Legislative Update 

STATE OF PLAY AT THE CAPITOL

June Marked Key Deadlines for Legislation and for the State Budget

June concluded an active several months for the Legislature, encompassing the June 15 deadline to pass a Budget Act and the bulk of committee hearings leading to the July 2 deadline by which all policy committees must meet and confer on bills in their second house. Bills that remain in motion reside in their second house, meaning that Assembly bills are being heard in the Senate and Senate bills are being heard in the Assembly. June 25 also marked the final day for measures to be added to, or withdrawn from, the November 2026 ballot.

On July 2, the Legislature adjourned for Summer Recess, and when it reconvenes on August 3, with limited exceptions, only appropriations committees may meet to determine the fate of fiscal measures. The deadline for fiscal measures to clear the second-house Appropriations Committee is August 14. The final two weeks of session leading up to the last day of the 2025-2026 legislative session on August 31 are reserved for Floor deliberations only. The Governor has until September 30 to sign or veto all legislation passed by the Legislature after August 1.

Budget Update

On June 29, Governor Gavin Newsom announced that he had signed the primary budget bill, AB 109 (Gabriel), along with a series of budget trailer bills. He stated that he had delivered a “balanced budget with no deficit this year or next,” consistent with previous statements.

On June 26, the Senate released a summary of the budget agreement that had been reached between the Governor and both houses of the Legislature. The budget agreement approves the Governor's proposal for more than $5 billion in ongoing new revenues, including a federally compliant Managed Care Organization tax, a sales tax on pre-written software products, and a limitation on business tax credits.

SB 1164

SB 1164 (Cervantes) repeals the California Voting Rights Act of 2001 and replaces it with a new California Voting Rights Act of 2026. Presented as the Legislature’s response to recent U.S. Supreme Court decisions narrowing the federal Voting Rights Act, the bill significantly expands the types of voting-rights claims that may be brought against local governments. While current law is largely focused on challenges to at-large election systems, SB 1164 creates new causes of action for voter suppression and vote dilution and applies broadly to all local agencies that conduct elections, including both general law and charter cities. For agencies that have already transitioned to by-district elections, the most consequential change is the elimination of the existing safe harbor. Under current law, jurisdictions that transition to district-based elections have generally been insulated from CVRA claims. SB 1164 removes that protection and allows challenges to any method of election, including by-district systems with a rotating mayor or by-district systems with an at-large mayor.

California Chamber of Commerce Measure

On June 16, the Secretary of State published on their website that the “Building an Affordable California Act” had become eligible for the November ballot. The measure is backed by the California Chamber of Commerce and a broad coalition of business, housing, infrastructure, and clean-energy organizations. The initiative would establish new procedures for reviewing designated “essential projects,” including firm deadlines for environmental review and accelerated timelines for public comment and legal challenges. In most cases, public agencies would be required to complete environmental reviews within one year after a project application is deemed complete.

Howard Jarvis Taxpayers Association Measure

If approved by voters, this measure would have invalidated certain local tax increases retroactively, eliminated real estate transfer taxes, and imposed stricter requirements for cities and counties seeking to adopt new taxes. The Legislative Analyst’s Office (LAO) estimates that local governments could collectively lose several billion dollars in annual revenue. The measure qualified for the ballot in April 2026.

On June 22, AB 736 (Mark González) was gut-and-amended to be the Legislature’s answer to this measure. On June 23, HJTA announced that it had rejected the proposal and would not remove the measure from the November 2026 ballot. On June 25, the Legislature withdrew AB 736 from its scheduled hearing, pausing consideration of the bill after a deal was reached to remove the HJTA-qualified initiative from the November ballot in exchange for placing a narrower constitutional amendment before voters and withdrawing ACA 13 (Ward, 2023). ACA 13 had already qualified for the November 3, 2026, ballot and served as the Legislature’s leverage to bring HJTA to the negotiating table: by raising the bar for initiatives seeking to impose higher voter-approval thresholds, it posed a direct threat to the passage of HJTA’s qualified initiative. Withdrawing ACA 13 was therefore the concession that secured the agreement. The agreement was implemented through two measures: ACA 21 (Rivas) and ACA 22 (Wicks). ACA 21 directed the Secretary of State to withdraw ACA 13 from the November 3, 2026, ballot. ACA 22 placed a narrower constitutional amendment on the ballot that would require a two-thirds vote to impose, extend, or increase any local special tax, including those proposed through the voter initiative process, beginning January 1, 2027.

ADMINISTRATIONS ACTIONS UPDATE

High Speed Rail Authority Tax Increment Financing Proposal

The California High-Speed Rail Authority continues to advocate for inclusion of a proposal in this year’s budget that would authorize the Authority to cap and capture property and sales tax revenues and exercise land use authority within a half-mile of high-speed rail stations through state-administered tax increment financing (TIF) districts to help fund rail construction and operations. The proposal would represent a significant expansion of state authority and would require constitutional amendments to grant the Authority independent taxing and land use powers. A local government association opposition letter can be found here. More information on the proposal can be found here and here.

LOOKING FORWARD

• August 3: Legislature reconvenes from Summer Recess
• August 31: Last day for the Legislature to pass bills; end of the session
• September 30: Last day for the Governor to sign or veto bills