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Prepared by Precision Advocacy
With the 2025-26 legislative session concluded, attention in Sacramento has shifted to the governor as he considers legislation sent to his desk before the September 30 deadline. This week, Governor Newsom signed a four-bill wildfire recovery package addressing smoke-damage claims, environmental remediation standards, and mortgage protections, while several additional insurance consumer-protection measures remain pending.
This report also reviews the Legislative Analyst’s Office’s recent analysis of the state’s unusually large cash balance and its implications for previously appropriated infrastructure and program funding, and provides an update on July General Fund revenues.
Wildfire Recovery Bills Signed; Insurance Package Pending
Governor Newsom this week signed four bills aimed at strengthening protections for wildfire survivors and establishing a longer-term framework for disaster recovery. The measures address smoke-damage testing and insurance claims, environmental remediation standards, and mortgage relief following major disasters. One of the signed measures, AB 1795 (Gipson), is part of Insurance Commissioner Ricardo Lara’s broader 10-bill consumer protection package. With AB 1795 now signed, nine Commissioner-sponsored measures remain before the governor, who has until September 30 to sign or veto legislation passed by the legislature.
Governor Newsom’s Signed Wildfire Legislation
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AB 1642 (Harabedian) Wildfire contamination standards
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AB 1795 (Gipson) Smoke-damage insurance protections
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AB 1842 (Harabedian) Permanent mortgage forbearance framework
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AB 1847 (Harabedian) Extended mortgage relief for LA fire survivors
Smoke-Damage Claims and Environmental Standards. The Department of Insurance estimates that more than 13,000 of the roughly 40,000 insurance claims filed following the January 2025 Los Angeles fires involve smoke damage to homes that did not burn. California previously lacked enforceable statewide standards governing how smoke-damaged homes should be tested, remediated and cleared for occupancy.
AB 1642 establishes a framework for those standards. The measure requires the Department of Toxic Substances Control, in consultation with the Office of Environmental Health Hazard Assessment and other agencies, to develop regulations governing lead and asbestos testing, remediation and restoration following wildfires. The California Air Resources Board must also develop guidance addressing indoor-air contaminants associated with wildfire smoke. Until those standards are completed, the bill establishes interim lead and asbestos standards and requires DTSC to develop separate guidance to assist schools following wildfires.
AB 1795, the Smoke Damage Recovery Act, establishes corresponding requirements for insurers handling smoke-damage claims. Among other provisions, the measure establishes timelines for inspections and payments; requires insurers to pay qualifying testing, remediation and restoration costs; establishes training and certification requirements for adjusters handling wildfire smoke claims; and protects Additional Living Expense coverage while a covered home remains unsafe to occupy.
Together, the two bills are intended to provide both a science-based standard for determining whether smoke-damaged property is safe and clearer requirements governing how insurers investigate and settle those claims.
Mortgage Flexibility. AB 1842 and AB 1847 expand mortgage-forbearance protections for homeowners whose properties become uninhabitable following disasters.
AB 1842 creates a permanent statewide framework allowing qualifying borrowers whose residential property becomes uninhabitable as the direct result of a federally declared disaster to request mortgage forbearance. Servicers generally must provide an initial 180-day period, with extensions available in 90-day increments for up to 12 months. The measure also restricts late fees and default interest during the forbearance period and establishes protections related to credit reporting.
AB 1847 provides additional relief specifically for survivors of the January 2025 Los Angeles wildfires. The measure extends the maximum forbearance period available under existing law from 12 months to 24 months and extends the latest possible deadline for requesting relief to January 7, 2029. It also requires mortgage servicers, subject to specified investor or contractual limitations, to offer qualifying borrowers the option of deferring repayment of missed payments until the end of the loan term.
The Newsom administration is also continuing the CalAssist Mortgage Fund, which provides eligible disaster survivors with up to 12 months and $100,000 in mortgage assistance that does not have to be repaid. The state has also appropriated $100 million for a Disaster Rebuilding Fund intended to expand access to affordable financing where insurance proceeds do not cover the full cost of rebuilding.
Insurance Commissioner Lara’s Consumer Protection Package. Insurance Commissioner Ricardo Lara sponsored 10 measures during the 2026 legislative session addressing disaster recovery, insurance-industry accountability, privacy and health coverage. AB 1795 has now been signed. The following nine measures have passed the legislature and remain before the governor.
Disaster Recovery Legislation
SB 876 (Padilla) Disaster Recovery Reform Act. Would make a series of changes to residential property insurance following disasters, including increased penalties for specified insurance-law violations during declared emergencies, authority for the Insurance Commissioner to order restitution for certain unfair claims practices, additional requirements governing claims adjuster continuity and expanded protections related to replacement-cost and Additional Living Expense coverage.
SB 878 (Pérez) Insurance Claims Payments. Would establish additional deadlines and requirements governing residential property claims, including requirements intended to accelerate payment of undisputed amounts following a covered loss.
AB 1680 (Calderon) Make It FAIR Act. Would strengthen oversight of the California FAIR Plan by requiring the FAIR Plan Association to take corrective actions identified by the Insurance Commissioner through examinations and other oversight activities.
Insurance Industry Accountability and Consumer Protections Legislation
SB 354 (Limón) Insurance Information and Privacy Protection Act. Would modernize California’s insurance privacy laws by establishing expanded requirements governing how insurers and insurance-related entities collect, use, disclose and protect consumers’ personal information.
SB 1209 (Allen) Insurance Examination Compliance and Accountability Act. Would strengthen the Department of Insurance’s authority to require insurers to correct violations identified through financial and market-conduct examinations and establish penalties when required corrective actions are not completed.
SB 1206 (Senate Insurance Committee) Insurance Omnibus Bill. Would make numerous updates to California insurance law, including changes involving licensing, insurer investments, public adjusters, workers’ compensation fraud reporting, disclosures and other regulatory requirements.
Health Care Protection Legislation
AB 1798 (Wilson) Genetic Testing and Insurance. Would restrict the use of specified genetic-test results by life and disability insurers when underwriting asymptomatic applicants.
AB 2011 (Hart) Behavioral Health Parity Protection Act. Would incorporate specified federal mental-health and substance-use-disorder parity requirements into California law, preserving state-level protections if federal regulations change.
SB 1023 (Laird) HIV Prevention Medication Coverage. Would expand access to specified long-acting injectable HIV pre-exposure prophylaxis by requiring health plans and insurers to provide coverage through both medical and prescription-drug benefits under specified circumstances.
All nine remaining measures are enrolled and awaiting action by the governor. The deadline for gubernatorial action is September 30.
LAO Report: Understanding the State’s “Astonishing” Cash Position
The Legislative Analyst’s Office (LAO) reports that California continues to hold an unusually large cash balance despite persistent General Fund deficits. The balance peaked at $107 billion in May 2024 and remained approximately $86 billion as of June 30, 2026, equal to roughly 35% of annual General Fund disbursements. The LAO cautions, however, that this should not be interpreted as evidence that the state has an $86 billion surplus or comparable resources available for new spending. Most of the growth reflects cash sitting in special funds that has already been appropriated but has not yet been spent.
The largest factor is what the LAO calls “unplanned cash” – appropriated funding that has accumulated because projects and programs are taking longer than expected to deliver. Infrastructure is a major contributor. Labor shortages, supply-chain constraints, rising construction costs, lengthy project timelines, and the decision to spend time-limited federal funding before state dollars have all slowed state special-fund expenditures. This is particularly evident in transportation and climate programs. The Greenhouse Gas Reduction Fund (GGRF) alone held nearly $15 billion as of June 30, approximately 17% of the state's entire cash balance, even though its planned balance was only about $100 million. GGRF supports programs including transportation, transit, housing, wildfire resilience, drinking water, energy, and environmental protection.
For Orange County, the most significant takeaway is the distinction between the state's budget deficit and its ability to deploy previously appropriated funding. The report provides useful support for advocating for faster distribution and implementation of existing transportation, housing, climate, wildfire, and infrastructure dollars, particularly where state processes are slowing locally delivered projects. Transportation accounts are a good example. The LAO finds that projects commonly require six to eight years from design through construction and closeout, contributing to substantial accumulated balances. Importantly, however, the report does not conclude that these balances can simply be redirected to counties or used to solve the General Fund deficit; much of the money is legally dedicated or already committed.
The report also helps explain why the state may continue to argue that it has limited General Fund capacity despite the headline cash figure. California has increasingly used its cash position to temporarily support the budget, including a $3.4 billion Medi-Cal maneuver under which cash was spent but the budgetary cost will be recognized over several years. The LAO warns that these techniques create future obligations and recommends using cash borrowing only as a last resort, maintaining or accelerating repayment schedules, and relying instead on traditional reserves when possible.
July Revenues
The Department of Finance (DOF) and State Controller have released reports on July 2026 revenues, the first month of the 2026-27 fiscal year, compared with projections in the 2026-27 Budget Act. Because July is the first month of the fiscal year, July and fiscal year-to-date figures are the same.
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Tax Revenues
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DOF July
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Controller July/Fiscal YTD
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Personal Income
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$420 million below projections
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$40.9 million below projections
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Corporation
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$434 million above projections
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$566.3 million above projections
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Sales and Use
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$74 million above projections
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$87.3 million above projections
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Total Revenues
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$7 million below projections
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$536.4 million above projections
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DOF reported preliminary General Fund agency cash receipts of $11.745 billion in July, $7 million below the $11.752 billion Budget Act forecast. Lower-than-anticipated personal income tax receipts and pooled money interest were largely offset by stronger corporation tax, sales and use tax, and other revenue collections.
The Controller’s revised July report shows General Fund revenues of $12.395 billion, $536.4 million, or 4.5%, above the Budget Act estimate of $11.859 billion. Personal income tax collections were $40.9 million below projections, while corporation taxes were $566.3 million above projections, and sales and use taxes were $87.3 million above projections.
The difference between the DOF and Controller figures reflects their different reporting methodologies and timing. DOF’s report measures agency cash receipts, while the Controller reports funded cash recorded in the state’s accounting records; DOF expressly notes that the two reports may differ because cash received by agencies may not yet have been reported to the Controller.
Grant Opportunities
Below is a list of the latest grant opportunities released by the state. All opportunities for local jurisdictions may be found here.
Application Deadline: 9/29/26 10:00
Title: Division of Boating and Waterways 2026 Boating Infrastructure Grant
State Agency / Department: Department of Parks and Recreation
Match Funding? 25%
Estimated Total Funding: $18,000,000
Funding Method: Reimbursement(s)
Application Deadline: 10/16/26 23:59
Title: Illegal Disposal Site Abatement Grant Program
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? No
Estimated Total Funding: $1,000,000
Funding Method: Reimbursement(s)
Application Deadline: 9/16/26 23:59
Title: Legacy Disposal Site Abatement Grant Program
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? 50%
Estimated Total Funding: $1,500,000
Funding Method: Reimbursement(s)
Governor’s Press Releases
Below is a list of the governor’s press releases beginning September 9.
September 16: Governor Newsom cuts red tape to accelerate new zero-emissions ferry project in San Francisco Bay
September 16: Governor Newsom signs new law to protect workers, require disclosures on AI-generated advertising
September 16: Governor Newsom visits Jay Leno’s Garage to sign legislation celebrating and preserving California’s classic car and lowrider heritage
September 15: Governor Newsom proclaims Latino Heritage Month
September 15: California honored for nation-leading efficiency and data-driven improvements in state services and programs
September 15: Governor Newsom signs wildfire recovery package to strengthen protections and focus on rebuilding for survivors
September 14: Governor Newsom signs legislation 9.14.2026
September 14: Governor Newsom announces California-backed victory after Supreme Court blocks Trump’s attack on vote-by-mail
September 14: Ready is how California leads, and every Californian has a role to play
September 14: Governor Newsom presses Secretary Wright to admit the truth: Trump had no viable plan to protect Americans from his Iran war gas and diesel price spikes
September 11: On September 11, Governor Newsom welcomes CAL FIRE’s newest leaders as they answer the call to serve
September 11: Governor Newsom proclaims Patriot Day
September 10: What they are saying: National leaders and lawmakers celebrate Governor Newsom’s signature on landmark child safety chatbot and social media laws
September 10: Governor Newsom announces appointments 9.10.26
September 10: Governor Newsom signs the strongest child safety chatbot and social media laws in the nation
September 9: Governor Newsom signs first-in-the-nation AI safeguards to protect Californians, calls on the federal government to do its part
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