Thursday, May 14, 2026
Press Contact: Sumeet Bal, Director of Communications, 917-647-1952, [email protected]

California Can’t Lead the World While Leaving Workers Behind

SACRAMENTO, Calif.—California enters this May Revision in a moment of unexpected abundance—and familiar avoidance. 

Tax revenues are more than $16 billion above forecast. The state’s cash position has hit record highs. California dominates the global technology economy, leading the world in IPOs, artificial intelligence, Fortune 500 companies and innovation. But California cannot claim to lead the world while its teachers, nurses and essential workers are being priced out of the communities they sustain. Dominating in technology while losing ground on economic security for working families is not a strong legacy—it is a contradiction that demands solutions. The question this May Revision must answer is not whether California can dominate. It already does. The question is who that dominance works for.

California already knows how to build the things families need—the governor’s commitment to increasing per-pupil funding, investing in our educators, and expanding community schools proves that. When the state chooses to invest directly, boldly and consistently, it changes lives. Community schools are doing that now, in the communities that need it most. 

Housing and transit deserve the same commitment—not threats, not red tape reduction alone, but direct state investment that meets the scale of the crisis. Without substantial and sustained funding for affordable housing, low-income Californians will continue to struggle, regardless of how much development streamlining or local government oversight the state pursues. Meanwhile, the state’s basic protections against rent gouging and arbitrary evictions, the Tenant Protection Act, will expire in 2030 unless a governor with the courage to fight for and strengthen it steps forward. At the same time, without an infusion of state money, our public transit network is in danger of collapse. 

Abundance is not the same as security—AND it is not the same as justice. The working families at the center of our state’s story are experiencing a cost of living crisis that no IPO can solve—and they are waiting to see whether California’s record revenues will reach them, or pass them by once again. The question is made more urgent by federal cuts stripping millions of Californians of healthcare, food assistance, and housing support, and a proposed restructuring of Cap-and-Invest revenues that could cut affordable housing, transit, and clean air programs in half—redirecting dollars from low-wealth communities to fossil fuel companies. Seven years ago, the governor promised to fix the state’s boom-and-bust tax system. The boom is here. The question is whether he will use it for the Californians who built this state—and can no longer afford to live in it.

Education: A Legacy Built, A Problem Unaddressed

“Governor Newsom’s historic community schools investments will cement one of his enduring legacies, just as LCFF defined Jerry Brown’s,” said John Affeldt, Managing Attorney for Education Equity. “The research is showing that California’s community schools have cut chronic absenteeism by 30% compared to similar schools, reduced suspensions by 15% overall and delivered learning gains in English equivalent to 151 extra days of instruction for Black students.”

“But the governor’s May Revise failed to address one of the key equity challenges remaining for him—the state’s unconstitutional discrimination against low-wealth school districts in modernizing facilities. The State’s program for renovating dilapidated schools substantially favors high-wealth communities who are able to raise much more in matching funds, leaving students in poor districts in overheated portables and leaky classrooms amidst black mold and unremediated asbestos. The governor has acknowledged ‘you can’t look in the eyes of these kids,” but today, he chose to look away—and to keep fighting them in court,” added Affeldt, a lead counsel in a Public Advocates’ lawsuit suing the State over the issue.

“As far as moving forward into the future, our state cannot continue to rely on temporary AI stock market bubbles. To his credit, the governor proposed some modest new taxes, but to build a budget that will enable our residents to thrive, California needs more robust permanent revenue streams to support our schools and healthy communities. We cannot ask teachers to transform students’ lives while those same teachers are being priced out of the communities they serve.”

Higher Education: Affordability Crisis Threatens College Access & Completion?

“California’s economy is growing because generations of students had a path to affordable higher education. But too many low-income students are still being left behind as the cost of education and living continue to rise. If we want a future powered by innovation, we need to make sure opportunity isn’t reserved for those who could afford college anyway. We call on the governor and the legislature to strengthen and expand Cal Grant to keep the door to economic mobility open for the students coming after us—and ensures California’s future includes everyone,” said Sbeydeh Viveros-Walton, Director of Higher Education.

“For low-income Black and Latinx students, affordability is the difference between access, completion and attrition,” said Jetaun Stevens, Deputy Director of Higher Education Equity & Senior Staff Attorney. “Housing is the largest cost students face when pursuing higher education, and California’s housing crisis makes higher education out of reach for many low-income students. With 60% of community college students facing housing insecurity and nearly a quarter of community college students facing homelessness, we need greater investment in housing. We call on the governor and legislature to invest in additional projects through the Higher Education Housing Grant program—including reinvesting funds from withdrawn projects—and open up access to part-time community college students. We encourage the governor and legislature to make greater investments in affordable housing and homelessness prevention to improve economic opportunity for all low-income Californians, including supporting the Senate’s proposal to invest $1 billion in Homeless Housing, Assistance and Prevention Program 7 (HHAP) and an additional $1 billion for HHAP 8.”   

Housing Relief Deferred, Renters Left Behind

We welcome the inclusion of $500 million in HHAP 7 funds—California’s primary homelessness assistance program—in the governor’s proposal, but we are concerned about new requirements to receive that funding. Requiring a local funding match will shut out many jurisdictions. Requiring a Prohousing Designation is even more limiting: only 47 jurisdictions would currently qualify. Further, a Prohousing Designation is substantially based on how friendly a jurisdiction’s development environment is for market-rate developers—a standard which should not impede aid to people experiencing homelessness. Consistent, predictable funding is what moves people from the streets to stability. The Senate’s “Foundation for the Future” budget priorities letter reflects this, committing $1 billion for HHAP 7 and $1 billion more for a subsequent 8th round of funding. The governor should match that commitment—without the barriers.

Governor Newsom’s proposal also fails to address what his administration’s proposed changes to Cap-and-Invest would do to the Affordable Housing and Sustainable Communities grant program (AHSC), the largest source of affordable housing funding in the state. When asked directly, the governor said it wouldn’t be addressed in his proposal. That is not an answer. Redirecting Cap-and-Invest money away from affordable housing and transit to fossil fuel companies and other polluters is a choice—and it demands a response.  Now is the time, however, for Governor Newsom to propose funding to backfill the affordable housing and transit funding that will be lost if his proposal to redirect AHSC money to polluters moves forward.

The human cost of inaction is not abstract.  More than half of California’s 6.1 million renter households spend more than 30% of their income on rent. Nearly a third spend more than half. Evictions have now surpassed pre-pandemic levels. “Housing is the largest item in a family’s budget and the governor’s housing proposals in his final budget do not address the problem or deliver the help renters desperately need,” said Michelle Pariset, Director of Legislative Affairs. “Governor Newsom will leave office without securing his legacy on rent stabilization and just cause for eviction, as the state’s basic protections against rent gouging and arbitrary evictions are set to expire in 2030. He could have worked with the legislature to remove this sunset on the Tenant Protection Act—permanently shielding renters from gouging and no fault evictions. Instead, renters will face that fight with a new governor and a legislature freshly-drenched in real estate industry campaign spending.”

Transit: When Transit Fails, Working Families Pay

The future of public transit in California hangs in the balance at the same time the rising costs of transportation is hurting low-income families. Citizens in multiple regions are collecting signatures for ballot initiatives to maintain critical service, but the state must do its part. “The governor’s proposed CARB regulations for the Cap-and-Invest program would eliminate over $600 million a year in critical state transit funding—funding for service, lower fares for seniors and students, electric buses, and infrastructure upgrades. These are cuts that the Californians who depend on transit cannot afford,” said Laurel Paget-Seekins, Senior Transportation Policy Advocate. “This governor’s proposal would leave a massive multi-year budget hole for transit and affordable housing at a time when Californians need additional investment to address rising costs of housing and transportation.” 

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Public Advocates Inc. is a nonprofit law firm and advocacy organization that challenges the systemic causes of poverty and racial discrimination by strengthening community voices in public policy and achieving tangible legal victories advancing education, housing, transportation equity, and climate justice.