Top Nine Ways Gavin Newsom Made California the Most Unaffordable State in the Country

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Eight Years In: The Affordability Record That Now Matters Nationally

Now in his eighth year as governor, Gavin Newsom has overseen California’s continued spot at or near the top of cost-of-living rankings. Housing, electricity, gasoline, and insurance are not just expensive—they cost more here than in most other states, and the difference has grown during his time in office.

This issue goes beyond California. Newsom is seeking the Presidency, and affordability is about his record, not just his words. Voters in other states should look at his actions. The policies that made California the most expensive state in the Lower 48 are still in effect, affecting people every month.

Newsom did not create every rule that affects California’s costs. However, after almost eight years, it isn't easy to distinguish what he inherited from what he chose to keep or expand. These are the policies he maintained, strengthened, or left unchanged. The result is the combined effect on affordability.

Here are nine of the most significant policies.

1) Locking a Permanent Carbon Surcharge Into Daily Life

California’s Cap-and-Trade program imposes a state carbon cost on fuel suppliers and utilities, which are passed on to consumers. Under Newsom, the program was not reduced or ended. Instead, it was extended and incorporated into the state’s long-term climate and budget plans, now set to last through 2045.

The nonpartisan Legislative Analyst’s Office estimates that Cap-and-Trade adds approximately 20-30 cents per gallon to gasoline at current prices, with higher costs for electricity and the transportation of goods. This is not a temporary increase. It is a permanent extra charge.

2) Mandating a California-Only Gasoline Blend That Drives Price Spikes

California requires a boutique gasoline formulation used almost nowhere else. That policy sharply limits supply flexibility because importing out-of-state fuel is not readily feasible to stabilize prices when in-state refineries are offline.

Newsom maintained this system without significant changes. As a result, when a refinery experiences problems, prices in California rise faster and to a higher level than in other areas. This price volatility is expected in a market that is intentionally kept separate.

3) Allowing Major Refinery Closures That Will Drive Gas Toward $8 a Gallon

California’s gasoline market was already limited, and under Newsom, it is getting even tighter. Valero plans to close its Benicia refinery by April 2026, and Phillips 66 is ending operations at its Wilmington refinery near Los Angeles. These are major facilities and constitute a significant portion of the state’s capacity.

A University of Southern California study warned that, in a closed, heavily regulated market, the loss of additional refining capacity could push gasoline prices to nearly $8 per gallon if supplies are disrupted. This is not a daily prediction, but a warning about the fragility of California’s fuel system under current policies.

4) Preserving the Highest Gas Tax in the Nation During Price Spikes

California has the highest state gasoline tax in the country, now just over 70 cents per gallon. Even when fuel prices hit record highs, Newsom did not suspend the tax, stop increases, or offer temporary relief at the pump.

Other states saw high fuel prices as an emergency cost-of-living problem. California did not. As a result, drivers pay more, and the state continues to collect the highest amount.

5) Mandating the Most Expensive Electricity in the Continental U.S.

California’s high electricity costs are the result of state laws that require utilities to meet strict renewable energy targets and reduce the use of affordable natural gas. Under policies that were continued and expanded during Newsom’s tenure, utilities must use 60 percent renewable energy by 2030 and 100 percent clean electricity by 2045, regardless of cost.

Residential electricity in California costs about 32 cents per kilowatt-hour, compared to 18 cents nationally. In areas served by PG&E and Southern California Edison, rates can reach nearly 40 cents per kWh. These numbers affect real household budgets because of policy decisions.

6) Offering “Relief” Only for High-Density Housing—While Making It More Expensive to Build

California has not made significant changes to housing regulations under Newsom. Instead, the state has focused its so-called streamlining efforts primarily on high-density projects, yet even those entail costly requirements.

High-density construction still faces requirements like prevailing wages, inclusionary zoning, and high fees to support below-market units. Other types of housing face even more barriers, including zoning rules, slow permitting, and legal risks. The result is higher costs, slower construction, and homes that many middle-class people cannot afford.

7) Crippling the Home Insurance Market Through Regulatory Paralysis

Many blame California’s home insurance crisis on wildfire risk. While wildfires are a real issue, the market’s problems also stem from policy choices. Under Newsom, insurers faced years of limited rate approvals, greater liability, and uncertainty about whether regulators would allow them to set prices to match risk.

As private insurers continue to leave the market, competition declines, and prices rise. This year, Newsom signed laws and supported rule changes that let wildfire losses be shared among more policyholders. This means people in low-risk areas will pay more to help cover those in fire-prone regions. The result is clear: fewer choices, higher premiums, and less coverage, all because the market cannot work correctly under current rules.

8) Squandering COVID Relief and Triggering a Statewide Payroll Tax Hike

California got tens of billions of dollars in federal COVID relief. While many states used these funds to pay down pandemic-era unemployment insurance debt, California did not. Under Newsom, most of the funds were allocated elsewhere, and the state still owes a substantial federal unemployment insurance loan.

This has a direct effect. When the debt is unpaid, federal law reduces the FUTA tax credit, thereby increasing federal payroll taxes for California employers by approximately $84 per employee in 2025. Employers do not merely absorb these costs—they exert pressure on wages, hiring, and prices, adding another hidden cost for working Californians.

9) Building a Permanent “Everything Tax” Through Regulatory Stacking

California’s affordability problem is not only about official tax rates. It also comes from many regulatory costs that do not appear on the state's bill but are still paid by consumers.

Rules for environmental compliance, workplace standards, permitting, lawsuits, and reporting all add real costs. For example, a trucking rule can raise grocery prices, a permitting delay can increase menu prices, and a construction rule can lead to higher rent. These are not called taxes, but they act like them—broad, permanent, and part of everyday life.

So, Does It Matter?

This matters because it is not just a theory or a short-term problem. Californians deal with it every day: rent or mortgages that take most of their pay, electric bills that seem unrelated to how much they use, insurance premiums that rise suddenly, and gasoline prices that make commuting and family life harder.

Gavin Newsom wants to be seen as a national leader. California is the example. Before anyone supports his ambitions, they should examine the policies in place here and ask a simple question that goes beyond speeches and press releases: Can we afford him?