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Prepared by: Precision Advocacy
The legislature has concluded the 2025-26 session, leaving Orange County with several important end-of-session developments to monitor as bills move to the governor for signature or veto by September 30.
This report summarizes key outcomes involving wildfire liability, SB 577 public-entity liability reform, end-of-session budget action, H.R. 1 health-care impacts, Proposition 4 climate and resilience funding, homelessness funding, transportation revenues, and state AI implementation.
For Orange County, the immediate takeaways include preservation of public-agency wildfire recovery, omission of the proposed Sustainable Aviation Fuel tax credit, potential Proposition 4 funding opportunities, continued concern over Medi-Cal and county indigent-care impacts, and the need to track both SB 577 implementation and emerging AI governance issues.
Wildfire Liability
The 2025–26 legislative session ended without enactment of the major wildfire liability package that dominated the final weeks of session. For Orange County, the immediate outcome is largely favorable. The legislature did not enact any proposal that would limit the County’s ability to recover losses from a utility-caused wildfire or otherwise shift those costs to local governments. However, the underlying debate over utility wildfire liability remains unresolved, and statements from the governor and legislative leaders indicate that the issue could return in a special session this fall or early in the 2027-28 legislative session.
Background and Evolution of the Proposal. The governor released an initial wildfire liability proposal in early August amid concerns about the financial stability of California’s investor-owned utilities and the continuing growth of wildfire-related liability. That initial proposal would have shifted some wildfire liability costs away from investor-owned utilities and onto local governments and insurers. This raised significant concerns regarding the ability of public agencies to recover the full costs of emergency response, damaged public infrastructure, and other losses attributable to utility-caused wildfires.
Following several weeks of negotiations among the governor, Senate, and Assembly, a substantially revised three-party agreement was amended into SB 492 (Becker) on August 29. The final compromise was significantly more favorable to local governments than the earlier proposals. Most importantly, SB 492 did not limit public entity recovery and did not eliminate insurance subrogation. That represented an important change from earlier concepts and addressed the primary concern raised by counties and other local agencies.
What SB 492 Would Have Done. The final bill attempted to combine wildfire-survivor compensation reforms, utility accountability measures, wildfire prevention, and changes to the existing Wildfire Fund structure. Among its major provisions, SB 492 would have established the California Wildfire Relief Fast-Pay Program, administered through the California Catastrophe Response Council, to provide an expedited claims process for individual wildfire victims.
Importantly for Orange County, the bill distinguished public agencies from individual wildfire claimants. The bill expressly excluded public agencies from the definition of an “individual claimant” under the fast-pay process and separately defined cities, counties, districts, and other public subdivisions as state public agencies. As a result, the final compromise did not require counties to accept the fast-pay process as a substitute for pursuing their existing legal remedies.
The bill also would have:
- Prohibited insurers from transferring wildfire subrogation rights to third parties and restricted the purchase or transfer of wildfire claims by private equity.
- Limited attorneys’ fees for insurer subrogation claims based on inverse condemnation to 10% of a settlement or judgment.
- Required changes to utility executive compensation intended to strengthen safety incentives and restrict incentive compensation following certain catastrophic wildfires.
- Authorized additional financing mechanisms for the Wildfire Fund Continuation Account, including bonds supported by utility and potentially ratepayer contributions.
- Required development of standards for a statewide wildfire-risk data-sharing platform.
- Required development of a statewide community wildfire preparedness strategy focused on community-scale mitigation, local capacity, common risk metrics, public education and reducing human-caused ignitions.
- Supported optional county-level community wildfire protection plans and would have prioritized certain state wildfire-prevention grants based on the quantifiable return on investment of projects contained in those plans.
These prevention provisions could have provided longer-term opportunities for counties to better coordinate mitigation projects and compete for state funding, although they died along with the remainder of SB 492.
Assembly Utilities and Energy Committee Informational Hearing. The August 31 Assembly Utilities and Energy Committee hearing provides important context for why the three-party agreement ultimately collapsed. Committee Chair Cottie Petrie-Norris opened the hearing by stressing that SB 492 was not intended to be the final word on wildfire policy. She described the issue as an ongoing challenge and said the hearing should examine both the provisions contained in SB 492 and the questions that remained unresolved.
Senator Josh Becker (D-Menlo Park) emphasized the bill’s survivor-compensation and prevention provisions, including the fast-pay program, restrictions on private equity involvement in wildfire claims, executive compensation reforms, and improved coordination between state and local wildfire mitigation efforts. He specifically emphasized the need for community-wide rather than solely individual-property hardening and noted that SB 492 would have directed the State Fire Marshal to assist cities and counties in developing community wildfire protection plans aligned with the statewide strategy.
The hearing nevertheless revealed substantial dissatisfaction with the package from both stakeholders and assemblymembers. The principal criticism was that SB 492 did not materially reduce the potentially large future wildfire exposure facing investor-owned utilities.
Assemblymember Rick Zbur (D-Los Angeles) said the bill failed to provide the structural reform he believed was needed and argued that a comprehensive solution would have to account simultaneously for wildfire victims, utility ratepayers, insurers, and utilities. He warned against treating SB 492 as the conclusion of the legislature’s work when the underlying liability and affordability issues remained unresolved.
Assemblymember Diane Papan (D-San Mateo) similarly argued that some reduction in future utility wildfire exposure would likely be necessary to protect utility financial stability, while emphasizing that those costs could not simply be transferred to ratepayers. Her comments captured the fundamental issue that remains unresolved – if utility exposure is reduced, policymakers must determine who instead bears those wildfire losses.
Utility labor and business representatives used the hearing to argue that the final compromise did too little to stabilize the financial position of investor-owned utilities. Representatives asserted that PG&E and Southern California Edison had lost approximately $20 billion in market capitalization following announcement of the agreement and warned that higher borrowing costs could ultimately reduce spending on grid hardening, transmission, distribution, and clean-energy infrastructure.
The California Building Industry Association argued that financially weakened utilities could also slow new electrical connections, potentially affecting housing construction and clean-energy projects.
Assemblymember Steve Bennett (D-Ventura) focused on the connection between utility credit ratings, borrowing costs, and electricity rates, noting that bankruptcy could be particularly damaging to wildfire survivors. Testimony during the hearing asserted that PG&E ratepayers have incurred billions of dollars in additional costs since the company’s prior bankruptcy because of its weaker financial condition.
The fast-pay proposal also received significant scrutiny. Assemblymember Chris Rogers (D-Santa Rosa) questioned whether participation should be required before wildfire victims could fully proceed through litigation. He emphasized the practical difficulties survivors face in the first year after a disaster, including determining rebuilding costs, insurance recoveries, and the ultimate size of their uninsured losses.
Assemblymember John Harabedian (D-Pasadena) discussed Southern California Edison’s existing claims program and noted that one important feature of that program is that participation is optional. He indicated that the optional nature of the program was a meaningful distinction from SB 492’s approach. The final bill would not have eliminated an individual claimant’s right to sue, but participation in the fast-pay process would have affected the timing of litigation.
One of the most significant observations from the hearing came during Senator Becker’s closing comments. Becker acknowledged that lawmakers still lacked reliable information regarding the consequences of some proposed liability changes, particularly eliminating insurance subrogation. He said estimates provided during negotiations ranged from assertions that ending subrogation would have little effect on premiums to claims that insurance rates could increase 20 to 40% in some regions.
The inability to resolve questions of that magnitude helps explain why lawmakers ultimately declined to adopt a broader liability restructuring in the closing days of session.
Wildfire Liability Punted. Despite the negotiated agreement among the governor and legislative leaders, SB 492 ultimately did not receive an Assembly floor vote on September 1. Because the bill had been designated as an urgency measure so that lawmakers could consider it after the August 31 constitutional deadline, passage required a two-thirds vote. Assembly leadership determined that the necessary support did not exist, and the measure was not considered.
Speaker Robert Rivas (D-Hollister) said the proposal did not provide sufficient relief, accountability, or meaningful reform and indicated that lawmakers would continue working on the issue. As a result, none of the provisions contained in SB 492 became law, including the fast-pay program, wildfire-data requirements, community preparedness strategy, executive compensation reforms, or Wildfire Fund financing changes.
The end-of-session outcome avoids the most significant risk posed by the wildfire negotiations for local jurisdictions. Earlier proposals contemplated shifting wildfire liability costs away from investor-owned utilities and potentially onto local governments and insurers. The final compromise moved substantially away from that approach and expressly preserved public entity recovery.
Although SB 492 itself failed, the negotiations demonstrated that strong local-government advocacy was successful in establishing an important principle – counties should not be required to absorb losses attributable to utility-caused wildfires as part of a solution to utility financial instability. That principle is particularly important given the County’s potential exposure for emergency response, public infrastructure, facilities, and other governmental losses following a major utility-caused wildfire.
Wildfire Liability Debate Likely to Return. Following SB 492’s collapse, the governor asked the California Public Utilities Commission to prepare a detailed assessment of the financial health of investor-owned utilities, including borrowing costs and the potential effect of utility financial instability on electricity rates. The governor has not ruled out calling a special session. Speaker Rivas has indicated that the Assembly is prepared to continue working on the issue, and Senate leadership has similarly left the door open to further negotiations.
The next proposal could therefore be broader rather than narrower than SB 492, potentially revisiting issues involving utility liability, insurance subrogation, Wildfire Fund financing, and the allocation of losses among utilities, insurers, wildfire victims, and other parties.
Orange County should remain actively engaged as wildfire liability discussions resume, with a continued focus on ensuring that any future reforms do not shift the costs of utility-caused wildfires to counties or local taxpayers. The County should continue to protect the ability of public agencies to fully recover emergency-response costs, damage to public infrastructure, and other governmental losses from responsible utilities, without first being required to pursue federal reimbursement or rely on other uncertain funding sources. Any future proposal should also preserve recovery for mutual-aid and emergency-response activities and maintain existing public agency rights under liability and inverse-condemnation law unless an alternative provides equivalent or greater protection. At the same time, Orange County should support continued state investment in wildfire prevention, community hardening, evacuation infrastructure, and locally driven mitigation projects that can reduce wildfire risk before disasters occur.
The County should also closely monitor any renewed effort to change insurance subrogation. Although that issue primarily involves insurers and utilities, changes to subrogation could materially alter the broader allocation of wildfire losses and reopen pressure to identify other entities to absorb costs.
SB 577 (Laird) Public Entity Liability/Childhood Sexual Assault
SB 577 emerged in the final days of session as the legislature’s principal compromise proposal addressing the rapidly growing liability exposure facing counties, school districts, cities, and other public entities from childhood sexual assault claims, particularly claims authorized by AB 218 (2019). The measure passed the Assembly 46-19 on August 30 and, shortly afterward, the Senate concurred in the Assembly amendments 24-10. It is now awaiting action by the governor.
Orange County backs SB 577 as a balanced solution that introduces procedural safeguards for public entities while upholding the right of survivors to seek redress for valid claims. In particular, the County has highlighted the need to safeguard local funds required for critical services and to maintain local administrative flexibility.
What SB 577 Would Do. For Orange County, the most significant provisions fall into two categories – liability reform and new child-protection requirements.
Liability Protections for Childhood Sexual Assault Claims. SB 577 provides several significant protections for public entities. For claims involving childhood sexual assault occurring before January 1, 2024, filed against a public entity by a plaintiff age 40 or older, the plaintiff would have to prove by clear and convincing evidence both that the public entity knew of misconduct resulting in childhood sexual assault and failed to take reasonable preventive steps, and that the entity negligently discharged a mandatory duty. The court would also be required to consider the public entity's mission, financial condition, the compensatory nature of an award, the severity of the harm and the egregiousness of the conduct when considering a motion to reduce an award. Public entities could elect to have damages paid over time.
The measure would also eliminate treble damages – three times the amount of actual damages – against public entities in childhood sexual assault cases, strengthen certificate-of-merit requirements for plaintiffs age 40 and older, and generally require those certificates to accompany the complaint. It would prohibit certain dismissed childhood sexual assault actions from being refiled if five years have passed since the original filing. For pre-2024 claims, it also changes the discovery-based filing period from five years to three years.
The bill also strengthens tools aimed at factually deficient or bad-faith litigation. It expands the circumstances under which a public entity may seek defense costs under the Government Claims Act to include cases resolved through a demurrer or motion for judgment on the pleadings. Separately, an attorney found to have brought a childhood sexual assault claim in bad faith could be subject to a $25,000 civil penalty, enforceable by the Attorney General, a city attorney, or county counsel.
Broader Tort Reform. One of the most significant late amendments goes well beyond childhood sexual assault claims. For civil actions filed on or after January 1, 2027 for personal injury, property damage or wrongful death, a public entity found 15% or less at fault would no longer be jointly liable for economic damages attributable to other defendants. Instead, its economic liability would be limited to its proportional share. If the public entity is found more than 15% at fault, existing joint-liability rules would continue to apply.
This represents meaningful general-liability reform for Orange County because it applies across public-entity tort litigation, not simply AB 218 cases. It could reduce circumstances in which the County becomes the financial backstop for damages attributable primarily to another responsible party.
At the same time, this provision became one of the principal points of disagreement among local-government advocates. Cal Cities and the Rural County Representatives of California (RCRC) opposed the final bill unless amended, arguing that the 15% threshold significantly weakens the benefit. They sought true proportional liability under which a public entity would pay only its percentage of economic damages regardless of its level of fault. Under the final bill, for example, a public entity found 16% responsible could still potentially be responsible for economic damages attributable to other defendants.
New requirements for Orange County. SB 577 is not solely a liability-relief measure. It creates substantial new prevention, training, and oversight responsibilities for counties. By December 1, 2027, the Orange County Board of Supervisors would be required to adopt a code of conduct and sexual assault prevention plan for environments involving minors. The policies must address professional boundaries between employees, volunteers, contractors, and minors; establish appropriate limits on electronic and social-media communications; and establish procedures for reporting grooming and sexual-abuse concerns. The County would have to submit its adopted code of conduct to the Attorney General by January 1, 2028. The Attorney General could investigate jurisdictions that do not comply.
The bill also expands mandated-reporter training obligations for employers of specified personnel, including peace officers, probation officers, and social workers. Training would have to specifically address grooming behavior and sexual-abuse risks and generally be completed at least once every two years.
Probation and Law-Enforcement Provisions. Of particular importance to Orange County, beginning January 1, 2028, investigations conducted by the Division of the Ombudsperson within the Office of Youth and Community Restoration (OYCR) would be added to the proceedings permitted access to otherwise confidential peace officer and custodial officer personnel records.This was strongly opposed by the Chief Probation Officers of California (CPOC), Peace Officers Research Association of California (PORAC), the California State Sheriffs' Association, and other law-enforcement organizations.
Senator Laird defended the provision during the final Senate debate, emphasizing that existing confidentiality restrictions on the OYCR would remain in place and that the change gives the oversight office access to records rather than making those records generally public. He also noted that the delayed 2028 operative date gives the legislature an opportunity to address any implementation problems next year.
This provision warrants particular attention during implementation because it potentially affects internal investigations, personnel-record practices and interactions between Probation, the Sheriff's Department, and state youth-oversight entities.
Prevention and Foster Care Provisions. The measure also establishes a broader prevention framework affecting children in foster care, juvenile justice facilities, and other public or publicly supervised settings. Among other provisions, it requires enhanced monitoring of children's residential facilities after specified allegations of sexual abuse, grooming, exploitation, or retaliation; calls for unannounced inspections and confidential youth interviews; strengthens oversight by the State Foster Care Ombudsperson; and directs OYCR and the Board of State and Community Corrections to develop stronger oversight protections for youth in juvenile justice facilities.
These provisions were a major reason several children's advocacy organizations supported the compromise. During the Assembly floor debate, supporters stressed that SB 577 should not be viewed solely as a response to past liability but as an effort to prevent the next generation of claims by requiring stronger institutional safeguards.
The final votes reflected just how difficult the compromise was. In the Senate, Laird described SB 577 as an attempt to "thread the needle" between providing justice for survivors and keeping public agencies financially capable of delivering services. He emphasized that the legislation contains no damages cap, while providing new standards for older claims, payment flexibility, fraud protections, and prevention requirements.
Opponents came from very different directions. Some survivor advocates and legislators argued that the clear-and-convincing evidentiary standard makes older claims substantially more difficult to prove and improperly gives public entities protections unavailable to private institutions. Law-enforcement organizations objected principally to expanded OYCR access to personnel records. Conversely, Cal Cities, RCRC, and other public-agency advocates argued that the liability relief did not go far enough, particularly because of the 15% threshold.
That unusual coalition of opposition is an important context – the final bill was not the preferred proposal of either public-entity advocates or many survivor advocates. It was deliberately constructed as a middle-ground package capable of passing in the closing hours of session.
For Orange County, SB 577 represents meaningful but incomplete public-entity liability reform. It does not eliminate the fiscal exposure associated with AB 218 and it does not provide the full proportional-liability protection sought by many local governments. Nevertheless, it contains several provisions that could materially improve the County's position in future litigation – elimination of treble damages, heightened evidentiary requirements for certain older claims, stronger certificate-of-merit standards, expanded defense-cost recovery, structured-payment authority, and limited proportional liability for economic damages across a much broader universe of public-entity tort claims.
Those benefits come with significant new obligations. If the bill is signed, the County will need to coordinate among County Counsel, Risk Management, Probation, the Sheriff's Department, Social Services, and other departments serving minors to prepare for the new prevention plans, codes of conduct, mandated-reporter training, personnel-record access rules, and oversight requirements.
End-of-Session Budget Action
The legislature concluded the 2025-26 session with a final round of budget legislation making significant additions and adjustments to the 2026-27 state budget. The principal budget bill junior, AB 113, adds less than $100 million in General Fund spending above the June agreement, while appropriating approximately $2.66 billion from Proposition 4 and $450 million from the Greenhouse Gas Reduction Fund (GGRF). AB 113 passed both houses on September 1 and is now awaiting action of the governor.
H.R. 1 and County Health Care Responsibilities
For Orange County, one of the most consequential long-term budget issues remains implementation of the federal reconciliation measure, H.R. 1, and its potential effect on Medi-Cal coverage, health care utilization, and county indigent care responsibilities.
The August package provides $1 million for CalHHS, working with the University of California, to evaluate changes in California's insured and uninsured populations and health care utilization resulting from H.R. 1. Importantly for counties, the required evaluation specifically contemplates utilization of emergency rooms, clinics, county hospitals, and county indigent health programs, as well as impacts on nutrition programs.
The package also increases the Department of Health Care Access and Information’s (HCAI) General Fund authority from $1 million to $3 million to administer the Uncompensated Care Program and Abortion Practical Support Program and authorizes HCAI to implement those programs through grants and contracts.
Separately, AB 113 allocates $30 million to repay federal funds associated with payments affected by H.R. 1 and expressly provides that the Department of Health Care Services will not seek recovery from Medi-Cal managed care plans and that plans will not seek corresponding recoveries from providers. This provision is relevant to the broader stability of Orange County's Medi-Cal delivery system, including CalOptima's provider network.
These provisions demonstrate that the state recognizes the health-system consequences of H.R. 1, but they do not eliminate the underlying fiscal exposure facing counties. Orange County should therefore continue to emphasize the need for an adequate and flexible state response as the impacts on coverage and county indigent care become clearer.
Sustainable Aviation Fuel Tax Credit
Importantly for Orange County, the final end-of-session budget package does not include the proposed sustainable aviation fuel (SAF) tax credit that had been under consideration earlier in the budget process. The proposal had raised concerns for the County because it would have financed the SAF incentive through reductions in diesel excise tax revenues that otherwise support state and local transportation programs, potentially reducing funding available for local streets and roads and other transportation infrastructure. Its omission from the final package is therefore a positive outcome for Orange County and preserves the existing transportation revenue stream. The final package instead restores $230 million for SB 125 transit capital and operations programs without adopting the proposed SAF-related tax change.
Housing and Homelessness
The final package makes a modest downward adjustment to statewide homelessness funding. AB 113 reduces Round 7 of the Homeless Housing, Assistance, and Prevention Program by $10 million, leaving $890 million statewide.
For Orange County, the change is relatively small in the context of the total HHAP appropriation, but implementation and local allocations should continue to be monitored. The County has a substantial interest in maintaining predictable state homelessness funding, particularly as local governments are expected to sustain shelter, outreach, behavioral health and housing services.
The package also transfers administration of $200 million in Multifamily Housing Program funding from HCD to the Housing Development and Finance Committee.
At the local level, the $1 million City of Orange HUB Resource Center appropriation supports operations and services at a facility directly involved in the region's homelessness response.
Proposition 4: Wildfire, Coastal, and Climate Resilience
The most significant statewide investment in the August package is the appropriation of approximately $2.66 billion from Proposition 4, creating substantial opportunities for Orange County and its cities to pursue funding for wildfire prevention, coastal resilience, water infrastructure, extreme heat, parks, and other climate adaptation projects.
The package includes $329.5 million for wildfire and forest resilience, including:
- $60 million for the Regional Forest and Fire Capacity Program;
- $35 million for the Forest Health Program;
- $25 million for a statewide community wildfire mitigation program through CalOES; and
- $33 million for forest health and watershed improvement projects at State Parks.
These programs are directly relevant to Orange County's wildfire-prone communities and could support community hardening, vegetation management, fuels reduction, and regional wildfire-prevention efforts.
Orange County's coastal communities could also benefit from approximately $204.2 million for coastal resilience, including $25 million to implement the California Sea Level Rise Mitigation and Adaptation Act and $15 million for projects increasing ocean and coastal resilience to climate change.
The package additionally provides $24 million for the Extreme Heat and Community Resilience Program and $5 million for local Urban Forests Program grants through CalFire.
The prior-year budget bill provides the Department of Finance with additional flexibility to transfer Proposition 4 appropriations among administering agencies, including for landscape-scale and multijurisdictional projects and to address reimbursement-related cash-flow constraints. This may be particularly useful for regional projects involving the County, cities, special districts and other local partners.
Transportation and GGRF
The final package restores $230 million in GGRF funding for SB 125 transit capital and operations programs administered through the California State Transportation Agency. While this is not an Orange County-specific earmark, restoration of the statewide funding is positive for transit agencies and should continue to be monitored for opportunities affecting OCTA and regional transit investments.
The broader GGRF package also increases funding for wildfire prevention, clean water, agricultural emissions programs and community emissions-reduction efforts.
The end-of-session budget package positions Orange County to compete for substantial new Proposition 4 funding for wildfire mitigation, coastal resilience, extreme heat, water, and other climate priorities. The County should move quickly with departments and regional partners to identify grant-ready projects as the administering agencies establish guidelines and open funding rounds.
The principal area of continuing concern is health care financing following H.R. 1. The legislature has funded additional research and made some targeted health-system investments, but the package does not resolve the potential longer-term shift of health care costs and responsibilities to counties. Orange County should continue making the case for sufficient state funding and flexibility as the actual impacts on Medi-Cal enrollment, uncompensated care, and the County's indigent health obligations become clearer.
Housing and homelessness likewise remain ongoing priorities. Although Round 7 HHAP remains substantial at $890 million statewide, Orange County should continue advocating for predictable, ongoing funding and flexibility to address local shelter, services and permanent housing needs.
Little Hoover Commission Hearing on Artificial Intelligence Implementation
The Little Hoover Commission (Commission) held a hearing last week examining implementation of its previously published policy recommendations on Artificial Intelligence (AI). The Commission’s 2024 report, “Artificial Intelligence and California State Government,” provides recommendations for the state to improve government services and operations through AI while ensuring the technology is implemented safely and effectively. The report follows a 2018 Commission report that provided a roadmap for addressing AI in California state government. The 2024 report focuses heavily on empowering state workers, improving procurement and implementation, and maintaining safety, transparency, and accountability as the state expands its use of AI.
The hearing on implementation of the Commission’s recommendations included testimony from Senator Jerry McNerney (D-Pleasanton); Amy Tong, Partner and Chair of the Emerging Technology and AI Practice Group at Ballard Partners; Chris Given, State CIO and Director of the California Department of Technology; and Anica Walls, President of SEIU Local 1000.
Legislative Perspective. Senator McNerney spoke in support of AI’s potential and the tremendous opportunities it presents across a wide range of areas, including scientific discovery, efficiency, and improved government services and operations. At the same time, he pointed to a number of potential threats presented by AI, including massive unemployment, intellectual softening, the use of personal data, bioterrorism, and what he called the “control problem” of AI potentially being able to overtake our networks. McNerney advocated for continued human oversight and the use of “kill switches.”
Senator McNerney highlighted SB 947 and SB 813 and emphasized the importance of collaboration among state lawmakers and the governor to effectively regulate AI. Both bills passed the legislature and have been sent to the governor for signature or veto.
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SB 947 (McNerney), which has been dubbed the “No Robo Bosses Bill,” would prohibit an employer from using an automated decision system (ADS) to fire or discipline employees.
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SB 813 (McNerney) would require the Government Operations Agency (GovOps) to create and publish requirements, procedures, and qualification criteria for independent verification organizations (IVOs), and would require IVOs to submit annual reports to GovOps and the legislature. GovOps would also be required to convene working groups to solicit input in identifying relevant standards, procedures, requirements, and criteria.
More generally, Senator McNerney emphasized the need for transparency around the use of AI. He noted recent public pushback against AI and associated data centers, saying that he and his legislative colleagues have been feeling the political heat around these issues directly.
Workforce Opportunities and Challenges of AI. Amy Tong, Partner and Chair of the Emerging Technology and AI Practice Group at Ballard Partners, has served in government and the administration in a variety of roles advising on technology and AI, including as California Secretary of Government Operations. She spoke broadly about the improved efficiency and capacity AI can offer government.
Referencing the governor’s 2023 executive order on AI, Tong discussed the state’s goal of piloting AI in a safe and responsible manner. She emphasized the importance of identifying specific uses for the technology, including traffic management, language translation, and healthcare facility inspections, as well as the need for transparency and workforce training.
Speaking from her personal experience as a first-generation immigrant, Tong also discussed some of the opportunities AI may offer California residents who do not speak English as their first language. She cited recent census data indicating that 45% of California residents live in a home where English is not the primary language.
Touching on concerns about job loss resulting from AI adoption, Tong detailed the state’s efforts to work with labor organizations to ensure that AI augments workforce capabilities rather than replaces jobs. She noted that the state’s procurement policies are intended to ensure AI tools are disclosed and appropriately guardrailed. She also pointed to human resources and hiring processes as an area where the state has successfully implemented AI technology, helping shorten the time it takes to hire new employees.
Commissioners expressed both support and concern regarding these issues. While there is significant potential to improve government services for California residents, commissioners also raised concerns that a focus on affordability could lead to simple cost comparisons between using AI and hiring people. Tong noted that, in her current private-sector work, she is hearing from small and medium-sized businesses that AI has allowed them to hire more employees because efficiencies created by the technology have freed up resources to grow their companies.
State Pilot Programs and Security Risks. Chris Given, State CIO and Director of the California Department of Technology, discussed the state’s efforts to improve AI procurement and risk assessment through shared statewide agreements. He also discussed the state’s use of Poppy, a secure, state-built generative AI platform designed to help state employees work more effectively in service of the public.
Poppy was launched in response to the governor’s 2023 GenAI executive order, with a pilot program beginning September 29, 2025. During the pilot phase, 2,800 state employees across 67 departments provided input, leading to a statewide rollout planned for July 2026. Poppy provides a secure space for state employees to explore AI’s productivity benefits and is intended to help agencies and staff leverage AI technology more effectively.
Given offered the example of a small state department with only six employees that received a Public Records Act request. The team initially expected the request to take more than a month to complete, but Poppy was able to automate much of the process, allowing the team to fulfill the request in two weeks. He also pointed to examples of Poppy helping government scientists make information more usable and digestible for the public through dashboards without requiring additional project costs or technology procurement.
On procurement and security, Given highlighted the benefits of accessing AI tools through shared statewide agreements, including pre-negotiated pricing, implementation support, and workforce training. Looking ahead, he also underscored the need for greater attention to cybersecurity and the defense of state assets as hacking technologies continue to advance as demonstrated by the recent Hugging Face incident that occurred during Open AI’s internal research.
Labor Perspective. Closing out the panel, Anica Walls, President of SEIU Local 1000, offered a labor perspective on AI. She advocated for a balanced approach to AI adoption that prioritizes workers and protects vulnerable communities. She also emphasized the need for training and educational opportunities for workers affected by AI and for workers to have a meaningful role in the implementation of the technology.
Background on the Commission’s 2024 Artificial Intelligence Report and Recommendations
The Commission’s 2024 report includes nine recommendations intended to guide the safe and effective implementation of AI in California state government.
Recommendation 1: Build a California AI Computing Center. California should develop its own state-run, cloud-based AI computing center to provide affordable, scalable access to computing power, AI tools, and datasets for state agencies, academic institutions, nonprofits, and startups.
Recommendation 2: Create a California AI Council. A California AI Council should be established to oversee implementation of AI in state operations, including development of the proposed AI computing center and the other recommendations in the report.
Recommendation 3: Empower State Workers. California should provide all state employees with access to secure general-purpose GenAI tools, along with mandatory basic GenAI training. The state should also facilitate peer-to-peer and self-directed GenAI training tailored to the unique needs of individual workers and programs.
Recommendation 4: Make Implementation Easier. The state should facilitate GenAI innovation without increasing agency workloads by clarifying GenAI use policies, supporting interagency and intergovernmental collaboration, identifying agency needs, and piloting and scaling GenAI applications across agencies.
Recommendation 5: Improve Procurement and Risk Assessment. The state’s current procurement and risk-mitigation processes for GenAI should be streamlined as much as possible without compromising safety.
Recommendation 6: Strengthen Human Worker Voices. The state must balance leveraging GenAI with maintaining a strong human presence in its operations. This could include regular forums, agency position statements, and creation of an AI ombudsperson.
Recommendation 7: Educate the Public. The state should educate Californians about how it intends to implement GenAI and the safeguards it will use to protect against potential harms.
Recommendation 8: Legislative Oversight. The legislature should establish a “Select Committee on California Public Sector AI” to oversee AI and GenAI implementation in state operations and should engage in continued education regarding AI technology and policy.
Recommendation 9: California Must Think Beyond GenAI. The Commission argues that California’s current focus on GenAI is too narrow and recommends expanding procurement and risk-mitigation policies to include all technologies that pose significant risks, rather than GenAI alone.
Grant Opportunities
Below is a list of the latest grant opportunities released by the state. All opportunities for local jurisdictions may be found here.
Expected Award Announcement: January, 2027
Title: Lunch at the Library Summer 2027
State Agency / Department: CA State Library
Match Funding? No
Estimated Total Funding: $3,000,000
Funding Method: Advances & Reimbursement(s)
Application Deadline: 12/17/26 23:59
Title: Statewide Park Development and Community Revitalization Program (SPP) – Round 5 – Proposition 4
State Agency / Department: Department of Parks and Recreation
Match Funding? No
Estimated Total Funding: $188,500,000
Governor’s Press Releases
Below is a list of the governor’s press releases beginning August 26.
September 2: Governor Newsom announces nearly 15,300 illegal hemp, kratom and 7-OH products removed from California store shelves
September 2: California’s legal cannabis market generates $8.4 billion for Californians as state cracks down on illicit operators
September 2: Governor Newsom announces CalGuard has seized $534 million in deadly fentanyl, helping keep drugs off the streets as crime falls statewide
September 1: 15,000+ arrests. 7,000+ stolen vehicles recovered. Crime Suppression Teams deliver results across California
September 1: Governor Newsom visits CHP Academy, highlights next generation of officers and California’s public safety progress
August 31: Governor Newsom signs legislation 8.31.2026
August 31: Governor Newsom announces appointments 8.31.2026
- Kasey Young, of Modesto, has been appointed to the State 911 Advisory Board.
- Reye Diaz, of Sacramento County, has been appointed to the Board of Parole Hearings
- Brittiany Bearden, of Sacramento County, has been appointed to the Board of Parole Hearings
- Gilbert Infante, of Ventura County, has been reappointed to the Board of Parole Hearings
- Catherine Purcell, of Solano County, has been reappointed to the Board of Parole Hearings
- Emily Sheffield, of Sacramento County, has been reappointed to the Board of Parole Hearings
- Robert Barton, of Sacramento County, has been reappointed to the Board of Parole Hearings
- Kevin Chappell, of Sacramento County, has been reappointed to the Board of Parole Hearings
- Nancy Miller, of Sacramento, has been appointed to the California Transportation Commission
August 31: Governor Newsom signs legislation cracking down on cannabis ads and labels that appeal to kids
August 31: California’s crime rates are at record lows – even if Fox News won’t tell you
August 29: Governor Newsom statement on compromise to address wildfire risk, support fire survivors, and create stronger accountability
August 29: Governor Newsom announces $44 million for tribal stewardship, salmon recovery and desert protection projects
August 28: Governor Newsom signs bipartisan measure to strengthen suicide prevention efforts for boys, young men
August 28: Governor Newsom announces $2.7 billion for 150+ projects to expand and make California’s transportation system more resilient
August 28: BUY CALIFORNIAN: Governor Newsom launches new campaign to help consumers identify California-made products
August 27: Governor Newsom signs legislation 8.27.2026
August 27: What they are saying: Leaders from across the state celebrate transformative economic August 27: investments through California Jobs First
August 27: Time for Fox News to update their talking points: California’s economy is dominating
August 27: First Partner Siebel Newsom launches California’s first Social Health Council to strengthen community connection
August 27: California answers the call: The state has deployed 3,372 personnel since June to support disaster response across the country and abroad
August 26: Governor Newsom proclaims Farmworker Day
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