Office of Legislative Affairs - "The Friday Wrap-Up"

State Budget

According to State Controller Malia Cohen, the state’s General Fund revenues, disbursements, and actual cash balance for the fiscal year through March 31, 2025 remains strong. Receipts for the fiscal year through March were higher than estimates in the 2025-26 governor’s budget proposal by $4.5 billion. Fiscal year-to-date expenditures were $6.9 billion lower than the administration’s January estimates.

The governor’s January budget estimates that the state will collect $17.4 billion in personal income taxes in April. However, the Franchise Tax Board extended the current deadline for Los Angeles County individuals and businesses in response to the January fires until October 15, 2025, making hitting that number far less likely. The State Controller’s Office is posting daily personal income tax receipts and withholding totals net of refunds on its April 2025 Personal Income Tax Tracker webpage.

As budget uncertainty continues into the foreseeable future with federal action and state revenue volatility, budget conversations are broad, and are continuing to evolve. We do not anticipate much budget action prior to the governor’s May revision in mid-May updating revenue numbers as well as his budget proposals. 

Cap-and-Trade. 35 environmental groups sent a letter to the legislature last week requesting that prior to its reauthorization, reforms be made to the cap-and-trade program. Specifically, the groups, including the Coalition for Clean Air, Clean Water Action, and the American Lung Association requested that the legislature reduce or eliminate the free allowances given to the oil and gas industry, and give those allowances back to the Greenhouse Gas Reduction Fund and/or the California Climate Credit.

The coalition is anticipating that costs of the cap-and-trade program will increase post-2030, as a result of California’s ambitious climate goals. The group contends that changing how the allowances are distributed within the system will not impact the overall cost of the system - it will only shift who pays.

AB 398 (Chapter 135 Statutes of 2017), set the industry assistance factor at 100% for all industries. The industry assistance factor is a percentage that determines how much allowance credits eligible facilities receive. These credits help mitigate the potential for "carbon leakage" (the displacement of manufacturing to less regulated jurisdictions) and provide some transition support for industries as they adapt to the carbon price. The assistance factor is aimed at ensuring that certain industries are not disproportionately impacted by the program. According to the letter, the biggest beneficiary of the 100% industry assistance factor was the oil and gas industry, which received approximately $300 million in free allowances that the industry would have otherwise had to purchase at auction.

Currently, the California Air Resources Board regulates the cap-and-trade program, and the legislature can choose to simply reauthorize or make changes to the program.

There will be budget discussions and potentially legislation related to the extension of, and potential amends to, California’s cap-and-trade program in the coming months, particularly with the continued budget uncertainty.

Complicating the issue, last week President Donald Trump released an executive order directing Attorney General Pam Bondi to block states from implementing climate laws, including California’s cap-and-trade program. The administration has expressed confidence that action on the part of the President will not stand up to judicial scrutiny.

Federal Court Filings by California Attorney General Against the Federal Government

California’s Attorney General has been active in litigation against the federal government since President Donald Trump took office. Attorney General Rob Bonta has filed 12 lawsuits, 12 amicus briefs and 1 motion to intervene against the federal government, as of April 7. An additional lawsuit is expected to be announced today, contesting President Trump’s ability to unilaterally enact tariffs.

California officials used the courts extensively during Trump’s first administration, suing the federal government more than 120 times and winning two out of every three cases.

The following chart sets forth the lawsuits, amicus briefs, and motions filed in the federal courts by AG Rob Bonta. From time-to-time, this chart will be updated to reflect developments and additional federal court filings.

Climate Proposals

The legislature has introduced a few legislative climate proposals, targeting major polluters and imposing major fiscal penalties on those polluters. Should they be signed into law, the proposals would assist in addressing the costs of both major disasters and climate change, relieving the state budget of some of the burden.

SB 222 (Wiener) would create a cause of action for those harmed by climate disasters, including storms, wildfires, and other events caused in part by climate change, against responsible parties, defined as large companies engaged in the extraction, production, manufacture, marketing, or sale of fossil fuel products. Responsible parties would be jointly, severally, and strictly liable for all associated damages and costs. The bill also provides insurers a right of subrogation against a responsible party and the right to bring an action pursuant to the above. The bill requires the California FAIR Plan Association to exercise this right of subrogation against a responsible party as specified in the bill, prior to charging the state’s policyholders.

Status: Failed passage in the Senate Judiciary Committee with a 5-2 vote, with 6 Senators abstaining. Senator Tom Umberg, chair of the committee, abstained from the vote.

Notes: The Senate Judiciary Committee analysis points out legal concerns with the bill, including that it charges a select number of fossil fuel companies with billions in potential liability based on past conduct and holds only one contributor to climate change responsible for all the damage. Constitutional concerns related to SB 222 include violations of due process and equal protection, and the levy of excessive fines.

SB 684 (Menjivar) would task the California Environmental Protection Agency with determining the total damage amount caused to the state by covered fossil fuel emissions, then assess a cost recovery demand against those responsible parties, which will be appropriated by the legislature for projects and programs within the state to mitigate, adapt, or respond to the damages and harms from climate change, as well as ongoing operation and maintenance for those projects or programs. According to the author, “We must be relentless in pursuing all avenues to redirect the financial burden away from the consumer as we mitigate the consequences of human-made disasters. The Polluters Pay Climate Superfund Act is a commonsense way to tap into a small fraction of polluters’ profits, and collect their share of the financial burden.”

Status: Passed the Senate Environmental Quality Committee and is awaiting a hearing in the Senate Judiciary Committee

AB 1243 (Addis) Identical to SB 684, AB 1243 would task the California Environmental Protection Agency with determining the total damage amount caused to the state by covered fossil fuel emissions, then assess a cost recovery demand against those responsible parties, which will be appropriated by the legislature for projects and programs within the state to mitigate, adapt, or respond to the damages and harms from climate change, as well as ongoing operation and maintenance for those projects or programs.

Status: Scheduled for hearing in the Assembly Natural Resources Committee on April 21

Upcoming Hearings

Agendas are typically posted on the committee websites in the Assembly and Senate a few days prior to the hearings. To view hearings after they take place, you may access them in the Assembly or Senate media archives where they are generally available within a few hours of committee adjournment.

Monday, April 21, 2025, 2:30 p.m.

Assembly Budget Subcommittee No. 1 on Health

Location: State Capitol, Room 127

Item No. Description

4260 Department of Health Care Services

4800 California Health Benefit Exchange

4265 Department of Public Health

• Open Issues - Changes in Federal Health Policy

Tuesday, April 22, 2025, 1:30 p.m.

Assembly Budget Subcommittee No. 5 on State Administration

Location: State Capitol, Room 447

Item No. Description

0890 Secretary of State

0845 Department of Insurance

0840 State Controller

9210 Local Government Financing

7501 Department of Human Resources

8620 Fair Political Practices Commission

7900 Public Employees' Retirement System

7920 State Teachers' Retirement System

Wednesday, April 23, 2025, 8:00 a.m. (Upon Adjournment of Budget Subcommittee No. 2 and Budget Subcommittee No. 3)

Assembly Budget Subcommittee No. 2 on Human Services

Location: State Capitol, Room 444

Subject: Childcare/Preschool

Item No. Description

5180 Department of Social Services

6100 Education

• Child Care Rate Reform Transition Plan

Wednesday, April 23, 2025, 9:00 a.m.

Assembly Budget Subcommittee No. 7 on Accountability and Oversight

Location: State Capitol, Room 126

Informational Hearing: Update on Federal Funds and Impacts of AB 218 Claim Costs on Local Governments

Wednesday, April 23, 2025, 9:30 a.m.

Assembly Budget Subcommittee No. 4 on Climate Crisis, Resources, Energy, and Transportation

Location: State Capitol, Room 447

Informational Hearing: Wildfire Prevention Oversight

Wednesday, April 23, 2025, 1:30 p.m.

Assembly Joint Hearing Budget Subcommittee No. 2 on Human Services and Budget Subcommittee No. 3 on Education Finance

Location: State Capitol, Room 444

Informational Hearing: Childcare / Preschool

Item No. Description

5180 Department of Social Services

6100 Education

• The State of Preschool
• Universal Transitional Kindergarten
• Child Care and Preschool Rates and Cost of Living Adjustment (COLA)
• Child Care and Development Block Grant (CCDBG)
• Quality Plan Overview
• Department of Social Services Child Care Budget Change Proposals

Thursday, April 24, 2025, 9:30 a.m. (Or upon adjournment of Session)

Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services

Location: 1021 O Street, Room 1200

Item Description

4300 Department of Developmental Services

4100 State Council on Developmental Disabilities

4170 Department of Aging

4700 Department of Community Services and Development

5160 Department of Rehabilitation

5175 Department of Child Support Services

Thursday, April 24, 2025, 9:30 a.m. (Or upon adjournment of Session)

Senate Budget and Fiscal Review Subcommittee No. 4 on State Administration and General Government

Location: State Capitol, Room 113

Item Description

Tax Proposals and Program Oversight

0971 Alternative Energy and Advanced Transportation Financing Authority

0984 California Secure Choice Retirement Savings Board

7600 Department of Tax and Fee Administration

7730 Franchise Tax Board

8780 Milton Marks "Little Hoover" Commission on California State Government Organization and Economy

9210 Local Government Financing

Thursday, April 24, 2025, 9:30 a.m. (Or upon adjournment of Session)

Senate Budget and Fiscal Review Subcommittee No. 5 on Corrections, Public Safety, Judiciary, Labor, and Transportation

Location: State Capitol, Room 112

All Departments - Open Issues

Thursday, April 24, 2025, 9:30 a.m. (Or upon adjournment of Session)

Senate Joint Hearing Natural Resources and Water and Budget and Fiscal Review Subcommittee No. 2 on Resources, Environmental Protection, and Energy

Location: 1021 O Street, Room 2200

Informational Hearing: Defensible Space: Zone Zero Implementation

Grant Opportunities

Below is a list of the latest grant opportunities released by the state. All opportunities for local jurisdictions may be found here.

Deadline: 5/23/25 11:59

Nesting Bird Habitat Incentive Program Public Lands Funding 2025-26

Open Date: Apr 14, 2025

State Agency / Department: Department of Fish and Wildlife

Match Funding? No

Estimated Total Funding: $800,000

Estimated Low/High: Dependent

Funds Disbursement: Other

Governor’s Press Releases

Below is a list of the governor’s press releases beginning April 9.

April 15: Deadline day: Today is the last day to register up for Los Angeles fire debris removal

April 15:First Partner Siebel Newsom releases recommendations for improving support for survivors of sexual assault

April 15: ICYMI: Crime dropped significantly last year, according to early data

April 15: Governor Newsom, Legislature double down on state’s critical cap-and-trade program in face of federal threats

April 14: Governor Newsom issues order extending protections of Los Angeles area firestorm survivors from predatory real estate speculators

April 14: Governor Newsom and Visit California launch international tourism campaign welcoming Canadians to experience the warmth and love of the Golden State

April 14: California welcomes 32 new state park rangers, lifeguards at graduation ceremony

April 14: Governor Newsom proclaims special election for Assembly District 63

April 14: Governor Newsom signs legislation investing additional $170 million to prevent catastrophic wildfires, issues executive order to fast-track projects

April 13: ADVISORY: First Partner Siebel Newsom to release report outlining recommendations for providing better support to survivors of sexual assault

April 12: Governor Newsom announces Pacific Coast Highway will reopen in time for summer as California’s all-in fire response continues ahead of schedule

April 11: As LA Fire cleanup advances ahead of schedule, deadline nears for debris removal

April 11: ICYMI: LA’s small businesses, nonprofits, and workers get additional aid with support from Governor Newsom and LA Rises

April 10: California’s Jobs First regional plans recognized by federal government, creating new opportunities for state economic investment and coordination

April 10: Acting Governor Eleni Kounalakis proclaims Dolores Huerta Day

April 10: California cuts ‘green tape’: 500+ fast-tracked projects have restored nearly 200,000 acres and improved 700 miles of streams

April 10: Since January, California has seized over $316 million in illicit cannabis

April 9: As a global economic leader, California remains a stable, trusted partner for international trade and investment. Here’s why.

 LEGISLATIVE BRANCH ACTIVITY 

The House and Senate were in recess this week, returning for votes at the end of April.

House and Senate Pass a Compromise Budget Resolution and Head Home, Difficult Work Still Ahead on a Reconciliation Package

A Compromise Budget Resolution has passed the House and Senate, kicking off the next phase of the Budget Reconciliation process, drafting a Reconciliation Package. The Package is what Republicans have been referring to as the “One Big Beautiful Bill” that would advance the President’s agenda on tax cuts, spending reductions, and a debt limit increase. 

H.Con.Res.14, the Senate-proposed Compromise Budget Resolution meant to clear the first hurdle in the Reconciliation process, passed the House on April 10, overcoming a near failure at the hands of deficit hawks and the House Freedom Caucus (HFC). In passing the Resolution the House and Senate’s standing committees can begin work on drafting real bill text to deliver the President’s agenda. Republicans intend to pass a package before Memorial Day.

Reconciliation still faces an uphill battle, as each chamber’s committees received different instructions on how much they must cut. The Senate has a $4 billion and the House a $1.5 trillion floor. This gap was the key controversy Speaker Johnson had to overcome to pass the Resolution. He did so by partnering with Senate Majority Leader John Thune to assure HFC leaders that Senate Republicans would target $1.5 trillion in cuts and Johnson also signed a memo agreeing to those terms with holdout Rep. Ralph Norman (R-SC).

Congressional leadership has pushed House and Senate committees to work out some of their differences over the recess so markups can come quickly once lawmakers return the first week of May. Any package will still face considerable opposition, the House instructions demand $880 billion in cuts from the committee that oversees Medicare and Medicaid, the House Chairman has said $500-$600 billion in cuts would have to come from the healthcare program. Deficit hawks are skeptical about extending the TCJA if there are not sufficient cuts to mitigate the deficit, while on the other side moderate Republicans have sent a letter to leadership drawing a redline on significant Medicare/Medicaid cuts.

Budget Reconciliation is a procedural tool allowing expedited consideration of certain budget/spending related bills. Reconciliation can only be “unlocked” when one party controls the House, Senate, and White House. It works by bypassing cloture and limiting debate in the Senate, reducing the threshold for passage to 51 senators. It requires the House and Senate to pass identical budget resolutions with no extraneous policy riders.  

White House Plans to Send Congress a Recission Package on Funding for Public Broadcasting and USAID, Congressional Approval Required, More Packages Expected

The White House is anticipated to send a recission package to Congress when they return on April 28, allowing the Administration to impound Congressionally appropriated discretionary funding for 45 days while Congress mulls approval.

The package is expected to contain complete cuts to the Corporation for Public Broadcasting, which in part funds PBS and NPR, and to formalize the end of USAID foreign assistance programs. The use of this procedure is expected to continue, as the Administration looks to formalize spending cuts in the forthcoming reconciliation package, the FY26 appropriations process, and across grant and contracting programs.

Rescission packages are requests by the President to cancel all or part of allocated budget authority, specifically targeting unobligated discretionary funds provided through the appropriations process (not budget reconciliation). Under the Impoundment Control Act, the President must transmit a special message to both the House and the Senate detailing and justifying the request. Congress then has 45 calendar days to approve or amend the package, during which time the funding is impounded. If Congress fails to approve the rescissions or does not act the funding must be released. This law applies to an estimated 27% of federal spending.

EXECUTIVE BRANCH ACTIVITY

Trump Signs Executive Order Prioritizing Lowering Prescription Drug Prices

On April 15, the President signed an Executive Order (EO) prioritizing policies that would lower prescription drug prices. Included in the EO are provisions to expand Medicare’s Drug Price Negotiation Program, increase drug imports, improve transparency in Pharmacy Benefit Manager fees, and ensure access to insulin and epi-pens for low-income Americans.

Many of these provisions are controversial within Congress and the Pharmaceutical Industry itself but have broad public support. The provisions which direct these actions require a report from the Department of Health and Human Services (HHS) within the next 6 months on avenues for implementation. It is likely the Administration’s plans will change, as some of the initiatives in the EO will require agency rulemaking to proceed.

DOGE Begins Using HUD, SSA, and IRS Data to Find Undocumented Immigrants and Ensure They Are Not Receiving Public Benefits

The Department of Government Efficiency Service (DOGE) has been assembling personal data that is usually protected by law from inter-agency sharing for the purpose of finding and removing undocumented immigrants and/or to revoke their access to federal benefits.

This follows an Executive Order (EO) from March mandating interagency cooperation to stop waste, fraud, and abuse. The Department of Housing and Urban Development (HUD) and the Department of Homeland Security (DHS) then signed a Memorandum of Understanding (MOU) in March and DHS and the Internal Revenue Service (IRS) have submitted a deal for review to share taxpayer information to help find undocumented immigrants.

With the MOU signed, HUD has begun pursuing a rule barring mixed-status households from receiving housing benefits, right now an undocumented migrant may live with a citizen or qualifying legal permanent resident in public housing. The Social Security Administration has also begun adding migrant names to databases used to track the deceased, cutting them off from receiving benefits or work authorization in the US.

President Trump Signs Executive Order Targeting CA’s Environmental Regulations, Including Cap and Trade  

 President Trump’s April 8 Executive Order (EO) “Protecting American Energy from State Overreach” directs the Attorney General (AG) to identity state laws which are or may be unconstitutional, preempted by Federal law, or otherwise unenforceable within 60 days. The EO also contains a directive that prioritizes environmental policies.  

In a fact sheet attached to the EO, the White House stated their intention was also to take action against regulations they have previously identified, such as California’s Cap and Trade program and the Clean Air Act waivers for California. The stated goal is to remove barriers to energy resource extraction, arguing that the states are beyond their authority in regulating the environment, as these regulations often apply across state lines by affecting national businesses. 

The first Trump Administration was unsuccessful in challenging California’s Cap and Trade Program in court. They previously argued that California had entered into an international treaty by tying certain metrics to Canada, therefore exceeding their authority as a state. The Court rejected that argument. It is likely an attempt to enforce the order will again result in litigation.  

California To Sue the Trump Administration Over Tariffs

On April 16, Governor Gavin Newsom and Attorney General Rob Bonta announced a lawsuit against the Trump Administration over the economic turbulence caused by the start and stop tariffs the Administration has been pursuing since early March.

The lawsuit is anticipated to argue that the remedies Congress listed under the International Emergency Economic Powers Act, which the President is using as a basis for some tariffs, do not include tariffs, and ask for an injunction stopping them from taking effect. California’s lawsuit would join others from a group of small businesses suing in the US Court of International Trade and the New Civil Liberties Alliance’s suit in Florida.

Administration Issued Reciprocal Tariff Carveouts for Electronics, President Discusses a Higher Rate in the Long Term

On April 11 U.S. Customs and Border Protection updated their guidance on the reciprocal tariffs to temporarily exclude most electronic products, primarily benefitting Apple, Dell, the Taiwan Semiconductor Manufacturing Company (TSMC), and Nvidia, with ancillary benefits for auto manufacturers. The 60-day reprieve will most immediately impact China, which was not given the temporary, 90-day pause on reciprocal tariffs announced April 9. Other base tariffs, running 10-20%, will continue to apply.

On April 13, President Trump posted on Truth Social announcing his intention to initiate a National Security Tariff Investigation which would likely reapply levies on electronic goods like semiconductors. These tariffs would be based on Section 232 of the Trade Expansion Act of 1962 and would fall into the same category as the longstanding tariffs protecting the domestic steel and aluminum industries. Any Section 232 Investigation would likely require a public comment period, where public agencies and private companies/citizens would be given the opportunity to voice their opinions.

Friday 04/18

California’s frustration with homelessness is boiling over, poll finds -- California voters have grown so frustrated with the blue state’s failure to reduce homelessness that well over a third of the electorate now supports local laws that allow police to arrest people camping outside if they refuse shelter. Dustin Gardiner Politico -- 4/18/25

Should California drivers get charged by the mile? A pilot program is looking into it -- Revenue from the gasoline excise tax that drivers currently pay at the pump is declining because of better fuel mileage and EV adoption. Rob Nikolewski in the San Diego Union Tribune -- 4/18/25

Thursday 04/17

DOGE begins to freeze health-care payments for extra review -- DOGE is putting new curbs on billions of dollars in federal grants, requiring officials to manually review and approve payments that were previously routine. Dan Diamond, Carolyn Y. Johnson and Hannah Natanson in the Washington Post$ -- 4/18/25

A cloud over L.A. home builders: How tariffs are tormenting contractors and developers -- Uncertainty about which imports will be socked with new tariffs and when they’ll go into effect has thrown a cloud over home builders and other real estate developers trying to pay for new construction throughout Southern California. Roger Vincent and Liam Dillon in the Los Angeles Times$ -- 4/17/25

Wednesday 04/16

Consumer group sues insurance commissioner over Fair Plan assessments on state homeowners -- In a lawsuit filed in Los Angeles Superior Court on Monday, Consumer Watchdog alleges that Lara violated state law when he reached a deal last year with California’s property insurer of last resort that would allow its member insurance companies to charge their policyholders for some of the billions of dollars of Fair Plan losses. Laurence Darmiento in the Los Angeles Times$ -- 4/16/25

California voters have Trump-resistance fatigue, poll finds -- California voters are less keen on fighting Donald Trump than their state’s political elite. In a dual survey of California voters and political professionals who are driving the state’s agenda, the electorate is strikingly more likely to want a detente with the White House. Jeremy B. White Politico -- 4/16/25

Tuesday 04/15

Newsom signs $180 million more for fire prevention, plus slew of Democratic priorities -- The California governor signed the early-session budget bill Monday. The GOP opposed it over health care for illegal immigrants. Grant Stringer in the San Jose Mercury Alejandro Lazo CalMatters -- 4/15/25

L.A. County faces $2 billion in fire recovery costs, straining budget -- Saddled with about $2 billion in fire recovery costs and the largest sex abuse case settlement in U.S. history, the Los Angeles County government is facing about $89 million in budget cuts. Rebecca Ellis in the Los Angeles Times$ -- 4/15/25

A $16 billion question: How did San Francisco’s budget get so huge? -- At about $16 billion, the current budget is 67% larger — adjusted for inflation — than it was during the first year of Ed Lee’s mayorship in 2011, a Chronicle analysis found. J.D. Morris, Nami Sumida in the San Francisco Chronicle$ -- 4/15/25

Monday 04/14

California lawmakers quietly sideline bills in secretive suspense process -- In just 24 minutes and without any debate, the most powerful committee in the state Senate last week moved 33 bills from public view into a secretive process that will decide whether the measures live or die. Two days later, its sister committee in the Assembly moved 82 of its bills in under two minutes to the same secretive, uncertain future. Ryan Sabalow CalMatters -- 4/14/25

How bad is California’s housing crisis? A first-in-the-nation bill would let students live in cars -- A progressive Democratic lawmaker is seeking a simple but jarring remedy of last resort for California’s college students navigating the state’s housing crisis: Let them sleep in their cars. Eric He Politico -- 4/13/25

Trump’s volatile trade policy creates new problems for California state budget -- The whiplash from Washington over President Trump’s tariffs underscores the challenge before lawmakers and Gov. Gavin Newsom this spring as they attempt to develop a state budget plan for the year ahead. Taryn Luna in the Los Angeles Times -- 4/14/25

Weekend 04/13 – 04/12

Meet the politician who could make or break California’s housing efforts. What’s her plan? -- Assembly Member Buffy Wicks, D-Oakland, is pushing one of the biggest bills in recent memory, AB609, to exempt almost all infill housing development from California Environmental Quality Act review. And it’s just one of 20 bills in an ambitious, bipartisan package that aims to streamline and simplify the state’s housing approval process and make it easier to build the estimated 2.5 million homes California needs. Emily Hoeven in the San Francisco Chronicle$ -- 4/13/25

State Farm moves one step closer to emergency California rate hike -- State Farm could soon win final approval to raise premiums for California homeowners and others on an interim basis, a move meant to help prop up the finances of the state’s biggest provider of property insurance, after a public hearing this week. Levi Sumagaysay CalMatters -- 4/12/25