As California lawmakers wrapped up their legislative session this week, Gov. Gavin Newsom found himself on the losing end of several high-profile fights, raising questions about how much political capital he has left with just four months remaining in his final term.
The most notable defeat came Tuesday, when the Assembly rejected a contentious bill that would have reshaped how much liability utility companies face for wildfires they cause. The measure, which Newsom had pushed hard for, also would have sped up payments to wildfire victims for property losses and barred private equity firms from bankrolling wildfire-related lawsuits. By the time it reached its final form, the bill had already been scaled back significantly from Newsom’s original vision.
It wasn’t the only setback. In Solano County, supervisors effectively shelved for the year a Newsom-backed plan to fast-track a new shipyard in the Bay Area for the real estate firm California Forever. And the governor was forced to abandon a separate push to grant environmental exemptions for an oceanfront development in Santa Monica tied to a real estate developer who has also donated to his campaigns.
Some observers see the string of losses as a sign that Newsom’s influence in Sacramento is fading as he nears the end of his tenure. Others, including several lobbyists who work the Capitol regularly, argue this session’s outcomes aren’t dramatically different from years past.
Newsom himself pushed back hard against the lame-duck narrative, saying critics making that argument simply aren’t paying attention. He pointed to dozens of other bills that made it across the finish line this year, including measures addressing artificial intelligence chatbots and child safety protections.
“We landed 90 planes on some of the toughest issues as relates to chatbot bills and child safety,” Newsom said. “I decided to take a last at-bat on the toughest issue I could, and the good news is we made progress.”
The collapse of the wildfire liability bill sent shockwaves through Wall Street, where shares of California’s three major investor-owned utilities dropped sharply in the days following the news. Utility executives warned the outcome could scare off future investment and hurt the state’s broader economy. But at least one state Assemblymember brushed off the market reaction, calling it an overblown case of investor “hysteria.”
Defense Industry Booms Across Southern California
While lawmakers wrangled over wildfire policy, another economic story was unfolding across the region: a surge in defense spending that’s reshaping Southern California’s economy.
Over the past decade, the total value of defense contracts awarded to companies in Los Angeles County has more than doubled, even as the overall federal defense budget grew by a comparatively modest 19 percent. Last year alone, defense contracts in the county totaled roughly $15 billion.
Analysts expect that growth to accelerate. Ongoing conflict involving Iran is fueling demand for military technology, and the Trump administration’s latest budget proposal calls for $1.5 trillion in defense spending — the largest request in U.S. history. The Pentagon has also begun awarding early contracts for a sprawling missile-defense system, with many of the winning companies based in or connected to Southern California.
Much of this spending is flowing into congressional districts represented by Democrats, many of whom have historically supported defense investment when it benefits their local economies. But that consensus may be shifting. Lindsay Koshgarian, director of the National Priorities Project, which tracks military spending nationally, said the political tension around defense budgets is intensifying even in reliably blue districts.
“That tension is definitely real, even in left districts,” Koshgarian said. “But I think we’re reaching a level of extremity now that that might be starting to flip.”
Legislature’s Final Sprint: Winners and Losers
As lawmakers raced to beat the end-of-session deadline, several other significant measures met different fates.
Democratic leaders and Newsom struck a last-minute deal to redirect $450 million from the state’s primary climate fund toward transit projects, clean air initiatives and drinking water infrastructure.
Separately, in response to federal research funding cuts under the Trump administration, legislators are moving forward with plans to place a $7.5 billion bond measure before voters in March 2028. Of that total, $1 billion would go toward helping California’s public universities expand science facilities and establish new review panels for research proposals.
Not everything succeeded, however. A proposal that would have redirected $200 million in unused school funding — originally intended to help campuses upgrade heating and cooling systems — failed to reach a final agreement. That money will instead revert to utility companies rather than benefiting schools.
A separate bill aimed at boosting condominium construction across California also died despite clearing both legislative chambers. The measure had drawn support from pro-housing development groups but faced early resistance from homeowners associations.
San Diego Moves to Address Tijuana River Pollution
In San Diego County, supervisors approved a plan Tuesday to tackle long-standing pollution problems in the Tijuana River. The proposal calls for diverting contaminated water for treatment at a new facility before it can reach surrounding communities. To help pay for construction, officials are considering using local tax revenue to support as much as $1 billion in bonds.
Original source: CalMatters
