The Problem

California leads the world in artificial intelligence today. But decisions being made in Sacramento risk driving this critical industry out of our state.

After 16 years of one-party rule, the pattern is clear: more regulation, higher taxes, and greater political control. That approach has already pushed other industries out of California—and now it is being applied to one of the most important technologies of the future.

This is not just about jobs or investment. Artificial intelligence is a foundational technology with major national security implications. The global race is happening now, largely between the United States and China. If California weakens its position, America’s leadership is weakened with it.

At the same time, California is failing to prepare its own people for the changes AI will bring. Educational outcomes are declining despite increased spending:

• Only 47% of students meet basic English standards
• Only 35% meet basic math standards

These failures leave millions unprepared for a more technical, fast-changing workforce.

California risks pushing out the industries of the future while failing to prepare its workforce to participate in them.

Why This Is Happening

This problem stems from a governing approach that prioritizes regulation, restriction, and taxation over growth.

California policymakers approach new technologies with excessive caution rather than confidence. Instead of supporting innovation, they impose sweeping rules before technologies are fully developed.

At the same time, the state has neglected foundational systems:

• Schools focus on bureaucracy over outcomes
• Workforce training and vocational pathways are limited
• There are fewer clear routes into skilled, well-paying jobs

AI also depends on physical infrastructure and reliable energy—areas where California has struggled due to high costs, supply constraints, and regulatory delays.

The Threat

California is already seeing the consequences of this approach. Proposed legislation would:

• Restrict how AI can be developed and used
• Increase liability under vague standards
• Add new layers of bureaucracy

Examples include:

• AB 1979: restricting AI use in healthcare
• SB 420: imposing liability for “algorithmic discrimination”
• SB 813: creating a new AI regulatory commission

These proposals risk slowing innovation, pushing investment elsewhere, and increasing government control over technology.

Combined with proposals like taxing unrealized gains, these policies threaten the foundation of California’s startup ecosystem.

Unless direction changes, it will become easier for innovators to build the future somewhere else.

The Plan

1. Extend California’s Global Leadership in AI

California must be the best place in the world to build, invest, and grow AI companies.

That requires:

• A strong business climate
• Affordable infrastructure
• A well-educated workforce

Government should enforce basic accountability—but avoid sweeping, preemptive regulation on evolving technologies.

2. Set Clear, Common-Sense Guardrails

There are real risks, but solutions should be targeted and practical.

Focus areas include:

• Protecting children
• Preventing fraud and impersonation
• Safeguarding intellectual property and identity

The approach should:

• Enforce existing laws
• Close clear gaps
• Avoid vague, open-ended rules

3. Compete for the Full Stack of AI Jobs

California must capture the entire AI ecosystem, including:

• Energy
• Manufacturing
• Infrastructure
• Computing
• Software and applications

Right now, many of these jobs are going elsewhere due to cost and regulatory barriers.

Fixing this means:

• Faster approvals
• Lower barriers to building
• A clear commitment to growth

4. Deliver Abundant Energy and Infrastructure

AI depends on reliable, affordable energy.

California must shift from scarcity to abundance by:

• Expanding in-state energy production
• Modernizing the grid
• Removing barriers to infrastructure development

This includes:

• Utilizing existing natural gas capacity
• Expanding nuclear power over time

Meeting rising electricity demand must be treated as an urgent priority.

5. Prepare Californians to Win in the AI Economy

The most important role of government is preparing people—not controlling technology.

Current education outcomes are failing students and the workforce.

Key priorities include:

• Ensuring literacy and math proficiency
• Using phonics-based instruction
• Holding schools accountable for performance

Students should not advance without mastering fundamentals.

In addition:

• Expand vocational and technical education
• Support retraining for displaced workers

Change is coming. The goal is to ensure Californians can move forward—not fall behind.

Conclusion

California has all the advantages needed to lead the world in artificial intelligence—but those advantages are being undermined by bad policy decisions.

The state faces a choice:

• Continue down a path of overregulation, high costs, and declining outcomes
  or
• Prioritize growth, innovation, and opportunity

If California gets this right, it will lead the AI revolution for decades to come.