Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Connie Juarez-Diroll, Chief Legislative Officer
Subject: State and Federal Legislative Update #4
RECOMMENDATION:
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Accept the May 2025 informational report on the 2025 State and Federal Legislative sessions.
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BACKGROUND:
In May, the California State Legislature reviewed thousands of bills in policy and fiscal committees. While some proposals failed, others advanced. Those tagged as “fiscal bills”-if they contain an appropriation of funds, require a state agency to spend money, or result in a substantial loss of revenue to the state-now face the challenge of the Appropriations Suspense Hearings, which consider their fiscal impact. The deadline for fiscal committees to report these bills to the Floor is May 23rd. Non-fiscal bills, on the other hand, proceed to the floor of their respective houses for a vote of the full house. All bills have until June 6th to pass out of their house of origin.
On May 14th, Governor Newsom is expected to release the 2025-26 May Revision of the state budget, which is likely to include a multi-billion-dollar deficit that may worsen due to upcoming federal actions. Additionally, the governor introduced a plan to reorganize the state’s executive branch, while the legislature unveiled an affordability package.
At the federal level, President Trump released his Fiscal Year 2026 “skinny” budget proposal, which calls for approximately $163 billion in discretionary funding cuts to federal education, health, housing, and labor programs- a 22 percent reduction in non-defense spending. On a separate, though related budgetary matter, House Republicans continued intraparty negotiations on how to pay for President Trump’s sweeping domestic policy priorities as part of the so-called “budget reconciliation” measure. Finally, the County Executive’s Office and the Department of Public Works submitted their Fiscal Year 2026 Community Project Funding Requests.
DISCUSSION:
State Budget Update
Details of the 2025-26 May Revision were not available at the time of the writing of this report. The Intergovernmental and Public Affairs (IGPA) Unit will provide your Board with a follow-up analysis regarding state budget updates and potential impacts on the County on June 10th. The report will also include information regarding the County’s efforts to secure its FY 2023-24 $114 million VLF shortfall backfill funding.
State Legislative Update
On May 5, 2025, Governor Newsom introduced GRP 1, a plan to reorganize the State’s executive branch by replacing the Business, Consumer Services, and Housing Agency with two new entities: the Business and Consumer Services Agency and the California Housing and Homelessness Agency. This change aims to enhance coordination, streamline operations, and address issues related to housing, homelessness, and consumer protection.
Additionally, last month, Pro Tem McGuire and other Senate Democrats launched the "Investing in Your California Dream" affordability bill package, which includes three bills focused on energy, housing, and workforce development. The package aims to increase housing supply, lower utility costs, and improve access to job training programs. Concurrently, Assembly Speaker Rivas announced initiatives to protect families and enhance affordability for Californians.
These actions include the creation of the following select committees:
• Select Committee on Childcare Costs
• Select Committee on CalFresh Enrollment and Nutrition
• Select Committee on Housing Finance and Affordability
• Select Committee on Transportation Costs and Impact of Low-Carbon Fuel Standard
With the state’s keen focus on facilitating housing production and improving affordability, the following is a list of bills that Assembly Speaker Rivas is advancing during this legislative session.
• AB 353 (Boerner-D) would mandate internet service providers to make affordable home internet plans available to California residents.
• AB 457 (Soria-D) would streamline the process to provide affordable housing for farmworkers in California.
• AB 485 (Ortega-D) would strengthen enforcement of unpaid wage judgments.
• AB 609 (Wicks-D) would create an exemption from the California Environmental Quality Act for housing projects that are compliant with local laws and in environmentally friendly locations.
• AB 782 (Quirk-Silva-D) would eliminate unnecessary costs and delays by prohibiting local governments from requiring bonding or other financial assurances related to subdivision improvements that will be privately owned and maintained.
• AB 1007 (Rubio-D) would expedite the approval process for development projects by requiring public agencies to make decisions within set timelines.
• AB 1234 (Ortega-D) would speed up the resolution of valid wage theft claims by penalizing bad-faith delays and allowing default judgments when employers fail to appear or respond to claims.
• AB 1248 (Haney-D) would protect tenants from unpredictable and costly housing fees.
• AB 1294 (Haney-D): would establish a statewide uniform application for housing projects that are compliant with local laws.
The following bills are included in the Senate Affordability bill package, Investing in Your California Dream:
• SB 254 (Becker-D) would propose various policies related to electrical corporations, including changes to wildfire mitigation regulatory framework, the allocation to customers of the Climate Credit, electric transmission infrastructure permitting and deployment, permitting of clean energy infrastructure, including energy storage facilities, and various proposals to address electricity utility bills, including prohibiting rate basing by electrical corporations of $15 billion in capital investments.
• SB 681 (Wahab-D) would prohibit landlords from charging tenants specific fees, limit the application screening fee a landlord can charge, and deem subordinate mortgages abandoned if the mortgage servicer fails to provide certain notices, among other provisions.
• SB 638 (Padilla) would, subject to an appropriation by the Legislature for this purpose, establish the Career Technical Education and Career Pathways Grant Program, to be administered by the State Department of Education, for purposes of providing programs and services related to career technical education and career pathways.
The attached May 2025 Legislative Activity Report details the bills tracked to date and the action taken by the Board.
Federal Update-President Trump Releases FY 2026 Budget Outline
The President's budget blueprint proposes an increase in spending on defense to $1 trillion, a 13 percent increase, as well as border security programs and the extension of the 2017 tax cuts. However, it also calls for a significant 26 percent cut in discretionary funding for the U.S. Department of Health and Human Services. This includes the elimination of several programs such as the Low-Income Home Energy Assistance Program (LIHEAP), the Community Services Block Grant (CSBG), Preschool Development Block Grants, and teen pregnancy prevention initiatives.
Additionally, the proposal outlines deep cuts in line with a reorganization of the department. Programs such as domestic HIV services, various Maternal and Child Health programs, and multiple Health Workforce Programs would be reduced or eliminated. The budget suggests a nearly 50 percent cut (amounting to $3.6 billion) to the Centers for Disease Control and Prevention (CDC). There would also be a reduction of almost $18 billion for the National Institutes of Health (NIH) and a $675 million cut from the Centers for Medicaid and Medicare Services (CMS), primarily targeting equity-focused activities and outreach related to the Inflation Reduction Act.
Furthermore, President Trump's proposed budget would reduce funding for the Department of Housing and Urban Development by $32.9 billion, which is over 40 percent of current levels. It aims to cut rental assistance programs by $26.7 billion and to impose a new two-year cap on rental aid for "able-bodied adults." The budget suggests eliminating the Community Development Block Grant and the HOME program while significantly cutting Homelessness Assistance Grants. Additionally, the proposal would eliminate the Commodity Supplemental Food Program, which provides food assistance to seniors, replacing it with “Make America Healthy Again” food boxes.
The budget also targets $646 million in Federal Emergency Management Agency (FEMA) grant programs, including the National Domestic Preparedness Consortium and FEMA's Preparedness Grants Portfolio. Notably, mandatory spending programs such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and the Social Services Block Grant (SSBG) are not addressed in the President's proposal.
It is essential to note that this budget proposal provides a high-level overview of the administration's fiscal priorities for fiscal year 2026. Last month, Congress passed a bill to maintain government spending at the current levels from the prior year, meaning that fiscal year 2025 spending is in a holding pattern for now. A full budget request is expected in the coming weeks or months. Congressional appropriators will then begin crafting the 12 spending measures that comprise the federal budget for fiscal year 2026 ahead of the September 30th shutdown deadline. The outcome of the appropriations process remains uncertain, as it is unclear which elements of the Trump administration’s budget outline will be included.
Reconciliation Process Update
At the time of writing this report, House Republicans continue to negotiate a reconciliation package for passage through the chamber by Memorial Day. If this does not occur, a July 4th deadline for submitting the bill to President Trump becomes less likely. While several House committees have recently advanced their respective titles of tax and spending bills, the panels tasked with identifying some of the most controversial spending reductions to offset a ten-year package of tax cuts have postponed their markups.
Congressional Republicans remain divided over levels of spending cuts to Medicaid, with GOP moderates expressing concern about proposed per-capita caps and the reduction of the federal medical assistance percentage (FMAP), arguing that such measures could jeopardize healthcare coverage for too many constituents back home. Hardline conservatives, for their part, are pressing the GOP leadership for hundreds of billions of dollars in additional spending cuts. Press reports indicate that Republicans are mostly unified on instituting work requirements, tightening eligibility verification, excluding undocumented immigrants from benefits, and cracking down on waste, fraud, and abuse. Other proposals, like limiting state provider taxes, remain on the table. However, to achieve the $5 trillion or more in tax cuts that President Trump and Republican leaders are eyeing over the coming decade, even deeper cuts would be needed, and House and Senate GOP leaders remain divided over the extent of Medicaid cuts.
Similarly, a small group of Republicans, who represent high-tax states like New York and New Jersey, and the House Republican leadership continue to spar to reach an agreement to raise the cap on state and local tax (SALT) deductions, which are currently $10,000 and are set to expire at the end of the year.
Finally, on May 9th, Treasury Secretary Scott Bessent formally told congressional leaders that they must approve an increase to the U.S. government’s debt limit by mid-July, before lawmakers leave for the August break. The announcement, which has been widely anticipated, marks the start of the clock running on the massive Republican reconciliation bill. Republicans have included a debt-limit increase of at least $4 trillion in their package and plan to pass it along party lines.
Looking ahead, House GOP leaders are moving toward having their key committees hold markups next week on the most critical parts of the reconciliation package-massive spending cuts and the tax portion. Speaker Mike Johnson plans to hold a floor vote the following week, if all goes as hoped, although he has also acknowledged that it is possible the timeline could slip.
Senate Majority Leader John Thune and his Republican colleagues would have the entire month of June to discuss the reconciliation package, which only needs a majority vote to pass. However, Senate Republicans are likely to want to make changes to the measure, which will necessitate additional time. Afterward, House Republicans will need to approve those modifications. This makes Bessent's notice today particularly important for the White House.
County Federal Budget Requests
At the end of April, the IGPA Unit and Public Works Department, with assistance from Carpi and Clay, the County’s federal advocacy firm, submitted a $2 million Community Funding Request for the Mirada Road Resiliency Project to Rep. Sam Liccardo. The roadway has been subject to continual winter storm surges and coastal erosion. The proposed project aims to develop solutions for the 100-year storm event, strengthening the roadway and rock slope protection, and preventing wave overtopping. The project will identify and analyze alternatives with community input, provide design and environmental clearance, and obtain permits to prepare the project for construction.