- State & Local
- California
Gov. Gavin Newsom’s State of the State concluded that 2025 was “challenging . . . yet one of our finest years.” But for many Californians, 2025 was their worst year imaginable.
Challenging Aftermath to the Southern California Fires
The year began with the Pacific Palisades and Eaton Fires, which killed 31 people, destroyed or damaged more than 16,000 structures, affected more than 70,000 individuals, and created perhaps as much as $131 billion in total economic damages. Yet these financial damages can’t begin to address how so many lives have been changed, and how Pacific Palisades and Altadena will never be the same.
Both fires could easily have been prevented. The Palisades fire has been determined to be a reignition of an arsonist’s fire (the Lachmann Fire) that was never extinguished. Infrared technology—often used to check burn areas for hot spots that could lead to reignitions—was not used in this case and in fact wasn’t even needed to determine that the original fire hadn’t been extinguished. A hiker’s video shows that the burn area was still smoldering, and Los Angeles firefighters’ texts allegedly show that firefighters at the Lachmann Fire site observed hot spots and requested to remain at the scene. However, according to those text messages, they were ordered to leave.
Palisades residents have filed lawsuits focusing on the Los Angeles Fire Department (LAFD) and the State of California’s potential negligence in failing to extinguish the Lachmann Fire. A Los Angeles Times article suggests the possibility that the LAFD’s efforts to extinguish the that fire may have been impeded by the State’s Parks Department’s effort to protect endangered plants. Those plants, of course, are now gone.
The City of Los Angeles has not been the most forthcoming in providing information about the fire. A trial judge ordered production of documents and depositions of firefighters and state officials, but attorneys for the City have recently moved to block the release of firefighter depositions that could provide an accounting of the LAFD’s decisions before the Palisades Fire.
Moreover, the LAFD’s after-action report was “watered down” to exclude damaging information. The author of the report’s original draft refused to endorse it, given how much it was changed. The LAFD will not say who wrote the final draft. The recently appointed fire chief states that “It won’t happen again.” The LAFD should replace the altered draft with the original draft, but that won’t happen because of the potential negligence and nonperformance of duty that it may reveal. Mayor Bass has not requested that the original report be reinstated.
Fires, Public Utilities, and Green Energy
A federal investigation concluded that faulty utility equipment was the cause of the Fire in Eaton and around Altadena. An Edison power line that hadn’t been used for 50 years—but that had apparently been live for all this time—may have sparked the blaze that killed 19 people. The Department of Justice is suing Southern California Edison for negligence.
Faulty equipment was also responsible for 2018’s Camp Fire, the most destructive in the history of California, initiated by the breakage of a PG&E pole bolt nearly 100 years old. California’s Public Utilities Commission regulates utilities to protect consumers and ensure reasonable pricing, but this responsibility is failing too often.
Despite the substandard state of its equipment, California has, second only to Hawaii, the highest residential electricity prices in the country, averaging about 87 percent higher than the national average. An important reason why prices are so high is California’s green energy mandates. The Pacific Research Institute estimates that costs of meeting California’s planned switch to renewables will be as much as $20,000 per household between 2025 and 2050. California’s nonpartisan Legislative Analyst’s Office warns that high electricity costs could impede California’s ambitious green energy plans.
While Governor Newsom lauds California’s green energy programs, the meager benefits don’t justify the extensive costs: Carbon emissions are a global phenomenon, and California is responsible for less than 1 percent of the global total. Even if California could wave a magic wand and eliminate all of its own carbon emissions, it would be inconsequential on a global basis.
California’s Home Insurance Crisis After the Fires
Returning to the impact of the fires, fire-stricken homeowners are frustrated by delays in permitting approvals. One year after the fires, an ABC report noted only two homes had been rebuilt in the Palisades and just seven in the Altadena area. Moreover, homeowners who are rebuilding are also dealing with problems related to California’s chronic home insurance crisis, which reflects an outdated state regulatory framework that controls rate increases. Massive fires followed by high rebuilding costs and ensuing insurer losses has led some insurers to withdraw or reduce their exposure in California. For example, in 2023, State Farm stopped writing California policies. Following the LA fires of last year, State Farm advised California Insurance Commissioner Ricardo Lara that “it doesn’t make sense to issue new policies in California.”
The insurance crisis has been growing since the massive California fires of 2017 and 2018, and dealing with this key issue should have been a top priority for politicians since that time. I see no reason why it wasn’t resolved years ago. And ironically, carbon emissions from just a single year of California wildfires were nearly double the total carbon emission reductions that California had achieved over a 16-year period.
Looking Beyond the Governor’s Numbers
In his State of the State speech, Governor Newsom spoke very positively about other aspects of California: the University of California (UC) system, the state’s Nobel laureates within it, and the nearly 14,000 active patents that arose out of its research. These accomplishments are indeed remarkable, but these are legacy investments that are now at risk, as the state no longer prioritizes the UC as it once did. Cal Matters notes California’s general budget once provided over 80 percent of the UC’s core operating budget, but that amount has now declined to about 20 percent. The UC system now relies much more on fees and tuition, including out-of-state student tuition, for its funding. If UC is to retain its excellence and continue to produce Nobel laureates and pathbreaking research, it will benefit substantially from more state budget support.
The governor also spoke about a remarkable decline in California crime, which is excellent news, though it is unclear how much is due to California policy and how much reflects other factors driving a large drop in crime across the United States. The US experienced about a 23 percent drop in violent crime between 2025 and 2024, with crime in California falling about 34 percent. However, violent crime per capita remains higher in California than in the United States at large.
Newsom also noted California’s dominance in high technology and venture capital (VC), which tend to go together because many tech startups seek VC financing. However, California has lost the headquarters of Oracle, Tesla, Hewlett Packard Enterprises, and some smaller but growing companies. including Realtor.com (online real estate listings) and GAF Energy (solar integrated roofs), to Texas. Moreover, California tech giants Apple and Google have both invested billions in Texas’s rapidly growing tech sector.
The governor spoke about jobs, including a new program called “Jobs First,” which is a blueprint for “building a community-led and climate-forward economy” by identifying key sectors and industries across 13 regions for government support. However, governments have a poor track record in picking industry winners and losers. This is not surprising: if private businesses don’t see opportunities for growth,, then why would we expect government to be any better at doing that?
More broadly, California has a significant jobs problem in the private sector. The Legislative Analyst’s Office (LAO) noted in its 2024 report California's Private-Sector Labor Market Showing Broad Weakness. “large and mounting private sector job losses . . . with 154,000 job losses since September 2022.” The LAO defined “private sector jobs” as all but government and government-supported jobs (in healthcare and social assistance). The California Center for Jobs and the Economy followed up on the LAO 2024 report by stating that there had been an additional 133,000 private sector job losses (using the LAO definition) between September 2024 and September 2025.
The governor was also excited about California’s High Speed Rail project. But that project is enormously over budget and delayed. What was promised to voters in 2008 was 2-hour-and-40-minute train ride between Los Angeles and San Francisco, projected to be completed by 2020, within a budget of about $33 billion. So far, what we see is a route from Bakersfield to Merced that may cost as much as $38 billion and that may not be ready until 2035.
In closing, I note that the governor’s speech stated, “The federal government is unrecognizable.” I feel the same way about California government. California has been at the forefront of so many remarkable discoveries and innovations that were facilitated in the past by excellent government and highly productive public-private partnerships. But that was then. And this is now.
