Gov. Arnold Schwarzenegger's signing of the bill establishing "Harvey Milk Day" each May 22, Milk's birthday, was announced Monday.
The Republican governor vetoed similar legislation a year ago. In the interim, Milk was posthumously awarded the Presidential Medal of Freedom in August and was the subject of a movie for which Sean Penn won the Academy Award for best actor.
Penn spoke out in favor of the bill last spring, saying he didn't want to insult Schwarzenegger's intelligence by assuming the governor would again oppose creating Harvey Milk Day.
"He has become much more of a symbol of the gay community than he was a year ago because of those things," Schwarzenegger spokesman Aaron McLear said. "That made the difference from last year: he's really come to symbolize the gay community in California."
In his veto message a year ago, the Republican governor said Milk should be honored locally by those who were most impacted by his contributions. He did not write a signing message this year saying why he flip-flopped.
Milk was a leader in the gay rights movement who was elected to the San Francisco Board of Supervisors in 1977. The bill said he was the nation's first openly gay man elected to public office in a major U.S. city.
A year later, Milk played a prominent role in defeat of the so-called Briggs Initiative, a ballot proposition that would have prevented gays and lesbians from teaching in the state's public schools.
In November 1978, a few weeks after the election, he and Mayor George Moscone were assassinated at City Hall by former supervisor Dan White, who had resigned his seat but wanted it back.
White was angry at Moscone for refusing his request and at Milk because he had been among those lobbying the mayor against reappointing White.
"Harvey Milk Day" will not be a formal state holiday, so government employees will not be given the day off. The bill instead calls for the day to be observed by public schools as a day of special significance. Teachers will be encouraged to conduct exercises recalling Milk's life and contributions to the state.
State Sen. Mark Leno, D-San Francisco, who wrote the bill, said Milk was a human rights leader in the same way Cesar Chavez championed Hispanic farmworkers and the Rev. Martin Luther King Jr. sought equal treatment for blacks.
"Harvey's work was not only about the respect and dignity and validation of the LGBT (lesbian, gay, bisexual and transgender) community, but for all human life. That's why I think he ranks among the other world-renown human rights leaders," he said.
Leno said he would support making Milk's birthday a formal holiday but conceded the state can't afford it because it would require overtime payments to thousands of state workers.
Randy Thomasson, president of SaveCalifornia.com, said he was appalled by the governor's decision.
"Sadly, children in public schools will now have even more in-your-face, homosexual-bisexual-transsexual indoctrination," Thomasson said in a statement.
Leno responded by saying opponents of his bill "wish to lock the fact of LGBT Californians into a dark closet of the 20th century."
"The rest of the state is moving forward," he said.
"Harvey Milk Day" is California's fifth day of significance. The others are the Day of the Teacher, John Muir Day, California Poppy Day and Welcome Home Vietnam Veterans Day. Muir was instrumental in establishing Yosemite National Park and starting the Sierra Club.
McLear said Schwarzenegger is open to adding days of special significance for other influential Californians if lawmakers send him the bills.
"There's no threshold," McLear said. "He just weighs evry bill on its merits."