LEGISLATIVE UPDATE
2025
Assemblymember Diane Papan
2025-2026 CALIFORNIA STATE BUDGET
• Budget Total :
$321.1B
• Shortfall of $12
billion closed via:
⚬ fu n d s h ift s
⚬ reserve
drawdowns
⚬ program
a d ju s t m e n t s
Current
• Continued revenue declines
• Sustained operating deficits
• Sp e n d in g g ro w t h t o exceed
revenue growth
• Unstable Revenue
• Rising Costs fo r C o n t in u in g
Ob lig a t io n s
• Federal Instability
2026 -27 Projections & Future Challenges
VEHICLE LICENSE FEE (VLF)
2004
2004 VLF Backfill Deal : State reduced Vehicle
License Fees significantly but agreed to backfill the
VLF loss to counties from the Educational Revenue
Augmentation Fund (ERAF).
Persistent shortfall : This ERAF payment structure
uniquely disadvantages SM County due to a shortfall
in the ERAF pot of money used to backfill the VLF loss.
Shortfall:
$32.8 million
restored to the
County
Shortfall:
$114 million
Backfill (2/3):
$76.5 million
restored to the
County
2025
Shortfall:
$70 million
restored to the
County
2023 2024
2026 Projected Shortfall: $162 million
Pro je c t io n s fo r C o m in g Ye a rs : Larger shortfalls 2026 and Beyond
Distributed from the State General Fund
2 years after being allocated in the budget
2025
LEGILSATIVE EFFORTS
• Bans the manufacture and
sale of cosmetic products
containing musk ingredients
starting January 1, 2027
• Aligns California with
European Union regulations
• Reduces harmful chemical
exposure
• Requires the California
Natural Resources Agency
(CNRA) to develop a new
stewardship plan in the 2027
30x30 progress report
reflecting:
⚬ St e w a rd s h ip b e n e fit s
⚬ Workforce needs
⚬ Ba c klo g g e d , c rit ic a l, re c u rrin g ,
and future needs
• Establishes consistent
recertification standards
across all transit operators
• Modernizes recertification
options to be phone, mail -in, or
online submissions.
• Implements a uniform five -
year recertification cycle
• Reduces administrative
burden on transit providers
2-YEAR BILL
• Requires energy providers to
credit Caltrain for the energy
generated by new electric
trains.
• Caltrain will be compensated
at Net Billing Tariff rates,
saving taxpayers $2M
annually.
Sought to improve the housing
e le m e n t re vie w p ro c e s s in t w o ke y
ways:
1. St a rt t h e Re g io n a l Ho u s in g
Ne e d s As s e s s m e n t (RNHA)
p ro c e s s 6 m o n t h s e a rlie r
t h e re b y a llo w in g m u n ic ip a lit ie s
m o re t im e t o e n g a g e w it h t h e
De p a rt m e n t o f Ho u s in g a n d
C o m m u n it y De ve lo p m e n t (HC D)
2.Re q u ire HC D t o p ro vid e
c o n s is t e n t fe e d b a c k
TO BE RE-INTRODUCED
• Required data centers to
self - certify their anticipated
and actual water use during
the business license
process.
• Provides a pragmatic
solution that balances
resource sustainability and
revenue benefits of data
center expansion
TO BE RE-INTRODUCED
Equity & Local Safeguards :
• Requires >40% of funds go to projects benefiting
low -income or disadvantaged communities
• Disadvantaged communities are determined using
area median income
⚬ Ensuring San Mateo County remains fully
eligible for grant funding
Early Deployment & Local Benefits :
• 2025-2 6 fu n d in g s t re a m s in c lu d e :
⚬ $ 1.0 7 b illio n fo r water infrastructure
⚬ $325 m illio n fo r wildfire/forest resilience
⚬ $286 m illio n fo r biodiversity/nature -based
solutions
C A vo t e rs a p p ro ve d Pro p 4 in No v. 2 0 2 4:
• Au t h o rize d $10 billion in b o n d s fo r c lim a t e a n d e n viro n m e n t a l re s ilie n c e .
PROPOSITION 4: CLIMATE BOND
AB 156 7 (Papan c o - authored) got Prop 4 o n t h e b a llo t .
CAP & INVEST HAS BEEN REAUTHORIZED THROUGH 2045
California’s “Cap and Invest” Program is a market -based system for reducing greenhouse gas (“GHG”) emissions.
CAP
St a t e im p o s e s a GHG e m is s io n s
C AP o n p o llu t e rs b y is s u in g a
c e rt a in n u m b e r o f “Allo w a n c e s .”
Po llu t e rs p u rc h a s e a d d it io n a l
Allo w a n c e s a t a u c t io n s
INVEST
Re ve n u e g e n e ra t e d fro m t h e
a u c t io n o f Allo w a n c e s is
in ve s t e d in t o p ro g ra m s t o
c o u n t e ra c t p o llu t io n .
Declining CAP
Ove r t im e , t h e St a t e w ill re d u c e
t h e n u m b e r o f Allo w a n c e s t o
e n c o u ra g e p o llu t e rs t o in ve s t in
c le a n e r t e c h n o lo g ie s .
CAP & INVEST
$1.5B
in wildfire prevention
1.6M acres
conserved or restored
$9.2B
benefitting communities most
severely impacted by climate
change
116.1 MMTCO2e
(Million Metric Tons of Carbon
Dioxide )
e s t im a t e d GHG re d u c t io n s
13.6K
a ffo rd a b le h o u s in g u n it s
1,386
122K t ra n s it p ro je c t s jo b s c re a t e d
560K rebates
for zero - e m is s io n ve h ic le s
$15B
in u t ilit y b ill c re d it s
INVESTMENTS IN STATE AUTHORIZED PROJECTS
AROUND TOWN!
THANK YOU
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