After eight years in office and eight growing budgets, Gavin Newsom’s central legacy as governor is this: a vast expansion of social programs whose biggest beneficiaries are also some of his biggest political donors.
Newsom’s final budget for the 2026-27 fiscal year will total $539.1 billion — 36% more than that of his predecessor, Jerry Brown. (All figures are adjusted for inflation.) Of that, $344.3 billion goes to the California Health and Human Services Agency, which administers social programs. More than 90% of CHHS’ annual spending goes to three programs, each of which grew faster than the state budget as a whole.
The largest is Medi-Cal, which consumes two-thirds of CHHS’ annual spending and provides healthcare services to low-income Californians and families that meet eligibility requirements. Medi-Cal spending in Newsom’s final year will be 55% more than it was in Brown’s final year. The core difference between the two administrations’ approaches to Medi-Cal is structural: Brown’s era focused on federally funded expansions, extending coverage to low-income adults through the Affordable Care Act, which Washington financed almost entirely. Newsom’s era has focused on state-funded expansions, extending Medi-Cal to undocumented immigrants, which added billions of dollars annually.
The second-largest CHHS program is the Department of Social Services, which consumes 18% of CHHS annual spending and provides assistance to needy Californians. DSS spending in Newsom’s final budget is up 77% from what it was under Brown. Some of the growth is due to accounting (childcare was transferred to DSS from the Department of Education in 2021), but the major driver was growth in spending on In-Home Supportive Services, which provides in-home assistance to eligible elderly, blind, and disabled individuals. Spending on IHSS tripled as the state expanded eligibility regardless of immigration status and boosted wages for providers.
The third-largest CHHS program is the Department of Developmental Services, which consumes 7% of annual spending and pays for services provided to people with developmental disabilities. Spending on DDS was up 117% from Brown’s final year. Newsom has signed a series of bills that raised rates for DDS service providers.
By expanding access and raising rates and wages for service providers to Medi-Cal, DSS, and DDS, Newsom created big new social entitlements with big ramifications for budgets — and big sources of additional revenue for campaign supporters. Recipients of much of the $344.3 billion that CHHS will spend in 2026-27 will be members of the California Hospital Association, California Medical Association, California Nurses Association, Services Employees International Union, American Federation of State, County and Municipal Employees, and other nonprofit organizations, corporations, and unions that rank among top donors to Newsom and his committees. In turn, Newsom has used the money for elections, ballot measures, and raising his national profile.
That’s Newsom’s brand of socialism: Enact more government services and route the money through service providers that advance your political career. Whether one approves or disapproves of expanded state spending on social programs, shouldn’t we all disapprove of elected officials taking money from recipients of that spending?
Newsom is not unique in that regard. Former U.S. House Speaker Nancy Pelosi recently endorsed San Francisco’s CEO tax, sponsored by SEIU, which has long been a top donor to the Democratic Congressional Campaign Committee that Pelosi spearheaded for decades.
Republican legislators are not immune to similar behavior, gladly accepting donations from hospitals, doctors, and other providers that profit from state appropriations those legislators vote to approve. But that doesn’t make it right. Bigger government has costs beyond the ledger: California’s nearly 20 million workers benefit more from private-sector demand than from public spending, and that demand shrinks whenever money is pulled out of the private sector to pay for more government. Newsom financed CHHS’ growth with tax increases and raids of budget reserves that raise the odds of future tax increases. I don’t think it is a coincidence that California’s unemployment rate leaped over 12 states to become the highest in the country during the eight years in which Newsom expanded government. Whether or not that’s a coincidence, it’s certainly corrupt for a governor, or any state official, to accept donations from organizations that profit from the spending they helped create.
