Our biggest challenges are getting real attention this week — from a governor threading the needle on a budget that depends heavily on tech-sector windfalls, to a San Francisco mayor posting the city's best homelessness numbers in fifteen years, to a statewide housing debate that finally has every candidate in the room with something to say. Short on time? Scroll to our “Fast Five” to hear about the plumber getting sued for…having a website.

THE LEAD: STRETCH, HOLD, AND PRAY

Governor Newsom’s final budget pitch is a $350 billion exercise in fiscal yoga: cut now, stash later, and don’t let people forget how much the Trump administration likes to stick it to California. Despite a $16.5 billion revenue bump, Newsom wants $1.8 billion in general fund cuts, deeper Medi-Cal trims, higher premiums for undocumented adults, revived asset tests, and tighter homelessness funding rules. He’d still draw $7 billion from reserves this year, then refill the rainy-day fund later, arguing California needs protection from a future revenue belly flop. “This is a balanced budget structurally for the next 18 months after I’m gone,” he said. The deeper problem is California’s budget model itself: a state wealthy enough to dream big, but dependent on capital gains and tech booms that vanish the moment markets get spooked. Newsom’s plan is less a victory lap than a padded landing zone — part budget, part storm shelter, part farewell note to whomever inherits the keys.

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🤫 Everything you should know

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⛺ SF HOMELESSNESS PLUMMETS — San Francisco Mayor Daniel Lurie is getting something rare in City Hall: encouraging homelessness numbers and voters who aren’t throwing rotten fruit. The city’s latest point-in-time count found overall homelessness down 4%, while street homelessness fell 22% to a 15-year low. Tent living reportedly dropped 85%, suggesting Lurie’s mix of shelters, recovery facilities, crisis centers, street outreach and firmer enforcement is at least changing what San Franciscans see and experience. He acknowledged the city’s bleak reputation “wasn’t entirely wrong,” but argued it no longer defines San Francisco. The data has caveats: the count used a new methodology, and advocates say sweeps may be pushing people out of sight rather than into stability. Still, the public appears willing to give Lurie credit. A new Chronicle poll found 74% of registered voters approve of his performance, essentially unchanged from a year ago. In San Francisco politics, that qualifies as levitation. — NY Times

🏘️ THE GREAT BIG HOUSING DEBATE — California’s would-be governors walked into a housing forum carrying the same diagnosis — build more, faster, cheaper — then spent two hours arguing over which political organ to remove first. The evening, moderated by the New York Times’ Ezra Klein, exposed the real fight inside the state’s pro-housing turn: abundance sounds lovely until it runs into labor, local control, environmental review, city budgets and the various political third rails blocking the bulldozers. Xavier Becerra defended union wages, warning that the carpenter building the home shouldn’t be priced out of owning one. Katie Porter countered that piling labor rules onto residential construction can turn affordability into performance art. Matt Mahan wanted Sacramento to override cities that refuse to build; Tom Steyer preferred bribery with spreadsheets — build and get paid, stall and get stiffed. Everyone praised construction; the brawl was over who pays, who yields, and whose sacred cow becomes dinner. — Mission Local

🪓 JD ADVANCES ON CALIFORNIA — The Trump administration is withholding $1.3 billion in Medicaid payments from California, with JD Vance accusing the state of treating fraud prevention like decorative paperwork. “The state of California has not taken fraud very seriously,” he said, while announcing audits of Medicaid fraud watchdogs nationwide. So far, the crackdown has mostly clipped Democratic states, with Minnesota already suing over a $259 million freeze. CMS chief Mehmet Oz is also targeting California’s hospice industry, and Medicare is pausing new hospice approvals for six months while it investigates. — CNN

🦉🦦🐟 A toothy miracle with maps

California’s biodiversity is not just pretty scenery; it is a sprawling, feathered, flowering, occasionally toothy miracle with maps. CDFW’s updated Atlas of the Biodiversity of California packs gorgeous photography, full-color maps, wildlife art, and expert essays into one field guide for anyone wondering what exactly we’re missing while we’re staring at our phones. Smart, lush, and quietly alarming, it’s both a celebration of California’s living wonders and a warning that they need protecting. California Department of Fish and Wildlife

 🏃💨✋ FAST FIVE

1. 💼 Cisco posted its highest-ever quarterly revenue — $15.8B, up 12% — and announced 4,000 job cuts on the same day. Silicon Valley firms have collectively shed more than 85,000 jobs this year, up 33% over the same period in 2025. The economy is thriving. The workers aren't. - WSJ

1. 🏠 After losing its lawsuit against the state housing mandate, Huntington Beach now faces fines of up to $50,000 a month — a significant escalation in Sacramento's willingness to actually enforce its own rules. - East Bay Times

1. 💰 SpaceX, OpenAI, and Anthropic are preparing to go public in what analysts call the largest IPO wave in history — and California stands to collect billions in new tax revenue. "Galactically huge," per the Bay Area Council's general counsel. - Politico

1. 🏗️ Mayor Lurie promised a permitting revolution via new software. City workers say the rollout has been troubled from the start — and their union is now fighting the $28.5M contract expansion amid broader budget tensions. The gap between promise and execution is a familiar California story. - SF Standard

1. 😱 Elk Grove plumber Belinda Gutierrez thought she was opening another bill when a lawsuit landed in her mailbox this spring. Instead, the envelope demanded up to $40,000 over alleged wiretapping tied to basic tools on her company’s website. Her case is one of several that pushed lawmakers and business groups to the Capitol in search of a fix. - Hoodline Sacramento

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