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Prepared by Precision Advocacy
The legislature has returned from spring recess and is moving quickly into one of the most consequential phases of the session, with policy committees and budget subcommittees now fully engaged in substantive deliberations. Hearings are shifting from introductory overviews to more detailed policy discussions, amendments, and stakeholder negotiations, while budget conversations are beginning to take clearer shape ahead of the May Revision. This convergence of policy and fiscal activity reflects a critical inflection point in the legislative cycle, where broader proposals are translated into actionable decisions with direct implications for local governments.
The following updates highlight several major policy and fiscal developments with direct relevance to counties, including the SB 254 resiliency study, implementation of the Medi-Cal Justice-Involved Reentry Initiative, and the Legislative Analyst’s Office’s evaluation of state tax policy options. As legislative activity accelerates, these discussions will play a central role in shaping both near-term budget decisions and longer-term policy direction affecting county operations, fiscal planning, and service delivery.
Enhancing California’s Resiliency to Natural Catastrophes
The SB 254 Study, prepared by the California Earthquake Authority, presents a comprehensive assessment of California’s growing vulnerability to natural catastrophes, particularly wildfire, and outlines a set of policy pathways to strengthen long-term resiliency. It was commissioned by the legislature and governor in 2025 in response to escalating climate-driven disasters and their destabilizing impacts on California’s insurance market, electric utilities, and community resilience systems.
At its core, the study finds that California’s resilience challenges are driven by the convergence of three systems – the property insurance market, the electric utility sector, and community-level risk exposure. Climate change is intensifying wildfire risk and other natural hazards, placing strain on each of these systems simultaneously. For Orange County, this manifests in elevated wildfire risk in the wildland-urban interface areas (e.g., canyon and foothill communities), rising insurance costs or non-renewals in higher-risk ZIP codes, and increasing pressure on utility infrastructure and ratepayers. The report emphasizes that without coordinated intervention, these pressures will continue to compound, undermining affordability, housing stability, and local economic resilience.
The study highlights that California’s catastrophe risk is not only growing but becoming more interconnected. This means:
- Insurance Market Instability: The report notes that California’s insurance market is increasingly unable to meet demand in high-risk areas, leading to growth in the FAIR Plan and reduced private market participation. This trend is already affecting parts of Orange County, particularly hillside and fire-prone communities, where coverage is becoming more limited and expensive.
- Utility Cost Pressures: Electric utilities must simultaneously invest in wildfire mitigation, maintain reliability, and support clean energy goals, costs that are ultimately borne by ratepayers. This contributes to rising electricity costs and broader affordability challenges.
- Local Government Exposure: Counties play a central role in land use planning, emergency response, and recovery. As disasters increase in frequency and severity, Orange County faces growing fiscal and operational responsibilities tied to preparedness, evacuation planning, and post-disaster recovery.
The study stresses that these challenges are not isolated; rather, they form an interconnected system under compounding strain, where failures in one area, such as insurance availability, can ripple across housing markets, local budgets, and economic stability.
A key finding of the report is that the cost of inaction is both significant and escalating. Failing to act would likely result in:
- Continued insurance market contraction and increased reliance on last-resort coverage;
- Higher utility rates driven by wildfire liability and infrastructure investment;
- Increased exposure of local governments to disaster response and recovery costs; and
- Greater housing instability in high-risk areas due to insurance and rebuilding constraints.
The study frames this as a critical inflection point, as proactive investment in resilience is more cost-effective than reactive recovery after disasters.
The report outlines three major policy pathways, each with direct implications for Orange County.
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Community Wildfire Risk Reduction. This pathway emphasizes strengthening local and regional mitigation efforts including:
- Expanding vegetation management, defensible space, and fuel reduction in high-risk areas;
- Enhancing local hazard mitigation and pre-disaster planning;
- Improving coordination between state agencies and local governments; and
- Aligning insurance incentives with risk-reduction actions.
Importantly, the study calls for targeted, data-driven investments in the highest-risk communities, which would benefit Orange County’s canyon and interface areas where wildfire risk is concentrated.
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Equitable Allocation of Catastrophe Costs. The second pathway focuses on how costs are distributed among ratepayers, insurers, utilities, and the public. Key implications include:
- Insurance reforms to stabilize the market and improve coverage availability;
- FAIR Plan restructuring to ensure it remains a backstop rather than a primary insurer;
- Utility liability reform, including potential changes to inverse condemnation, to better balance costs and reduce pressure on electricity rates; and
- Improved compensation systems to support faster recovery for disaster survivors.
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Expanded State Role in Risk Financing. The third pathway explores more transformational approaches, including:
- State-backed insurance or reinsurance programs;
- A more durable Wildfire Fund with diversified financing; and
- Long-term funding strategies for community mitigation.
These options recognize that the scale of catastrophe risk may exceed what private markets and local governments can manage alone. For Orange County, increased state participation could provide more stable funding streams for resilience projects and reduce volatility in insurance and recovery systems.
The report suggests several overarching conclusions:
- Local governments are central to implementation. Land use decisions, emergency planning, and mitigation investments at the county level will be critical to reducing risk.
- Affordability is a central concern. Rising insurance and utility costs are already impacting residents and will continue to do so without policy changes.
- Targeted investment is essential. Resources should be prioritized toward high-risk communities where mitigation can have the greatest impact.
- State partnership will be necessary. The scale of the challenge requires sustained state involvement in financing, regulation, and coordination.
The SB 254 Study makes clear that California is at a pivotal moment in addressing natural catastrophe risk. The combination of climate-driven hazards, market instability, and infrastructure challenges requires integrated, forward-looking solutions. While no single policy will resolve these issues, the pathways outlined in the report provide a framework for aligning state and local efforts to improve resilience, protect communities, and maintain economic stability. Advancing these strategies will be critical to safeguarding residents, stabilizing housing and insurance markets, and ensuring long-term fiscal and environmental sustainability.
Medi-Cal Justice-Involved Reentry Initiative
California’s Medi-Cal Justice-Involved Reentry Initiative is now moving from concept into large-scale implementation, and the Department of Health Care Service’s Impact Report underscores the level of system transformation counties like Orange County will be expected to operationalize. Since the program’s phased launch in October 2024, implementation has expanded rapidly across correctional systems, with all 31 state prisons and dozens of county jails and youth facilities already live, and full statewide rollout expected by October 2026. This trajectory signals that Orange County’s jail system and care infrastructure will need to be fully integrated into the model in the near term.
The report highlights the scale of early uptake, with nearly 35,000 individuals already identified as eligible for pre-release services and more than 159,000 services delivered, including care management, medications, and clinical consultations. This volume suggests a substantial and ongoing caseload of justice-involved individuals requiring coordinated pre-release and post-release services, particularly given the county’s large jail population.
A central takeaway for counties is that intensive care management is the backbone of the model. The initiative relies heavily on pre-release care managers who assess needs, develop individualized reentry care plans, and coordinate “warm handoffs” to community providers. For Orange County, this places significant emphasis on aligning CalOptima, County behavioral health, and contracted community providers to ensure continuity of care beginning before release and extending into the community.
The report also emphasizes system coordination as a core implementation challenge and success factor. Effective delivery requires ongoing collaboration between correctional facilities, Medi-Cal managed care plans, county agencies, and community-based organizations, with some jurisdictions already convening regular multidisciplinary release planning meetings to align services and responsibilities. Coordination across the Sheriff’s Department, Probation, Health Care Agency, and CalOptima is anticipated to be critical to avoid fragmentation.
Importantly, the initiative is designed not just as a service expansion, but as a cost and outcomes strategy. The state is explicitly targeting reductions in emergency department use, hospitalizations, and mortality, particularly overdose deaths, by stabilizing individuals prior to release and ensuring immediate access to care, medications, and housing supports. This aligns closely with ongoing pressures in emergency services, behavioral health, and homelessness systems, and suggests potential downstream savings if implementation is effective.
Finally, the Impact Report reinforces that this population is high-need and high-risk, with a majority experiencing mental health or substance use conditions and significantly elevated risks of poor outcomes post-release. As a result, counties are not simply administering a new benefit, they are being positioned as the central coordinators of a complex reentry health system that integrates medical, behavioral health, and social supports.
Overall, the Impact Report suggests that the Reentry Initiative will require meaningful upfront coordination, staffing, and system alignment, but offers a significant opportunity to improve outcomes for a high-cost population while reducing strain on county safety-net systems over time.
Legislative Analyst’s Office: Comparing Options to Raise and Lower Taxes
The Legislative Analyst’s Office (LAO’s) March 2026 report presents a range of options to raise or lower taxes, following some members’ of the legislature’s expressed interest in raising state revenues. The analysis ultimately comes down to a central tension – the most stable revenue options tend to fall broadly on local households, while more progressive options concentrate costs on higher earners but introduce greater volatility and uncertainty. The state’s choices will directly affect both household affordability and county-administered program funding.
Tax Increase Options ($1–$3 Billion)
Consumption-Based Taxes (Sales and Use). Options like a quarter-cent sales tax increase, a sales tax on digital goods, and a soda tax would provide relatively stable and predictable revenue streams for the state. From a budgeting standpoint, these are among the most reliable tools available.
These approaches would be widely felt. A sales tax increase would touch nearly all households, particularly middle-income families already navigating high costs for housing, childcare, and transportation. Expanding the tax to digital goods, such as streaming services and software, would modernize the tax base, but it also represents a meaningful shift by taxing areas of everyday consumption that residents have historically viewed as untaxed.
The soda tax, while narrower in scope, raises additional equity concerns. The report notes that these types of taxes tend to fall more heavily on lower-income households and certain communities, which is relevant where disparities in income and health outcomes persist.
These options are fiscally reliable but place the greatest burden on local consumers.
Personal Income Tax Changes. The report outlines two primary approaches – a millionaire surcharge and a 2% across-the-board income tax increase.
A millionaire surcharge is among the most progressive options, concentrating costs on the highest earners and largely shielding most households. However, the report emphasizes that this revenue is highly volatile, tied to capital gains and financial market performance. For Orange County, which has a strong but not dominant concentration of ultra-high-income taxpayers, this creates a revenue stream that is less predictable for long-term planning.
By contrast, an across-the-board increase would generate more consistent revenue but would reach deeply into the middle-income population. Given that many households in the County earn higher nominal incomes due to cost-of-living pressures, without necessarily having greater disposable income, this option could feel disproportionately burdensome.
Targeted increases, while potentially leading to a more equitable outcome by focusing resources where they are most needed, introduce a degree of instability. Conversely, broad increases offer greater reliability and stability, though their impact is felt across a wider population.
Restructuring Tax Preferences (Deductions to Credits). The report evaluates replacing deductions for charitable giving, mortgage interest, and property taxes with credits.
In Orange County, these changes are particularly significant. High home values mean that mortgage interest and property tax deductions are widely utilized. Converting these to credits would generally reduce benefits for higher-income households while extending more uniform benefits to others.
At the same time, these changes could alter behavior. The report suggests that current deductions may encourage larger home purchases or higher levels of charitable giving. Adjusting these incentives could have ripple effects in the housing market and nonprofit sector.
These options improve equity but may weaken incentives tied to homeownership and local philanthropy.
Wealth and Capital Tax Changes. One option would eliminate the tax exemption for inherited capital gains (ending the “step-up in basis”). This is a highly progressive change that primarily affects wealthier households. In communities where generational wealth and property ownership are significant, this could increase tax liability on inherited assets.
However, the report highlights that revenues from this source are unpredictable and tied to asset markets, and implementation would require more complex recordkeeping and estate planning. These changes target wealth concentration but introduce complexity and revenue uncertainty.
Corporate Tax Changes
- Increasing the corporate tax rate
- Broadening the tax base while raising rates
- Eliminating the “water’s edge” election
The report notes that a portion of corporate taxes can be shifted outside California, to shareholders or consumers in other states, which may soften the direct impact on residents.
However, California’s economy relies on a wide mix of industries, including healthcare, tourism, technology, and small businesses. Changes to corporate taxation could influence business decisions over time, particularly in a region competing nationally for investment and job growth. Some costs may be exported, but there is potential long-term risk to business activity and competitiveness.
Major Tax Increase Options ($10–$15 Billion)
These options represent more structural changes, including:
- Extending Proposition 55 (high-income tax rates)
- Increasing the sales tax by 1.25%
- Expanding the sales tax to services
- Increasing all major taxes (“Big Three”)
- Implementing a split-roll property tax
The most notable proposal is the potential expansion of the sales tax to services. Given the County’s large service-based economy – legal, financial, healthcare, and consulting, this would significantly broaden the tax base into areas that are currently untaxed. While this could improve long-term revenue stability, it would also increase costs for both businesses and consumers.
A split-roll property tax, which reassesses commercial property more frequently, could also have localized impacts on commercial real estate and business costs, particularly in high-value markets.
These options generate substantial revenue but represent more fundamental changes to the local economy and tax structure.
Tax Decrease Options ($1–$3 Billion)
The report also outlines ways to reduce taxes, including:
- Sales tax reductions
- Gas and diesel tax reductions
- Vehicle license fee relief
- Income tax reductions or credits
- Corporate tax cuts
For Orange County residents, reductions in sales or gas taxes would provide immediate and visible relief, particularly given the County’s reliance on driving and commuting. Increasing the standard deduction or offering targeted tax credits would more directly benefit low- and middle-income households.
However, the tradeoff is reduced state revenue, which could affect funding for programs that the County helps administer, particularly in health and human services, where demand remains high. These proposal provide near-term relief but may constrain future program funding.
Bottom Line
Across all options, the report reinforces that no single approach dominates across all criteria. Instead, policymakers must weigh competing priorities:
- Stability vs. Equity – Sales taxes are stable but regressive; income taxes are progressive but volatile
- Broad Impact vs. Targeted Impact – Broad taxes affect more households; targeted taxes concentrate costs but may be less reliable
- Revenue vs. Economic Sensitivity – Higher business or income taxes may affect long-term growth and investment decisions
State tax policy will shape both the cost of living for residents and the resources available for county-administered services. Ultimately, the report provides a framework, not a recommendation, but makes clear that the choices ahead involve balancing household affordability, economic competitiveness, and fiscal sustainability.
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 13, 2026, 2:30 p.m.
Assembly Budget Subcommittee No. 6 on Public Safety
State Capitol, Room 447
0820 Department of Justice
5227 Board of State and Community Corrections
Tuesday, April 14, 2026, 1:30 p.m.
Assembly Budget Subcommittee No. 5 on State Administration
State Capitol, Room 447
0516 Housing and Homelessness Agency
2240 Department of Housing and Community Development
2250 Housing Development and Finance Committee
2255 Interagency Council on Homelessness
0968 Tax Credit Allocation Committee
0810 Debt Bond Allocation Committee
0515 Business and Consumer Services Agency
Wednesday, April 15, 2026, 9:30 a.m.
Assembly Budget Subcommittee No. 4 on Climate Crisis, Resources, Energy, and Transportation
State Capitol, Room 447
Transportation
0521 California State Transportation Agency
0964 Transportation Financing Authority
2600 California Transportation Commission
2660 Department of Transportation
2665 High-Speed Rail Authority
2667 High-Speed Rail Authority Office of the Inspector General
2670 Board of Pilot Commissioners for the Bays of San Francisco, San Pablo, and Suisun
2720 Department of California Highway Patrol
2740 Department of Motor Vehicles
Wednesday, April 15, 2026, 1:30 p.m.
Assembly Budget Subcommittee No. 2 on Human Services
State Capitol, Room 444
4100 State Council on Developmental Disabilities
Item No. Description
4300 Department of Developmental Services
5160 Department of Rehabilitation
All Related January Governor's Budget Proposals, including Policy and Estimate Changes, Budget Change Proposals for State Administration, and Governor's Trailer Bill Language Proposals
Expected Impacts of Federal H.R. 1 on People Served in These Programs and Proposals to Reduce Harm in California
Thursday, April 16, 2026, 9:30 a.m. or upon adjournment of Session
Senate Budget and Fiscal Review Subcommittee No. 2 on Resources, Environmental Protection, and Energy
1021 O Street, Room 2200
3340 California Conservation Corps
3540 Department of Forestry and Fire Protection
3125 California Tahoe Conservancy
Thursday, April 16, 2026, 9:30 a.m. or upon adjournment of Session
Senate Budget and Fiscal Review Subcommittee No. 4 on State Administration and General Government
State Capitol, Room 113
0509 Governor's Office of Business and Economic Development
0650 Governor's Office of Land Use and Climate Innovation
Thursday, April 16, 2026, 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
State Capitol, Room 112
0250 Judicial Branch
8140 State Public Defender
Grant Opportunities
Below is a list of the latest grant opportunities released by the state. All opportunities for local jurisdictions may be found here.
Anticipated Open Date: April 28, 2026
Title: Beverage Container Redemption Innovation Grant
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? No
Estimated Total Funding: $20,000,000
Funding Method: Advances & Reimbursement(s)
Application deadline: 7/8/26 00:00
Title: Farm and Ranch Solid Waste Cleanup and Abatement Grant Program FR91
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? No
Estimated Total Funding: $200K maximum per applicant each FY $50K maximum per cleanup site
Funding Method: Reimbursement(s)
Anticipated Open Date: April 17, 2026
Title: California Services to Science Academy (CSSA) Cohort 2.0: Technical Support and Assistance for Promising and Innovative Prevention Programs
State Agency / Department: Department of Health Care Services
Match Funding? No
Estimated Total Funding: $820,000
Funding Method: Reimbursement(s)
Application deadline: 5/15/26 17:00
Title: State Water Efficiency and Enhancement Program Block Grants
State Agency / Department: CA Department of Food and Agriculture
Match Funding? No
Estimated Total Funding: $34,000,000
Funding Method: Advances & Reimbursement(s)
Application deadline: 5/15/26 17:00
Title: Healthy Soils Program Block Grant
State Agency / Department: CA Department of Food and Agriculture
Match Funding? No
Estimated Total Funding: $65,000,000
Funding Method: Advances & Reimbursement(s)
Governor’s Press Releases
Below is a list of the governor’s press releases beginning April 1.
April 8: Governor Newsom announces $145.4 million in HHAP funding to help eight California regions reduce homelessness
April 7: California celebrates Genentech’s 50th anniversary
April 6: CYMI: Bloomberg News: How California’s economy dominates in the Gavin Newsom era
April 6: California Film & TV Tax Credit powers 55 major award wins during Governor Newsom’s Administration
April 3: Governor Newsom announces appointments 4.3.2026
- Matthew Livers, of Citrus Heights, has been appointed Senior Policy Advisor at the California Department of Conservation
- Charlton “Chuck” Bonham, of Berkeley, has been appointed to the California State Park and Recreation Commission
- Matilda Soria, of Fresno, has been appointed to the Early Childhood Policy Council
- Ranae Amezquita, of Los Angeles, has been appointed to the Early Childhood Policy Council
- Gabriela Gonzalez, of Downey, has been appointed to the Early Childhood Policy Council
- Maeva Renaud, of Vacaville, has been appointed to the Early Childhood Policy Council
- Anthony “Tony” Tobar Jordan, of Modesto, has been appointed to the Early Childhood Policy Council
April 3: Governor Newsom announces clemency actions
April 2: Governor Newsom turns on largest public broadband network, California connects first rural community to internet
April 2: Governor Newsom welcomes approval of Diablo Canyon license renewals, delivering on California’s commitment to a clean and reliable grid
April 1: California’s nation-leading aerospace industry powers NASA’s historic Artemis II Mission
April 1: Governor Newsom announces appointments
- Deborah “Debbie” Cochrane, of Alameda, has been appointed Executive Director of the California Education Interagency Council
- Elizabeth Flores, of Chula Vista, has been appointed to the State Board of Education
- Roque Barros, of San Diego, has been appointed to the California Arts Council
April 1: California celebrates Apple’s 50th Anniversary
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