from Mark Smith, California Builders Advocate
Folks, this is not a comprehensive list of everything we engaged in for sure (does not include SB 61) and is more of an end of session overview and look forward than anything else but wanted to highlight some policy priorities and things we kept an eye on this year.
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The Legislature adjourned for the 2025 session on Saturday, September 13, after extending their own self-imposed Friday midnight deadline in order to rush through some last-minute policy changes in the areas of carbon reduction and air quality, energy, and budget funding. Legislative leadership negotiated furiously with the Governor in the waning weeks of the session, but final agreements were not ironed out until Wednesday morning, and the Constitutionally required 72-hour in print rule necessitated lawmakers to stay in session through Saturday to vote on the legislative packages. The Legislature’s adjournment marked the end of a tumultuous period in which the state experienced record-breaking devastation during the Los Angeles fires and lawmakers confronted a $12 billion budget deficit. California also put itself at the forefront of the national redistricting debate over the summer, which dominated discourse and proceedings at the Capitol in August and made for an unusual last month of session. In the end, lawmakers sent hundreds of bills to Governor Newsom’s desk, where he has until midnight on October 13th to sign or veto them.
Legislators approved a package of bills aimed at reducing energy costs and pollution in the state, including reducing consumer electric bills, stabilizing gas supplies, and slashing toxic air pollution. They voted to approve the renewal of California’s signature Cap and Trade program. This central piece of the energy bills package limits in-state industry carbon emissions, through 2045. The program was set to expire in 2030, but Governor Newsom expressed the desire to reauthorize the program earlier in order to stabilize the market. Legislators also approved a measure to waive certain environmental reviews for oil drilling in Kern County (a complete departure from previous efforts to reduce reliance on California oil) with the goal of boosting in-state oil production and rely less on foreign governments with spotty human rights and environmental records. The proposal comes as lawmakers try to strike a balance between meeting the state’s ambitious climate goals and stabilizing its gasoline supply as Phillips 66 and Valero, two of the state’s major refineries, face closures that could create a significant oil and gas shortages in the state. Other bills in the package would allow California to join a regional energy market with other Western states (perhaps Enron part 2?) and would backfill $18 billion into the state’s wildfire insurance fund for utility companies in the event of a large-scale fire disasters. Governor Newsom already held a signing ceremony last week to cement these bills into law.
Other significant topics included the imposition of a new Vehicle Miles Travelled (VMT) surcharge that can be levied against new development and may increase housing costs by at least $16K per unit. Imposed through Budget action in June, a coalition of developer and business interests sought to repeal the mandate at the end of session, but did not succeed. More information can be found here: https://careabouthousing.org/broad-coalition-of-over-100-social-justice-housing-and-business-leaders-urge-legislature-to-repeal-new-vmt-housing-tax/
Further, a controversial measure to override local zoning to allow dense housing development near public transit stations (SB 79) would allow developers could build five and six story apartment buildings within a quarter mile of public transit, including light rail stations and bus stops. It would apply in neighborhoods where local rules restrict new development to single-family homes. The measure barely passed, over strong opposition from many local governments, and awaits actions by the Governor.
Housing Legislation. The 2025 session saw a historic volume of housing-related bills—over 160 introduced—with the legislature continuing to prioritize production, affordability, and zoning reform.
- The bipartisan “Fast Track Housing Package,” passed the Legislature, which focused on streamlining permitting and approvals and reducing delays.
- As part of the 2025 Budget Act, Governor Newsom significantly reformed CEQA, most notably exempting infall urban development from CEQA entirely. June Budget agreement, also created the VMT issue (above)
- Bills tagged as “Housing Killers”—those increasing CEQA delays, costs, or uncertainty—were actively opposed by our industry partners, such as AB 52 (Aguiar-Curry) on expanded tribal consultation and were ultimately stopped this year.
Immigration and Workforce Legislation. Immigration policy was unsurprisingly at the forefront of legislative efforts this year, and a number of bills on the Governor’s desk will protect construction workers impacted by immigration status:
- AB 1136 (Ortega) prohibits discharging employees solely because they are in immigration or deportation proceedings, which if signed, will strengthen workforce stability in the building trades.
- SB 294 (Reyes) expands employer notice requirements on immigration-related protections, including the right to unionize and protections from unfair labor practices at worksites employing immigrant labor.
- Debate on these bills frequently centered on how federal immigration enforcement might impact housing reforms, with industry groups advocating for a reliable and inclusive labor supply to match ramped-up building approvals.
California Democratic leadership entered the 2025 legislative session with a clear focus on tackling affordability challenges, particularly around housing, energy costs, and essential goods. While they passed several measures aimed at easing utility expenses and promoting housing production, substantial affordability improvements remain elusive, with many residents and small businesses still facing steep cost pressures despite these legislative efforts.
Looking ahead to the 2026 California legislative session, lawmakers already have a pile of bills that were shelved this year, that can be acted upon beginning in January 2026, the Assembly has 33 bills on its Inactive File (14 ABs and 19 SBs) and the Senate has 58 bills on its Inactive File (5 SBs and 53 ABs). The Legislature is likely to maintain strong focus on affordability and housing, continuing efforts to expedite housing production and address homelessness amid ongoing economic pressures. Energy and climate policy will remain high priorities, especially as the state advances clean energy goals while balancing grid reliability and cost concerns. Labor and workforce issues are expected to persist prominently, with potential expansion of worker protections and regulation around emerging technologies like AI. Given the political attention on elections, lawmakers may also revisit election reform and redistricting transparency, particularly in the aftermath of Proposition 50. Additionally, economic recovery and small business support will likely receive targeted legislative attention, including addressing supply chain resilience, workforce development, and easing regulatory burdens. Public safety and opioid crisis responses are anticipated to continue as areas of bipartisan concern, with new initiatives aimed at community health and crime reduction. Overall, 2026 is shaping up to be another eventful year in Sacramento.
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MARK SMITH
Smith Policy Group
1001 K Street, 6th Floor
Sacramento, CA 95814
(916) 335-5072
mark@smithpolicygroup.com
smithpolicygroup.com