optimistically named the California Water Fix, telling CALmatters, “I think if we walk down the path of two tunnels, we’re in litigation and no project.” Instead, he has signaled support for narrowing the project to a single tunnel.

Environmental advocates are hopeful that Newsom takes a harder line against California’s powerful oil interests, a heavily polluting industry that critics say got a free ride during Brown’s terms. Brown was unapologetic about accepting campaign contributions from oil and gas groups; Newsom pointedly notes he does not.

The governor-elect is on the record opposing fracking, a controversial technique that uses high-pressure injections of water, sand and chemicals to open underground fissures to stimulate production from new and already existing wells. Brown consistently rejected calls to ban the practice.

Environmental justice issues are likely to be higher on Newsom’s agenda, advocates say. He’s talked about putting people at the center of all environmental policies, a critical consideration for low-income communities that bear the brunt of poor air and water quality. Although many state resource agencies now include advisory groups representing “fence-line communities”—homes and schools sited near oil refineries and industrial plants—critics say they are window dressing.

While polling consistently demonstrates Californians’ keen interest in environmental protection, Newsom could decide the state is on course—with myriad laws and regulations firmly in place—and direct the “bold” moves he’s promised at housing or health care.

Environmental groups warn that competency shouldn’t breed complacency, and say they’ll be closely watching whom Newsom appoints to head key commissions and agencies. And they expect he’ll deliver on his pledge to lead California’s fierce clashes with the Trump administration, and to continue international leadership on climate change.

“We are really talking about a true transformation of our economy, our infrastructure; that’s what is lying ahead for California,” Creasman said. “I don’t think we can understate what getting to those required goals is going to take. Having that drive and ambition on climate change is what’s needed now.”

—Julie Cart

Health care: The single-payer dilemma

As the incoming Newsom administration prepares to unveil its legislative priorities, the single-payer health care concept he has touted will generate a lot of talk. But Capitol skeptics say that despite his promises to make it happen, action will be much more difficult—especially given the idea’s federal obstacles and huge costs.

Newsom may be more likely to initially pursue a less ambitious strategy: getting more of the uninsured covered under current government programs.

Except that is not what he promised the California Nurses Association, the powerful union that then endorsed and enthusiastically campaigned for him. The union says it’s not going to take no for an answer, and plans to insist on meetings with the governor-elect about how to move forward as soon as he takes office.

“Given the statements that Newsom made at our convention a year ago, we believe he is fundamentally committed to changing the health care system,” said Stephanie Roberson, director of government relations for the union. “He said that in a room full of nurses. His sentiments were very clear.”

Extending health care to all Californians has been, hands down, Newsom’s signature health issue.

Newsom, the one-time mayor of San Francisco, pledged to create a statewide universal health care program of the sort he backed when he was leading that city. The Healthy San Francisco program, primarily funded from city coffers, provides basic insurance to residents who lack access to health insurance regardless of legal status.

Although it is not a single-payer system, the governor-elect has often cited it to illustrate his commitment to coverage.

Newsom has not said how he would pay for a statewide single-payer program, which has been estimated to cost up to $400 billion— roughly triple the entire California state budget, although supporters say much of that would be offset by eliminating consumer costs such as for-profit insurance premiums and deductibles. Newsom contends that a government-run, taxpayer-financed health care program shouldn’t cost that much.

Discussions about a single-payer plan in California have fallen short in the past, largely because of costs. Those challenges likely will keep Newsom from pushing for single-payer out of the gate, said Gerald Kominski, senior fellow at the UCLA Center for Health Policy Research.

“He understands the barriers are difficult to overcome,” Kominski said. “I suspect he’ll support ways to reduce the remaining uninsured further.”

Even that could be tough given the federal government no longer mandates everyone have insurance or face a tax penalty.

As lieutenant governor, Newsom praised a bill that aimed to set up universal health care but failed. It would have barred private insurers and set up a state system funded by taxes and required for all residents. It was a tough sell: Gov. Brown all but said he wouldn’t support it, insurers fought it and the cost projections were the kiss of death.

Roberson, of the nurses union, said a new bill in the works will be a fine-tuned version of that bill.

“What it’s going to take is political will, to sit in a room and not emerge until we find a way to reach that goal,” she said.

—Elizabeth Aguilera

Housing and homelessness: Millions more units?

Newsom is a self-described fan of “Big Hairy Audacious Goals,” and they don’t come much bigger, more audacious and presumably more hairy than his plan to solve California’s housing crisis.

On the campaign trail, he pledged to lead an effort to build 3.5 million units of new housing by 2025, a construction pace Californians haven’t seen since they started keeping track of that type of thing. He says he can reach that goal—which some have criticized as impractically astronomical—by significantly increasing funds for government-subsidized housing and rolling back some regulations that impede new development, especially for housing around public transit.

“It’s an enormous number and a necessary number,” said Assemblyman David Chiu, a Democrat from San Francisco and head of the Assembly’s housing committee. “Just the fact that he has laid out that goal is exciting.”

When pushed, affordable housing advocates and others who work on housing issues admit the 3.5 million goal probably isn’t realistic. Still, most welcome Newsom as a refreshing change of pace from the outgoing governor.

Despite a much-celebrated package of housing legislation he helped shepherd to passage last year, Brown was criticized for not prioritizing housing in a state where the median price of a single-family home rose to over $500,000 on his watch and ever-rising rents are forcing low-income residents to leave the state en masse.

“It’s what you focus on as governor, it’s what you meet with your staff about every day, that’s what important for housing,” said Dan Dunmoyer, president of the California Building Industry Association. “That’s what most people don’t realize, how a governor can influence on housing.”

Rumors of a major housing package in Newsom’s first year as governor are already circulating around the Capitol, although no one will say so outright. What would that package contain? Bank on increased funding for subsidized units one way or another, likely via increased tax credits for affordable housing developers and/or a revamped form of “redevelopment,” a controversial and abuse-fraught program Brown eliminated in 2011.

But the other policies Newsom referenced either explicitly or obliquely in his campaign are far hairier politically. If Newsom is indeed able to broker a compromise on rent control, or tweak Proposition 13, or limit local control on housing development decisions, he will have accomplished something that has vexed politicians for decades.

Beyond the herculean task of making California affordable again, Newsom confronts a humanitarian crisis that has haunted him since his days as mayor of San Francisco: how to help the estimated 130,000 Californians who are homeless.

Fixing the state’s homelessness problem is among the many items that Newsom has, at various times, cited as his top priority, and he has pledged to create a first-ever cabinet-level position exclusively dedicated to solving it. But Newsom’s record on combating homelessness while in San Francisco remains deeply divisive among advocates for the unsheltered.

Newsom defends his “Care not Cash” program—which redirected direct cash payments for those experiencing homelessness to permanent supportive housing and bus tickets out of San Francisco to rejoin family—as a successful and innovative strategy that made the city’s homelessness crisis far less severe than it would have been otherwise. Critics have called the program unethical.

—Matt Levin

Criminal justice: A continued pendulum swing

In recent years, California has shrunk its state prison population in part by reducing some nonviolent felonies to misdemeanors and making it easier for nonviolent offenders to be released on parole. As the pendulum has swung away from reflexive tough-on-crime legislation, voters have legalized marijuana and lawmakers have passed a plan to end cash bail.

Newsom steps into office having championed these changes, and bearing expectations that he will see them through amid pressure to roll them back.

“The criminal justice reforms that have begun thus far—all of them are still in the process of being implemented. It takes many years to update local … practices to align with changes in state policy,” said Lenore Anderson, executive director of Californians for Safety and Justice, an advocacy group that has pushed for many of the recent changes.

For example, the new law banning money bail calls for each county to set up ways to evaluate people who have been charged with crimes to help determine if they should be held in jail while they await trial. That work could start now—even while the bail industry is trying to overturn the law—so supporters of ending bail will be watching to see how much money Newsom proposes to help counties establish pretrial services. If the bail industry qualifies a referendum for the 2020 ballot, Newsom likely will play political defense to try to protect the precedent-setting law signed by Gov. Brown.

Anderson worked on criminal justice policy for Newsom when he was San Francisco mayor, and said she expects that as governor he will consider efforts to expand crime reduction programs already in place in some California cities. That could mean more programs to divert homeless people who commit low-level crimes away from jails and into housing and drug-treatment programs, or more “restorative justice” practices that bring criminals and crime victims together with a facilitator to come up with ways for offenders to repair the harm they’ve caused.

Newsom’s experience as a mayor “means he’s familiar with what kind of new innovations need to be scaled up,” Anderson said.

Furor over police shootings may also shape Newsom’s first year, with legislators likely to consider bills meant to reduce the number of civilians killed by police. It’s an emotional issue on all sides, with civil rights advocates calling for a tougher legal standard to justify use of force and police arguing they need maximum legal protection to perform a dangerous job.

Legislators shelved a bill this year to raise the legal standard for police use of force, but a new version likely will be back next year.

Newsom opposes the death penalty and has said he would pursue another ballot measure asking voters to repeal it. (Voters rejected such measures in 2012 and 2016.) Other death penalty opponents likely will push him to do something more directly as governor.

“There are four governors across the United States who have put in place a moratorium on executions,” said Natasha Minsker, a director with the American Civil Liberties Union, citing Oregon, Washington, Pennsylvania and Colorado. “That is the kind of leadership a governor can take on the death penalty that we would certainly be advocating for.”

Newsom has vowed to end the use of private prisons, a campaign promise that could complicate Brown’s efforts to reduce crowding in the state corrections system.

On drug policy, Newsom has already demonstrated his differences from Brown. The governor-elect led the campaign to legalize marijuana, which Brown did not get involved in, and said he is “very open” to a bill Brown vetoed allowing San Francisco to establish a legal clinic where addicts could inject illegal drugs.

—Laurel Rosenhall

Pre-K-12 education: Affording universal preschool

Newsom will be the first governor in decades to hold office while raising young children. His experience as a father of four kids ages 2 to 8 has made him “more righteous about public education,” he has said.

In speeches and campaign ads, that has translated into a focus on universal preschool, guaranteed prenatal care and more quality, affordable childcare. Newsom also has spoken adamantly about public investment in children younger than age 3 as an antidote to closing the chronic gap in achievement between disadvantaged and wealthier students.

“People talk and write a lot about people being left behind. I think people start behind,” Newsom told CALmatters before the election. “I think the biggest mistake we’ve made is that we’re triaging the problem. We’re not addressing the root cause.”

Newsom’s emphasis on early childhood reflects the consensus of California education scholars, and echoes a longstanding priority of legislative leaders. The question is: How will he fund his ambitious goals?

Universal preschool and childcare in California would alone cost the state up to $8 billion. It’s unclear how a meaningful agenda of that size could be done without a tax increase. That’s what it took when then-Mayor Newsom successfully pushed a much more modest “Preschool for All” initiative in San Francisco.

Like Brown, Newsom has the support of the powerful California Teachers Association, the state’s teachers union. Newsom largely did not engage in the charged debate over charter schools during his campaign, although he’s said that he supports public, nonprofit charter schools and greater transparency measures there as well.

—Ricardo Cano

Higher education: 'Cradle to career'

Advocates hope Newsom will be the higher education hero who rescues the state’s massive, nationally renowned system from the twin challenges of lean budgets and growing demand. But will he deliver?

Newsom says he sees higher education as the culmination of a cradle-to-career journey toward economic opportunity, and his calls for the state to increase funding for the University of California and California State University have fueled speculation that he will loosen the purse strings more than has Gov. Brown, who often admonished the universities to live within their means.

“There’s no greater return on investment,” Newsom said during the campaign.

He has proposed the state offer two years of community college for free and provide college savings accounts for every kindergartner, an idea he implemented as San Francisco mayor amid a recession.

As lieutenant governor, he has been a member of the UC and CSU governing boards, repeatedly voting against tuition and fee hikes—drawing praise from students and concern from some administrators.

“He was supportive of higher education in general but he certainly didn’t always do things that [UC President Janet Napolitano] thought should be done,” said Henry Brady, dean of UC Berkeley’s Goldman School of Public Policy.

Now he’ll face pressure to address improving but still anemic graduation rates at CSU campuses that need retrofitting and a rising cost of living for students—a stubborn issue on which Newsom has not made specific commitments.

Newsom told CALmatters the state needed to boost spending on Cal Grants to help cover students’ living expenses, though he didn’t say how much. He’s also championed an unusual approach to the student debt crisis: creating a state bank to offer low-interest loans.

Faculty unions that often considered Brown out-of-touch have helped fund Newsom’s campaign.

Higher ed think tanks also like Newsom’s promises to take action on such unsexy issues as a statewide database that can track individual students’ progress through all stages of their education, and a coordinating council to streamline planning among the UCs, CSUs and community colleges.

Better data would give Californians a better sense of how well efforts to improve college completion rates—such as reforming remedial education at community colleges and CSUs—are actually working, said Hans Johnson, director of higher education research at the Public Policy Institute of California.

—Felicia Mello

The economy: The downturn is coming

The problem with starting at the top is that there’s nowhere to go but down.

Newsom will be taking the reins of state government at a time of strong (if unevenly distributed) economic growth and flush state coffers. All that cash will come in handy if he hopes to enact even a fraction of his ambitious policy proposals.

Even so, it’s impossible to seriously consider ending child poverty or funding universal pre-school, as Newsom plans to do, “without having a revenue conversation,” said Chris Hoene, the executive director of the California Budget & Policy Center.

The brewing 2020 ballot battle over whether to strip commercial landowners of Proposition 13 property tax breaks is the most obvious—and potentially lucrative—opportunity. Newsom has not stated clearly whether he supports such a proposal.

But the good times won’t last forever.

“Economic growth may be in the process of peaking as the impact of tax cuts fades and rising interest rates start to curb spending,” said Lynn Reaser, who chairs the state treasurer’s Council of Economic Advisers.

Even if the economy as a whole holds strong, Washington, D.C., is its own source of uncertainty. Significant changes to Medicaid spending—which could reduce federal transfers to Sacramento by tens of billions of dollars, for example—“would feel like a large recession hit to the state budget,” Hoene said.

Brown has been warning about coming hard times for years now. He’s been preparing, too. By the end of next July, the state is projected to have $13 billion socked away for a rainy day. But most analysts say that cushion will last only a year or two in the face of even a moderate recession.

A downturn will hit the state budget, and Newsom’s ambitions, particularly hard. That’s because recessions tend to have a disproportionate impact on investment returns and roughly 30 percent of the state’s discretionary spending comes from the top 1 percent of earners—the investor class.

Newsom has spoken broadly, if a little vaguely, about the need to rejigger the state’s tax code to flatten things out. Expanding the sales tax to services, an oil severance fee and revising the property tax limits of Prop. 13 are all “on the table,” he has said.

However the next governor handles the good times, sooner or later, said Mike Genest, finance director to former Gov. Arnold Schwarzenegger, he will have to confront the “slow-moving monster:” the growing costs of retirement benefits owed to public-sector workers.

“It’s conceivable that [Newsom will] slide through the whole eight years without it getting to that point,” he said. “But if he does, then the next guy or gal is totally hosed.”

—Ben Christopher