Business

This California city lost thousands of homes to fire. Santa Rosa’s rebuilding has lessons for L.A.

Published

12 months ago

January 23, 2025

This California city lost thousands of homes to fire. Santa Rosa’s rebuilding has lessons for L.A.

SANTA ROSA, Calif. — The sky above their newly built homes was clear, and the ground beneath their feet reassuringly soggy from recent winter rains. But as residents in the Coffey Park neighborhood made their way to a community gathering on a recent evening — passing one yard after another devoid of trees or brush or anything readily flammable — many said they still have flashbacks to a night of smoke and flames and fear.

It’s been more than seven years since homes in this Santa Rosa neighborhood were incinerated by the Tubbs fire, which swept across Napa and Sonoma counties in a matter of hours before jumping six lanes of the 101 Freeway. The residents of Coffey Park — about 9,000 people — were roused from their beds in a panic and fled through flames and whipping embers. In some cases, people walked miles to safety, with singed pets struggling in their arms and only the clothes on their backs.

A scorched lawn statue stands amid the rubble of the Coffey Park neighborhood in Santa Rosa in October 2017.

(Luis Sinco / Los Angeles Times)

Five neighborhood residents died in the fire, among 22 total in Sonoma County. At the time, it was the most destructive fire in California history — although that record would quickly be broken, and then broken again in the coming years.

Fire wasn’t supposed to do what it did that night. No one had predicted the flames would move so fast, or consume so much of this city of 175,000 and surrounding communities. No one could have predicted, either, that Santa Rosa would manage to build back so quickly, or that residents would say that, in some ways, their communities emerged stronger: safer from fire and more closely knit.

Just more than a week into Los Angeles’ ordeal by fire, the neighbors of Coffey Park were gathering in Tricia Woods’ rebuilt kitchen to raise funds to send to fire victims in L.A. They also wanted to send a message: You can’t imagine it now, but it is possible to recover from this.

Yes, the aftermath is hard: “I moved seven times in three years,” Diane Farris said of the uncertainty and dislocation.

And you never get over the trauma: “I still have a go bag packed,” Anita Rackerby confided, as her neighbors nodded in recognition.

But they knew from shared experience that communities can, indeed, rise from ashes.

A man opens the sliding glass door of a home under construction in Santa Rosa.

People in Santa Rosa are acutely aware that they are in the unenviable position of having hosted one of California’s first and most brutal megafires in this new age of unpredictable burns.

On the night of Oct. 8, 2017, the Tubbs fire ignited near the town of Calistoga. Within five hours, the blaze — spitting embers that helped it leapfrog in all directions — had traveled 12 miles, over the hills that separate Napa and Sonoma counties and down into Santa Rosa. Then, it did the unthinkable, jumping the freeway and burning through homes that were viewed as being at low risk for wildfire.

Santa Rosa has been in a state of recovery ever since. Along the way, some residents have become unofficial disaster consultants, jetting off to scenes of devastation around the country — to Paradise, which the Camp fire eviscerated in 2018; and Lahaina, the Maui community that burned to the ground in 2023 — to counsel people on how to pick up the pieces.

A grassy lot is all that remains of a house burned in the Tubbs fire.

Gabe Osburn, Santa Rosa’s planning director, said the L.A.-area fires were still raging when he got his first call from representatives of the city of Los Angeles. The question was simple: What do we do?

Osburn was Santa Rosa’s deputy director of city services in 2017. He found out his city was on fire the way most residents did: He woke to a blaring alarm.

His house, just outside Coffey Park, was filled with smoke, and it had a distinct smell that he recognized as wildfire. He glanced out his second-story window and saw a terrifying orange glow over his neighborhood. He and his wife grabbed what they could, which included their three cats, and fled to a relative’s house in southern Sonoma County.

Then, he reported to work.

It wasn’t long before the scope of the disaster became clear. Twenty-two people dead. And tens of thousands were homeless. With more than 3,000 homes burned within city limits — and more than 5,000 in the surrounding area — Santa Rosa had just lost 5% of its housing stock.

In a city that already had a housing crunch, this was a crisis. Where were all the people whose homes had burned going to live? And given that many of them were relatively wealthy, would their search for housing have the domino effect of pushing other renters out? What could or should government officials do about it?

Amid the charred rubble, residents were starting to ask themselves the same questions.

A cuddly dog licks a boy's face, while his parents look on smiling.

In Larkfield Estates, a neighborhood just north of the city limits, Brad Sherwood and his wife, Brandy, had long reassured their children that they had nothing to fear from wildfire. “I live on a valley floor,” he said of his thinking. “This is not the wild/urban interface” that is prone to burning. “They can stop it.”

He was wrong, as so many others have been in recent years when predicting what wildfires would do based on what they have done in the past.

Sherwood said he “will never forget looking up this canyon as I’m running from my house, seeing fire tornadoes ripping down” toward him. And yet, he added: “On Day 1, my wife and I said, we are rebuilding. This is our home.”

But first, they had to find a place to live. And of course, they were dealing with insurance, and the hundreds of things they had to account for in order to get paid.

And life didn’t stop. Both he and his wife had jobs, and they had to take care of their children, who had been through the ordeal of watching their home burn down.

An elegant dining table made from a walnut tree that was burned in the Tubbs fire.

He and his wife decided they would “divide and conquer.” Brandy would take the “front-line approach,” taking the lead with the insurance company and, eventually, the builder who constructed their new home. Brad “would focus on community outreach.”

“I knew that if we weren’t working together as a community, we would not be successful as a whole,” he said.

In the weeks after the fire, he built a website that would serve as an information hub for Larkfield Estates, whose residents were now scattered across the county and beyond. The community began holding neighborhood meetings and inviting local officials. The area supervisor, James Gore, created a “block captain” program for burned-out neighborhoods, to simplify communication and allow neighbors to speak collectively.

The community developed a “needs assessment.” In addition to rebuilding homes, recovery would require debris removal, reconstruction of power, water and sewer systems and fixing streets.

They also needed to figure out how to efficiently rebuild. Should every family find its own contractor? Or should the city bring in home builders who could mass-produce homes, which would be cheaper and faster?

And along the way, Sherwood said, something remarkable happened: The neighbors, mostly friendly, but often distant, got to know one another better and began to trust and rely on each other.

Three miles south, in Coffey Park, a similar effort was unfolding. They called the group “Coffey Strong.” They had a website. They held meetings with elected leaders, home builders, city officials.

And then, eight months after the Tubbs fire, another blaze ignited in nearby Lake County. Smoke drifted to Santa Rosa, traumatizing many.

Woods, the woman who summoned folks to her rebuilt home last week as Los Angeles burned, was among those who felt shaken. But she decided to do something about it. She blasted out a message to her neighbors telling them she would be sitting in a camp chair next to the burned-out husk of her home. She would have wine. Everyone was welcome.

Coffey Park residents gather on the street in 2018.

A neighborhood tradition was born. They began to meet every Wednesday evening. At first the gatherings took place in the street, amid the rubble. Eventually, as neighbors slowly rebuilt, they gathered for housewarming parties.

“We didn’t have many friends in the neighborhood before this,” said Melissa Geissinger, who was seven months pregnant when her house burned down and endured the trauma of having her newborn baby go through open-heart surgery while the family was displaced.

By 2020, just three years after the fire, more than 80% of the neighborhood homes lost in the fire had been rebuilt and families had moved back in.

Osburn, Santa Rosa’s planning director, said the city played a key role in making that possible. “We made this commitment to the community that we would understand where they were getting stuck and implement creative solutions to remove the impediment,” he said.

That meant a range of actions, including coordinating with state, federal and county officials in the early days of recovery to help people get their feet under them, stripping back discretionary regulations and processing permits within days or hours instead of months.

The signs from the Tubbs fire are still visible in Santa Rosa for those who know how to read them.

In the Fountaingrove neighborhood, in the hills east of downtown, many replacement homes are still under construction. And some lots are still empty, the grass from winter rains wafting in the wind, along with the sharp echoes of hammers and nail guns.

In Larkfield Estates, Sherwood and his family have moved into their new home. The old walnut tree that used to shade his frontyard has been transformed into an elegant dining room table. Many of his neighbors, also returned, did the same thing with their trees.

In some ways, the neighborhood has more amenities than it did before. It finally got a sewer system so residents could move off septic; the county offered loans at a low interest rate to make it affordable. A new park, which the community is helping to raise funds for, is coming. And there is a new sidewalk on busy Mark West Springs Road so children can more safely walk to school.

But across the street from Sherwood’s gorgeous new house — white with dark trim and cheerful flowers in the frontyard — is still an empty lot, a forlorn swimming pool surrounded by chain-link fencing the only reminder of what used to be. A plastic chair that blew into the pool the night of the fire is still there; the water protected it from the flames, and no one has touched it since.

An upended plastic chair floats in a pool surrounded by chain-link fencing.

In Coffey Park, there are still a few houses under construction, but the biggest reminder of fire is in the landscaping: very few big trees, and yard after yard ornamented with rocks and other materials that can’t burn.

At the wine gathering, one person after another said they hoped the people of Los Angeles could take hope from Coffey Park.

Until the fire, said Rackerby, “I lived here for 30 years, and I didn’t know the people across the street.” Now, she said, she feels like she knows everyone. In the months before the local park was refurbished, she opened up her yard as a play area for neighborhood children. She also helped her neighbors make mosaic artwork using scorched jewelry, dishes and other sifted wreckage from their homes — something to memorialize what they had lost.

Standing nearby was Geissinger, whose son is now a playful 7-year-old. She recently published a young adult novel, “Nothing Left But Dust,” that includes themes about a fire. Coming through the blaze, she said, gave her the courage to pursue her dream of being a writer.

Michelle Poggi, who seven years ago escaped with her husband on foot, walking three miles with their cat through smoke and burning embers, echoed that sense of what’s possible.

“This community really did take something horrible, and it’s kind of like we all found the silver linings where we could,” she said. Her neighbors nodded in agreement.

Business

Google and Character.AI to settle lawsuits alleging chatbots harmed teens

Published

3 hours ago

January 8, 2026

Press Room

Google and Character.AI to settle lawsuits alleging chatbots harmed teens

Google and Character.AI, a California startup, have agreed to settle several lawsuits that allege artificial intelligence-powered chatbots harmed the mental health of teenagers.

Court documents filed this week show that the companies are finalizing settlements in lawsuits in which families accused them of not putting in enough safeguards before publicly releasing AI chatbots. Families in multiple states including Colorado, Florida, Texas and New York sued the companies.

Character.AI declined to comment on the settlements. Google didn’t immediately respond to a request for comment.

The settlements are the latest development in what has become a big issue for major tech companies as they release AI-powered products.

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Last year, California parents sued ChatGPT maker OpenAI after their son Adam Raine died by suicide. ChatGPT, the lawsuit alleged, provided information about suicide methods, including the one the teen used to kill himself. OpenAI has said it takes safety seriously and rolled out new parental controls on ChatGPT.

The lawsuits have spurred more scrutiny from parents, child safety advocates and lawmakers, including in California, who passed new laws last year aimed at making chatbots safer. Teens are increasingly using chatbots both at school and at home, but some have spilled some of their darkest thoughts to virtual characters.

“We cannot allow AI companies to put the lives of other children in danger. We’re pleased to see these families, some of whom have suffered the ultimate loss, receive some small measure of justice,” said Haley Hinkle, policy counsel for Fairplay, a nonprofit dedicated to helping children, in a statement. “But we must not view this settlement as an ending. We have only just begun to see the harm that AI will cause to children if it remains unregulated.”

One of the most high-profile lawsuits involved Florida mom Megan Garcia, who sued Character.AI as well as Google and its parent company, Alphabet, in 2024 after her 14-year-old son, Sewell Setzer III, took his own life.

The teenager started talking to chatbots on Character.AI, where people can create virtual characters based on fictional or real people. He felt like he had fallen in love with a chatbot named after Daenerys Targaryen, a main character from the “Game of Thrones” television series, according to the lawsuit.

Garcia alleged in the lawsuit that various chatbots her son was talking to harmed his mental health, and Character.AI failed to notify her or offer help when he expressed suicidal thoughts.

“The Parties request that this matter be stayed so that the Parties may draft, finalize, and execute formal settlement documents,” according to a notice filed on Wednesday in a federal court in Florida.

Parents also sued Google and its parent company because Character.AI founders Noam Shazeer and Daniel De Freitas have ties to the search giant. After leaving and co-founding Character.AI in Menlo Park, Calif., both rejoined Google’s AI unit.

Google has previously said that Character.AI is a separate company and the search giant never “had a role in designing or managing their AI model or technologies” or used them in its products.

Character.AI has more than 20 million monthly active users. Last year, the company named a new chief executive and said it would ban users under 18 from having “open-ended” conversations with its chatbots and is working on a new experience for young people.

Business

Warner nixes Paramount’s bid (again), citing proposed debt load

Published

15 hours ago

January 7, 2026

Press Room

Warner nixes Paramount’s bid (again), citing proposed debt load

Paramount’s campaign to acquire Warner Bros. Discovery was dealt another blow Wednesday after Warner’s board rejected a revised bid from the company.

The board cited the enormous debt load that Paramount would need to finance its proposed $108-billion takeover.

Warner’s board this week unanimously voted against Paramount’s most recent hostile offer — despite tech billionaire Larry Ellison agreeing in late December to personally guarantee the equity portion of Paramount’s bid. Members were not swayed, concluding the bid backed by Ellison and Middle Eastern royal families was not in the best interest of the company or its shareholders.

Warner’s board pointed to its signed agreement with Netflix, saying the streaming giant’s offer to buy the Warner studios and HBO was solid.

The move marked the sixth time Warner’s board has said no to Paramount since Ellison’s son, Paramount Chief Executive David Ellison, first expressed interest in buying the larger entertainment company in September.

In a Wednesday letter to investors, Warner board members wrote that Paramount Skydance has a market value of $14 billion. However, the firm is “attempting an acquisition requiring $94.65 billion of [debt and equity] financing, nearly seven times its total market capitalization.”

The structure of Paramount’s proposal was akin to a leveraged buyout, Warner said, adding that if Paramount was to pull it off, the deal would rank as the largest leveraged buyout in U.S. history.

“The extraordinary amount of debt financing as well as other terms of the PSKY offer heighten the risk of failure to close, particularly when compared to the certainty of the Netflix merger,” the Warner board said, reiterating a stance that its shareholders should stick to its preferred alternative to sell much of the company to Netflix.

The move puts pressure on Paramount to shore up its financing or boost its cash offer above $30 a share.

However, raising its bid without increasing the equity component would only add to the amount of debt that Paramount would need to buy HBO, CNN, TBS, Animal Planet and the Burbank-based Warner Bros. movie and television studios.

Paramount representatives were not immediately available for comment.

“There is still a path for Paramount to outbid Netflix with a substantially higher bid, but it will require an overhaul of their current bid,” Lightshed Partners media analyst Rich Greenfield wrote in a Wednesday note to investors. Paramount would need “a dramatic increase in the cash invested from the Ellison family and/or their friends and financing partners.”

Warner Bros. Discovery’s shares held steady around $28.55. Paramount Skydance ticked down less than 1% to $12.44.

Netflix has fallen 17% to about $90 a share since early December, when it submitted its winning bid.

The jostling comes a month after Warner’s board unanimously agreed to sell much of the company to Netflix for $72 billion. The Warner board on Wednesday reaffirmed its support for the Netflix deal, which would hand a treasured Hollywood collection, including HBO, DC Comics and the Warner Bros. film studio, to the streaming giant. Netflix has offered $27.75 a share.

“By joining forces, we will offer audiences even more of the series and films they love — at home and in theaters — expand opportunities for creators, and help foster a dynamic, competitive, and thriving entertainment industry,” Netflix co-Chief Executives Ted Sarandos and Greg Peters said in a joint statement Wednesday.

After Warner struck the deal with Netflix on Dec. 4, Paramount turned hostile — making its appeal directly to Warner shareholders.

Paramount has asked Warner investors to sell their shares to Paramount, setting a Jan. 21 deadline for the tender offer.

Warner again recommended its shareholders disregard Paramount’s overtures.

Warner Bros.’ sale comes amid widespread retrenchment in the entertainment industry and could lead to further industry downsizing.

The Ellison family acquired Paramount’s controlling stake in August and quickly set out to place big bets, including striking a $7.7-billion deal for UFC fights. The company, which owns the CBS network, also cut more than 2,000 jobs.

Warner Bros. Discovery was formed in 2022 following phone giant AT&T’s sale of the company, then known as WarnerMedia, to the smaller cable programming company, Discovery.

To finance that $43-billion acquisition, Discovery took on considerable debt. Its leadership, including Chief Executive David Zaslav, spent nearly three years cutting staff and pulling the plug on projects to pay down debt.

Paramount would need to take on even more debt — more than $60 billion — to buy all of Warner Bros. Discovery, Warner said.

Warner has argued that it would incur nearly $5 billion in costs if it were to terminate its Netflix deal. The amount includes a $2.8-billion breakup fee that Warner would have to fork over to Netflix. Paramount hasn’t agreed to cover that amount.

Warner also has groused that other terms in Paramount’s proposal were problematic, making it difficult to refinance some of its debt while the transaction was pending.

Warner leaders say their shareholders should see greater value if the company is able to move forward with its planned spinoff of its cable channels, including CNN, into a separate company called Discovery Global later this year. That step is needed to set the stage for the Netflix transaction because the streaming giant has agreed to buy only the Warner Bros. film and television studios, HBO and the HBO Max streaming platform.

However, this month’s debut of Versant, comprising CNBC, MS NOW and other former Comcast channels, has clouded that forecast. During its first three days of trading, Versant stock has fallen more than 20%.

Warner’s board rebuffed three Paramount proposals before the board opened the bidding to other companies in late October.

Board members also rejected Paramount’s Dec. 4 all-cash offer of $30 a share. Two weeks later, it dismissed Paramount’s initial hostile proposal.

At the time, Warner registered its displeasure over the lack of clarity around Larry Ellison’s financial commitment to Paramount’s bid. Days later, Ellison agreed to personally guarantee $40.4 billion in equity financing that Paramount needs.

David Ellison has complained that Warner Bros. Discovery has not fairly considered his company’s bid, which he maintains is a more lucrative deal than Warner’s proposed sale to Netflix. Some investors may agree with Ellison’s assessment, in part, due to concerns that government regulators could thwart the Netflix deal out of concerns about the Los Gatos firm’s increasing dominance.

“Both potential mergers could severely harm the viewing public, creative industry workers, journalists, movie theaters that depend on studio content, and their surrounding main-street businesses, too,” Matt Wood, general counsel for consumer group Free Press Action, testified Wednesday during a congressional committee hearing.

“We fear either deal would reduce competition in streaming and adjacent markets, with fewer choices for consumers and fewer opportunities for writers, actors, directors, and production technicians,” Wood said. “Jobs will be lost. Stories will go untold.”

Business

Billionaire tax proposal sparks soul-searching for Californians

Published

1 day ago

January 7, 2026

Press Room

Billionaire tax proposal sparks soul-searching for Californians

The fiery debate about a proposed ballot measure to tax California’s billionaires has sparked some soul-searching across the state.

While the idea of a one-time tax on more than 200 people has a long way to go before getting onto the ballot and would need to be passed by voters in November, the tempest around it captures the zeitgeist of angst and anger at the core of California. Silicon Valley is minting new millionaires while millions of the state’s residents face the loss of healthcare coverage and struggle with inflation.

Supporters of the proposed billionaire tax say it is one of the few ways the state can provide healthcare for its most vulnerable. Opponents warn it would squash the innovation that has made the state rich and prompt an exodus of wealthy entrepreneurs from the state.

The controversial measure is already creating fractures among powerful Democrats who enjoy tremendous sway in California. Progressive icon Sen. Bernie Sanders (I-Vt.) quickly endorsed the billionaire tax, while Gov. Gavin Newsom denounced it .

The Golden State’s rich residents say they are tired of feeling targeted. Their success has not only created unimaginable wealth but also jobs and better lives for Californians, they say, yet they feel they are being punished.

“California politics forces together some of the richest areas of America with some of the poorest, often separated by just a freeway,” said Thad Kousser, a political science professor at UC San Diego. “The impulse to force those with extreme wealth to share their riches is only natural, but often runs into the reality of our anti-tax traditions as well as modern concerns about stifling entrepreneurship or driving job creation out of the state.”

The state budget in California is already largely dependent on income taxes paid by its highest earners. Because of that, revenues are prone to volatility, hinging on capital gains from investments, bonuses to executives and windfalls from new stock offerings, and are notoriously difficult for the state to predict.

The tax proposal would cost the state’s richest residents about $100 billion if a majority of voters support it on the November ballot.

Supporters say the revenue is needed to backfill the massive federal funding cuts to healthcare that President Trump signed this summer. The California Budget & Policy Center estimates that as many as 3.4 million Californians could lose Medi-Cal coverage, rural hospitals could shutter and other healthcare services would be slashed unless a new funding source is found.

On social media, some wealthy Californians who oppose the wealth tax faced off against Democratic politicians and labor unions.

An increasing number of companies and investors have decided it isn’t worth the hassle to be in the state and are taking their companies and their homes to other states with lower taxes and less regulation.

“I promise you this will be the final straw,” Jessie Powell, co-founder of the Bay Area-based crypto exchange platform Kraken, wrote on X. “Billionaires will take with them all of their spending, hobbies, philanthropy and jobs.”

Proponents of the proposed tax were granted permission to start gathering signatures Dec. 26 by California Secretary of State Shirley Weber.

The proposal would impose a one-time tax of up to 5% on taxpayers and trusts with assets, such as businesses, art and intellectual property, valued at more than $1 billion. There are some exclusions, including property.

They could pay the levy over five years. Ninety percent of the revenue would fund healthcare programs and the remaining 10% would be spent on food assistance and education programs.

To qualify for the November ballot, proponents of the proposal, led by the Service Employees International Union-United Healthcare Workers West, must gather the signatures of nearly 875,000 registered voters and submit them to county elections officials by June 24.

The union, which represents more than 120,000 healthcare workers, patients and healthcare consumers, has committed to spending $14 million on the measure so far and plans to start collecting signatures soon, said Suzanne Jimenez, the labor group’s chief of staff.

Without new funding, the state is facing “a collapse of our healthcare system here in California,” she said.

U.S. Rep. Ro Khanna (D-Fremont) speaks during a news conference at the U.S. Capitol on Nov. 18.

(Celal Gunes / Anadolu via Getty Images)

Rep. Ro Khanna (D-Fremont) spoke out in support of the tax.

“It’s a matter of values,” he said on X. “We believe billionaires can pay a modest wealth tax so working-class Californians have the Medicaid.”

The Trump administration did not respond to requests for comment.

The debate has become a lightning rod for national thought leaders looking to target California’s policies or the ultra-rich.

On Tuesday, Sanders endorsed the billionaire tax proposal and said he plans to call for a nationwide version.

“This is a model that should be emulated throughout the country, which is why I will soon be introducing a national wealth tax on billionaires,” Sanders said on X. “We can and should respect innovation, entrepreneurship and risk-taking, but we cannot respect the extraordinary level of greed, arrogance and irresponsibility that is currently being displayed by much of the billionaire class.”

But there isn’t unanimous support for the proposal among Democrats.

Notably, Newsom has consistently opposed state-based wealth taxes. He reiterated his opposition when asked about the proposed billionaires’ tax in early December.

“You can’t isolate yourself from the 49 others,” Newsom said at the New York Times DealBook Summit. “We’re in a competitive environment. People have this simple luxury, particularly people of that status, they already have two or three homes outside the state. It’s a simple issue. You’ve got to be pragmatic about it.”

Newsom has opposed state-based wealth taxes throughout his tenure.

In 2022, he opposed a ballot measure that would have subsidized the electric vehicle market by raising taxes on Californians who earn more than $2 million annually. The measure failed at the ballot box, with strategists on both sides of the issue saying Newsom’s vocal opposition to the effort was a critical factor.

The following year, he opposed legislation by a fellow Democrat to tax assets exceeding $50 million at 1% annually and taxpayers with a net worth greater than $1 billion at 1.5% annually. The bill was shelved before the legislature could vote on it.

The latest effort is also being opposed by a political action committee called “Stop the Squeeze,” which was seeded by a $100,000 donation from venture capitalist and longtime Newsom ally Ron Conway. Conservative taxpayer rights groups such as the Howard Jarvis Taxpayers Assn. and state Republicans are expected to campaign against the proposal.

The chances of the ballot measure passing in November are uncertain, given the potential for enormous spending on the campaign — unlike statewide and other candidate races, there is no limit on the amount of money donors can contribute to support or oppose a ballot measure.

“The backers of this proposed initiative to tax California billionaires would have their work cut out for them,” said Kousser at UC San Diego. “Despite the state’s national reputation as ‘Scandinavia by the Sea,’ there remains a strong anti-tax impulse among voters who often reject tax increases and are loath to kill the state’s golden goose of tech entrepreneurship.”

Additionally, as Newsom eyes a presidential bid in 2028, political experts question how the governor will position himself — opposing raising taxes but also not wanting to be viewed as responsible for large-scale healthcare cuts that would harm the most vulnerable Californians.

“It wouldn’t be surprising if they qualify the initiative. There’s enough money and enough pent-up anger on the left to get this on the ballot,” said Dan Schnur, a political communications professor who teaches at USC, Pepperdine and UC Berkeley.

“What happens once it qualifies is anybody’s guess,” he said.

Lorena Gonzalez, president of the California Federation of Labor Unions, called Newsom’s position “an Achilles heel” that could irk primary voters in places like the Midwest who are focused on economic inequality, inflation, affordability and the growing wealth gap.

“I think it’s going to be really hard for him to take a position that we shouldn’t tax the billionaires,” said Gonzalez, whose labor umbrella group will consider whether to endorse the proposed tax next year.

Peter Thiel speaks at the Cambridge Union in 2024.

California billionaires who are residents of the state as of Jan. 1 would be impacted by the ballot measure if it passes . Prominent business leaders announced moves that appeared to be a strategy to avoid the levy at the end of 2025. On Dec. 31, PayPal co-founder Peter Thiel announced that his firm had opened a new office in Miami, the same day venture capitalist David Sacks said he was opening an office in Austin.

Wealth taxes are not unprecedented in the U.S. and versions exist in Switzerland and Spain, said Brian Galle, a taxation expert and law professor at UC Berkeley.

In California, the tax offers an efficient and practical way to pay for healthcare services without disrupting the economy, he said.

“A 1% annual tax on billionaires for five years would have essentially no meaningful impact on their economic behavior,” Galle said. “We’re funding a way of avoiding a real economic disaster with something that has very tiny impact.”

Palo Alto-based venture capitalist Chamath Palihapitiya disagrees. Billionaires whose wealth is often locked in company stakes and not liquid could go bankrupt, Palihapitiya wrote on X.

The tax, he posted, “will kill entrepreneurship in California.”