Newsom Wants Democrats to Be “Culturally Normal.”
His Own State Built a $633 Million DEI Contracting Rule First.
Gov. Gavin Newsom (D-CA) told CNN’s Dana Bash earlier this year that Democrats need to be “more culturally normal” and spend less time on “pronouns, identity politics.” His own state’s regulatory apparatus tells a different story: California’s Public Utilities Commission runs a Supplier Diversity Program that, if its current goals are met, would direct an estimated $633,000,000 a year in utility contracts specifically to businesses certified as LGBT-owned — a program now under formal federal investigation.
That program is one piece of a much larger structure. California built a dedicated equity bureaucracy over the past several years — a statewide Chief Equity Officer, an 11-member Racial Equity Commission, agency-level diversity offices with six-figure department heads — that public-records requests estimated cost roughly half a billion dollars at the state level alone in a single two-year window.
Newsom’s rhetorical shift is real, and so is at least one budget cut. What hasn’t moved yet is the underlying infrastructure his rhetoric is now running against.
- $633,000,000 — in annual utility contracting CPUC's Supplier Diversity Program is projected to direct to LGBT-certified businesses if its 1.5 percent goal is met
- 0.36% — what San Diego Gas & Electric actually spent with LGBT-certified businesses in 2022 — a fraction of the goal · Source: City Journal
- ~$500M state / $1B+ total — California DEI spending across state, county, and city government, FY2020-2022, per public-records requests
- Federal inquiry — DOJ Assistant AG Harmeet Dhillon opened a formal investigation into the CPUC program in June 2026, calling it likely illegal set-aside contracting
- Cut — Newsom's 2026-27 budget omitted funding for California's ethnic-studies graduation mandate — a narrow, real reduction
California’s utility supplier-diversity framework dates to a 1986 law signed by Gov. George Deukmejian (R), expanded to include LGBT-owned businesses under Gov. Jerry Brown (D) in 2014 and expanded further under Newsom in 2019. Applied to the roughly $43,000,000,000 in annual utility contractor spending statewide, the program’s 1.5 percent procurement goal for LGBT-certified businesses works out to about $633,000,000 a year — if utilities actually meet it. San Diego Gas & Electric’s real 2022 spending with LGBT-certified businesses came in at $8,600,000, or 0.36 percent of procurement, far short of the target.
DOJ Assistant Attorney General for Civil Rights Harmeet Dhillon (Trump-administration appointee) opened a formal federal inquiry into the program in June 2026, arguing it functions as illegal set-aside contracting that raises consumer utility costs. “When you have set-asides and special contracts like that, you have inflation,” Dhillon said. The inquiry is open and unresolved.
The CPUC program sits inside a wider structure. Newsom appointed Pam Chueh as California’s first State Chief Equity Officer in August 2022, tasked with embedding equity review across every state department’s budget process. A separate 11-member Racial Equity Commission, created by executive order and statute co-sponsored by then-state Sen. Richard Pan (D-Sacramento), remains active with meetings scheduled into 2026. Public-records requests filed with dozens of agencies found roughly $500 million in state-level DEI spending and over $1 billion combined across state, county, and city government in a single two-year window (FY2020-2022) — including department heads at the Department of Public Health and the Office of Emergency Services each earning over $200,000 in total compensation, and roughly 100 California agencies paying annual dues to a national government race-equity alliance.
“I don't know how who somebody sleeps with is relevant to their provision of utilities-related support services.”
Harmeet Dhillon, DOJ Assistant Attorney General for Civil Rights, June 2026
California requires utilities to hit contracting quotas for LGBT-owned businesses — a $633 million-a-year goal built on a 1986 law never designed for it.
Newsom’s own language has shifted markedly. “From the prism of purely politics, there’s no doubt that the Democratic party needs to be — dare I say — more culturally normal,” he told Bash, adding Democrats spend a “disproportionate amount of time on pronouns, identity politics.” California’s own Legislative LGBTQ Caucus publicly objected, calling it “deeply concerning.” On the budget, Newsom’s 2026-27 signing omitted taxpayer funding for the state’s ethnic-studies graduation mandate — a real, if narrow, retreat. The Racial Equity Commission, the Chief Equity Officer’s office, and the CPUC contracting goals remain in place.
What's changed: Newsom's public language; one narrow budget line (ethnic-studies funding) cut.
What hasn't: the Chief Equity Officer's office, the Racial Equity Commission, and the CPUC's $633 million LGBT-contracting goal — all still active as of publication.
No state audit has ever measured whether any of it worked.
Gavin Newsom wants credit for telling Democrats to tone down identity politics. His state's own regulatory apparatus — a $633 million utility-contracting quota now under federal investigation, a statewide equity office, an active Racial Equity Commission — didn't get the memo. Rhetoric is cheap. Repealing a 1986 law that three governors, including Newsom himself, spent decades expanding is not.
