Legislative Update 

STATE OF PLAY AT THE CAPITOL

June Marked Key Deadlines for Legislation and for the State Budget

The end of June marks one of the busiest periods of the legislative year, highlighted by the June 15 constitutional deadline for the Legislature to pass the Budget Act. With the 2026 legislative session now well past its midpoint, bills that remain active have advanced to the second house, meaning Assembly bills are being considered in the Senate and Senate bills are being heard in the Assembly. Before the Legislature adjourns for Summer Recess on July 2, all policy committees must complete hearings on second-house bills. When lawmakers return on August 3, the pace of legislative activity will accelerate as both houses work to advance measures to the Governor’s desk before the August 31 deadline. Fiscal bills face an additional hurdle, as they must clear their second-house appropriations committees by August 14. The final two weeks of session are typically reserved for floor deliberations and final votes on pending legislation. Additionally, June 25 marked the deadline for measures to qualify for the November 2026 ballot.

Budget Update

On June 15, the Legislature passed AB 109 (Gabriel), the primary budget bill for the 2026-27 fiscal year. While the Legislature passed AB 109 to meet the state’s constitutional June 15 budget deadline, and the Governor is required to sign the measure by June 27, negotiations over the final spending plan remain ongoing. Governor Gavin Newsom and legislative leaders continue to work through key budget issues, with a series of follow-up budget bills expected in the coming weeks to amend and finalize the provisions contained in AB 109.

Budget Update

On June 15, the Legislature passed AB 109 (Gabriel), the primary budget bill for the 2026-27 fiscal year. While the Legislature passed AB 109 to meet the state’s constitutional June 15 budget deadline, and the Governor is required to sign the measure by June 27, negotiations over the final spending plan remain ongoing. Governor Gavin Newsom and legislative leaders continue to work through key budget issues, with a series of follow-up budget bills expected in the coming weeks to amend and finalize the provisions contained in AB 109.

Howard Jarvis Taxpayers Association Measure

If approved by voters, this measure would invalidate certain local tax increases retroactively, eliminate real estate transfer taxes, and impose 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 could also limit future revenue-raising options by increasing voter approval thresholds for some taxes and restricting the types of taxes local governments may enact. On June 22, AB 736 (Mark González) was gut-and-amended to be the Legislature’s answer to this measure.

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

• June 30: Governor must sign the primary budget bill
• July 2: Summer Recess begins upon adjournment
• 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