(Bloomberg) -- California Governor Gavin Newsom in his State of State speech Tuesday portrayed the world’s fifth-largest economy as a leader in progressive initiatives and promised to address core issues such as soaring gasoline prices.

The first-term Democrat, running for re-election this year, touched on topics from preserving democracy to climate change and homelessness. Referring to one of the most pressing concerns for residents, he said he would work with legislative leaders on “a proposal to put money back in Californians’ pockets to address rising gas prices,” without elaborating.

While California is rife with contradictions -- it’s home to more billionaires than any other U.S. state, but has the highest percentage of residents in poverty -- Newsom touted its liberal ideals. The most-populous state has set goals in reducing emissions and expanding transitional kindergarten, as well as extending health-care coverage to all undocumented residents.

“In the midst of so much turmoil, with stacking of stresses and dramatic social and economic change, California is doing what we have done for generations, lighting out the territory ahead of the rest, expanding the horizon of what’s possible,” said Newsom, 54. “We know that government cannot be the entire solution, but we also know that government has always been part of the solution.” 

The governor’s reference to gas-price relief comes after Russia’s invasion of Ukraine sent costs for the fuel surging. California now averages $5.44 for a gallon of regular, according to AAA. The state often has the nation’s most expensive gasoline, the result of high taxes, costs from global-warming programs and the use of pollution-fighting fuel blends used nowhere else.

Newsom had already proposed delaying an annual inflation-indexed increase in the fuel tax that was set for July 1 as part of his budget plan for the next fiscal year. He said Tuesday that it was time to go further. 

The two leaders of the Democratic-majority legislature -- Senate President Pro Tempore Toni Atkins and Assemblymember Anthony Rendon -- after the speech issued a a joint statement suggesting that they are considering a tax rebate that’s broader than relief from fuel prices.

On homelessness, Newsom acknowledged the crisis has worsened over the past decade. California has the most people experiencing homelessness among U.S. states -- 161,548, according to the latest figures -- and they have become even more visible during the pandemic with encampments lining sidewalks and parks.

In next year’s budget blueprint, Newsom had already allocated $2 billion in homelessness-related proposals, which the legislature’s nonpartisan adviser characterized as his continuing focus on “one‑time, rather than on‑going, funding” for one of the state’s most significant challenges.

In his speech, Newsom highlighted his proposals for grants to remove encampments and to set up court-ordered individualized interventions and services for mentally ill people.

“Getting people off the streets, out of tents and into housing and treatment is essential to making our streets safe for everyone,” he said.

The issue is a sensitive one for Newsom. In a poll released last month by the University of California, Berkeley’s Institute of Governmental Studies, 47% of the state’s registered voters disapproved of Newsom’s performance, up from 42% in September, when he faced a rare recall election. 

Two in three voters said Newsom is doing a poor or very poor job handing homelessness, and 51% say the same for crime and public safety. That’s a double-digit percentage point increase for both issues since 2020.

Still, no candidate with statewide name recognition has so far filed paperwork to run against Newsom in the November election. Larry Elder, the conservative talk show host who captured the most votes among candidates as a replacement to Newsom in an unsuccessful recall effort last year, has said he isn’t running.

Republicans are in the minority in the legislature. Before the speech Tuesday, Assembly Republicans called for declaring a state of emergency over homelessness and for immediately suspending the gas tax.

“From crime to homelessness to better opportunities for their kids, there is no shortage of quality-of-life issues,” Assemblymember Suzette Valladares said in a video released by the caucus. “It just costs too much to live yet alone thrive in California.”

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