Editor’s note: This is part 1 of a series on California’s developing AI legislation.

A restaurant may use artificial intelligence software to inventory its ingredients. A cleaning service could ask ChatGPT to write its submission to a request for proposals.

Around the world — including in the Capital Region — individuals and organizations are figuring out how AI might help or hurt them. And while the future is being built over in Silicon Valley, the decisions about how to govern the technology fall squarely on Sacramento. Dozens of legislative bills have made it through the state Capitol, ranging from rules about AI transparency in political advertising to preventing scams from AI-generated robocalls.

The actions can have repercussions far beyond Sacramento. Other companies and jurisdictions across the country and beyond frequently regard California as a regulatory leader on issues such as technology. For instance, there is no federal privacy law, but several states followed California’s example after it instituted such a law.

The Facebook corporate parent Meta says, in the absence of D.C. legislation, AI guard rails can start in California and spread. “Other states are looking at us,” says Mona Pasquil Rogers, director of California public policy for Meta, the parent company of Facebook, Instagram and WhatsApp.

Risks and rewards

Critics say AI can reinforce racial or gender bias, spread misinformation and deepfakes, invade privacy, displace jobs, hurt mental health and concentrate monopolies. The technology is “extractive,” says Jonathan Mehta Stein, chairman of the California Initiative for Technology and Democracy. “It is using our thoughts, our information, our relationships, our data to learn as much about us as they can, including the most vulnerable, most intimate parts of us, and then using it primarily to make as much money as possible.”

It is also extractive in terms of natural resources. Raissa D’Souza, the co-director of the UC Davis AI Center in Engineering, says people don’t know an AI query requires far more energy than a Google query. It requires about 10 times more electricity, used at data centers, according to Goldman Sachs.

Other risks include AI models that, in experiments, “resorted to malicious insider behaviors when that was the only way to avoid” being shut down, “including blackmailing officials and leaking sensitive information to competitors,” and even steps that could kill officials, AI company Anthropic wrote in a summary of experiments it conducted on a range of models. The company tested various models by giving the AI hypothetical business goals and checking if it would behave unethically to achieve the goals – it did.

Despite the risks, Sacramento’s economy is increasingly AI-infused. According to Valley Vision, there was “a sharp increase in AI-related job postings in the Greater Sacramento area from the end of 2020 to the summer of 2022,” when a wave of tech layoffs began.

The Sacramento Valley Small Business Development Center has held multiple AI trainings for companies. The director, SiewYee Lee-Alix, says they can use it for marketing, for instance, to be competitive. “Small businesses, they may not compete with large retail stores, but they can use AI to build relationships with the communities they serve,” she says.

Elk Grove-headquartered consulting company Savant One says it helps customers apply AI to their own companies in industries including hospitality, food and talent procurement. Using AI to generate content has helped Sacramento companies to be “hyper-tailored” to local customers, says founder Terence Custodia. For instance, he has a procurement client that uses the tech to tailor emails to thousands of prospects. “We work together to modernize the most tedious part of their growth framework,” he says.

These “tedious” tasks are traditionally assigned to entry-level employees, who may have a harder time gaining a foothold in companies that use AI. “We are chopping the career ladder off at the bottom three rungs,” says Sara Flocks, the legislative and strategic campaigns director for the California Labor Federation. She says retraining is not sufficient to help all the employees who will be impacted.

AI in the Capitol

California is introducing tech policies to balance innovation with public safety, privacy, transparency and equity — goals that are often in tension.

Stein, chairman of the California Initiative for Technology and Democracy, warns against “tech exceptionalism,” or not regulating tech for fear of stifling innovation. Speed limits and seat belts haven’t stifled the car industry, for instance, he says.

His organization’s surveys show it’s “almost impossible for California voters to trust Big Tech less,” he says. Reasons for distrust range from surveillance capitalism, which means companies profit from people’s data — supercharged with AI — to mental health issues. Chatbots have been shown to give people a therapeutic outlet but have also made harmful and even deadly suggestions to users in their chats.

SB 942 by State Senator Josh Becker is an example of new policies meant to make AI safer but still beneficial. It will take effect in 2026 and requires companies to label AI content, meaning, for instance, that people would know if Pope Francis really wore a puffy winter coat or if AI generated the image.

California is rolling out other AI regulations as well. Other recent legislation includes rules requiring companies to remove political deepfakes during elections; criminalizing AI porn intended to look like specific people; and banning the commercial use of deceased celebrities’ likenesses without consent from their estates.

However, the state is not just regulating AI but also putting it to use. The California Department of Transportation worked with companies using Gemini GenAI to identify high-crash roads, uncover patterns and suggest solutions to increase safety, for instance, says Gov. Gavin Newsom’s office. It was part of his policy to apply AI to procurement under an executive order.

On the city level, Sacramento is open to incorporating AI in day-to-day business. Roger Dickinson, a Sacramento city councilmember, says it can help automate processes. For instance, the city might develop an online system that would allow Sacramentans to chat with a bot to help them reserve a baseball field at Land Park.

“If you can increase efficiency and quality of service of government at a time of budget constraints, that’s a pro,” Dickinson says. AI can make mistakes, but it may also make life easier.

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