DATE: December 2, 2024
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City Manager
FROM: Marlene Subhashini, Assistant City Manager
Dane Hutchings, Founder & CEO, California Public Policy Group DEPARTMENT: City Manager
SUBJECT: 2024 STATE LEGISLATIVE UPDATE
RECOMMENDATION
It is recommended that the City Council, by Minute Order, receive and accept an informational report on the 2024 State Legislative Program.
EXECUTIVE SUMMARY
State legislation has the potential to have direct and significant impacts on a city’s legal authority; fiscal, operational, and environmental stability. Active legislative engagement protects and enhances the interests of Foster City’s residents and businesses.
Ensuring that Council, City staff, and the community are aware of policies impacting our community is an important step when conducting City business.
In December of 2023, Council adopted a state legislative platform to have a sustained and engaged presence in the state legislative process. Upon adopting the Legislative Platform, Council requested that City staff along with our legislative consultant provide at least three (3) formal legislative updates to Council at a regularly scheduled meeting.
Such updates are intended to provide Council with the information about the legislative process and policy themes of interest to Council. The first update was provided to Council on April 1, 2024, and the second on August 19, 2024. This would be the third and final update for 2024.
In an effort to advance the City’s public policy advocacy efforts, the City’s legislative consultant, California Public Policy Group (CPPG), formerly RPPG, has been tracking and engaging on priority legislation.
BACKGROUND/ANALYSIS
On August 19, 2024, the City Council approved a third amendment and assignment of the agreement from Renne Public Law Group, LLP (“RPLG”) doing business as Renee Public Policy Group (“RPPG”) to the California Public Policy Group (“CPPG”) for continued state legislative advocacy services and optional grant writing services.
VLF FUNDING INCLUDED IN FINAL BUDGET DEAL
Both in the Governor’s January and May Revised budget proposals, the Administration did not include its obligation to backfill the Vehicle Licensing Fee (VLF) shortfall to San Mateo County and its taxing agencies. Specifically, this impact to Foster City would have been $1,398,472 in lost revenue used to fund critical public services. CPPG worked with San Mateo County advocates, stakeholders, and legislative delegation to retain the full VLF backfill payment in the budget and testified in budget committees on behalf of the City to request VLF be included in the budget. CPPG worked closely with Assemblymember Diane Papan and Senator Josh Becker on pushing for the inclusion of San Mateo County’s shortfall to be included—outlining all of the potential service reductions on the table. The language specific to the VLF reimbursement was included in AB 107, which was the primary budget bill. This budget was passed by both houses on Thursday, June 13 and signed into law by the Governor on June 30. The budget included $73 million to reimburse local jurisdictions for VLF revenue shortfalls in Mono, Alpine, and San Mateo counties. This is viewed as a major victory for San Mateo County and its taxing agencies given the growing state budget deficit forcing considerable reductions to several other key statewide programs.
Below is a list of bills that the City has positioned on. For a more comprehensive list of tracked priority measures, please see Attachment 1.
POSITIONED BILLS
AB 460 (Bauer-Kahan) State Water Resources Control Board: water rights and usage: civil penalties
Under current law, the diversion or use of water other than as authorized by specified provisions of law is a trespass, subject to specified civil liability. This bill would require the State Water Resources Control Board to adjust for inflation, by January 1 of each year, beginning in 2025, the amounts of civil and administrative liabilities or penalties imposed by the board in water right actions, as specified.
CPPG worked with the Association of California Water agencies (ACWA) in providing City-specific impacts this measure would have to the City. Fortunately, CPPG was able to secure amendments to this bill which moved the City to a Neutral position.
Status: Chaptered (Chapter 342, Statutes of 2024)
City Position: Neutral
AB 817 (Pacheco) Open meetings: teleconferencing: subsidiary body The Ralph M. Brown Act, requires, with specified exceptions, each legislative body of a local agency to provide notice of the time and place for its regular meetings and an agenda containing a brief general description of each item of business to be transacted.
Current law authorizes the legislative body of a local agency to use alternate teleconferencing provisions during a proclaimed state of emergency (emergency provisions) and, until January 1, 2026, in certain circumstances related to the particular member if at least a quorum of its members participates from a singular physical location that is open to the public and situated within the agency’s jurisdiction and other requirements are met (nonemergency provisions). Current law imposes different requirements for notice, agenda, and public participation, as prescribed, when a legislative body is using alternate teleconferencing provisions. The nonemergency provisions impose restrictions on remote participation by a member of the legislative body and require the legislative body to provide specific means by which the public may remotely hear and visually observe the meeting. This bill, until January 1, 2026, would authorize a subsidiary body, as defined, to use similar alternative teleconferencing provisions and would impose requirements for notice, agenda, and public participation, as prescribed. The bill would require at least one staff member of the local agency to be present at a designated primary physical meeting location during the meeting. The bill would require the local agency to post the agenda at the primary physical meeting location. The bill would require the members of the subsidiary body to visibly appear on camera during the open portion of a meeting that is publicly accessible via the internet or other online platform, as specified. The bill would also require the subsidiary body to list a member of the subsidiary body who participates in a teleconference meeting from a remote location in the minutes of the meeting. In order to use teleconferencing pursuant to this act, the bill would require the legislative body that established the subsidiary body by charter, ordinance, resolution, or other formal action to make specified findings by majority vote, before the subsidiary body uses teleconferencing for the first time and every 12 months thereafter.
Status: Held in Senate Local Government
City Position: Support
AB 1337 (Wicks) State Water Resources Control Board: water diversion curtailment
Under existing law, the diversion or use of water other than as authorized by specified provisions of law is a trespass, subject to specified civil liability. This bill would expand the instances when the diversion or use of water is considered a trespass. This bill contains other related provisions and other existing laws.
Status: Held in Senate Natural Resources and Water
City Position: Oppose
AB 2427 (McCarty) Electric vehicle charging stations: permitting: curbside charging
Current law continues into existence the zero-emission vehicle (ZEV) division within GO- Biz as the Zero-Emission Vehicle Market Development Office. Current law references GO-Biz’s Electric Vehicle Charging Station Permitting Guidebook, which recommends best practices for electric vehicle supply equipment permitting. This bill would require the office to develop a model permitting checklist, model zoning ordinances, and best practices for permit costs and permit review timelines to help local governments permit curbside charging stations as part of the office’s development of the Electric Vehicle Charging Station Permitting Guidebook or any subsequent updates. The bill would also require the office to consult with local governments, electric vehicle service providers, and utilities while developing the above-described materials.
Status: Chaptered (Chapter 567, Statutes of 2024)
City Position: Support
AB 2489 (Ward) Local agencies: contracts for special services and temporary help Current law relating to the government of counties authorizes a county board of supervisors to contract for certain types of special services on behalf of the county, any county officer or department, or any district or court in the county. Current law requires those special services contracts to be with persons who are specially trained, experienced, expert, and competent to perform those services. This bill would require the board or a representative, at least 10 months before beginning a procurement process to contract with persons for special services that are currently, or were in the previous 10 years, performed by employees of the county represented by an employee organization, to notify, in writing, the exclusive employee representative of the workforce affected by the contract of its determination to begin that process. The bill would provide that this 10- month notice requirement does not apply in the event of an emergency, as defined. The bill would require persons with whom the board of supervisors enter into a contract for special services to perform functions that are currently, or were in the previous 10 years, performed by employees of the county, any county officer or department, or any district or court in the county represented by an employee organization to use employees who meet or exceed the minimum qualifications and standards required of bargaining unit civil service employees who perform or performed the same job functions, as specified.
This along with AB 2557 (see below) would have posed considerable operational challenges for the Citty. Fortunately, we were successful working alongside a broad coalition of stakeholders including individual local governments, private sector companies and non-profit organizations to stop AB 2489 from moving this year.
Status: Held in Senate Appropriations
City Position: Oppose
AB 2557 (Ortega) Local agencies: contracts for special services and temporary help: performance reports
Would require, as of July 1, 2025, each county board of supervisors that solicits for and enters into a specified contract for special services, except as specified, to post that contract and any related documents, as specified, on its internet website. The bill would require, as of July 1, 2026, each contract, as described above, to include, among other things, the objectives, desirables, and goals of the contract. The bill would require, before beginning a procurement process to contract for functions, duties, responsibilities, or services, as specified, the board of supervisors, or its representative, to give reasonable written notice to the exclusive employee representative of the workforce affected by the contract of its determination to begin that process. The bill would also require, at least 30 days before the modification or renewal of the above-described contract, the board of supervisors, or its representative, to notify, as specified, the exclusive employee representative of the workforce affected by the contract of the intent to modify or renew the contract.
Despite the fact that this bill has been considerably amended from its introduced version, the bill is still incredibly problematic. A number of local agencies, private businesses and over 100 non-profit organizations remain opposed to this measure. CPPG continues to advocate for the City’s position in an effort to stop this bill from advancing.
Status: Held in Senate Appropriations
City Position: Oppose
SB 366 (Caballero) The California Water Plan: long-term supply targets Would revise and recast certain provisions regarding The California Water Plan to, among other things, require the Department of Water Resources to instead establish a stakeholder advisory committee and to expand the membership of the committee to include tribes, labor, and environmental justice interests. The bill would require the department to coordinate with the California Water Commission, the State Water Resources Control Board, other state and federal agencies as appropriate, and the stakeholder advisory committee to develop a comprehensive plan for addressing the state’s water needs and meeting specified long-term water supply targets established by the bill for purposes of The California Water Plan. The bill would require the plan to provide recommendations and strategies to ensure enough water supply for all designated beneficial uses. The bill would require the plan to include specified components, including a discussion of various strategies that may be pursued in order to meet the water supply targets, a discussion of agricultural water needs, and an analysis of the costs and benefits of achieving the water supply targets. The bill would require the department to submit to the Legislature an annual report between updates to the plan that includes progress made toward meeting the water supply targets once established, as specified. The bill would also require the department to conduct public workshops to give interested parties an opportunity to comment on the plan and to post the preliminary draft of the plan on the department’s internet website.
Status: Vetoed by the Governor
City Position: Watch
FULL BILL TEXT TO ANY MEASURE CAN BE FOUND BY GOING TO THE STATE’S LEGISLATIVE INFORMATION WEBSITE: THAT CAN BE ACCESSED BY
CLICKING HERE
BALLOT MEASURES
•Proposition 2
oProposes a $10 billion school facilities bond, assisting both K-12 schools and community colleges.
oResult: Passed
•Proposition 4
oProposes a $10 billion “climate bond”.
oResult: Passed
•Proposition 5
oReduces the local vote threshold requirement from two-thirds (2/3rds) to fifty-five (55) percent for local public infrastructure and affordable housing financing proposals using general obligation bonds paid for with increases in ad valorem property taxes.
oResult: Failed
•Proposition 32
oIncreases the state minimum wage from $16 to $18 per hour. oResult: Failed
•Proposition 33
oProhibits the Legislature from limiting the right of any city or county, to maintain, enact or expand residential rent control.
oResult: Failed
•Proposition 36
oIncreases criminal penalties for drug dealers who distribute fentanyl and other hard drugs; increases penalties for repeated theft and shoplifting; allows individuals convicted for possession of fentanyl and other “hard drugs” with two prior felony convictions to complete mandatory court- supervised drug and mental health treatment in lieu of further incarceration. oResult: Passed
For a more detailed explanation of these ballot measures, please see please see Attachment 2 of the August 19, 2024 Staff Report: Link
LOOKING FORWARD
Legislature Composition
On December 2, 2024, the California State Legislature will convene its organizing session. Both incumbents and newly elected members will take their oaths of office, marking the commencement of the new 2025-26 Legislative session. This event signifies the first full turnover of the Legislature since the enactment of Proposition 28 in 2012, which established new twelve-year term limits. Consequently, the past four years have witnessed a considerable turnover among members.
With a total of 34 new members—24 in the Assembly and 10 in the Senate—the new composition for the upcoming session presents both challenges and opportunities. This influx is expected to lead to a surge in the number of measures introduced during the first year of the session. Members will move swiftly to honor campaign promises and vie for recognition as thought leaders in various policy areas.
While the turnover inevitably leads to a dilution of institutional knowledge, it simultaneously opens the door to exciting new prospects. Agencies and advocates will find themselves starting from scratch—cultivating relationships and introducing their priorities to a new class of members ready to influence the legislative landscape for years to come.
As the new two-year legislative session begins, one can expect to see shifts in committee chairs and their compositions. Although formal announcements are still pending, updates regarding policy committees are anticipated between December and early January.
These changes are crucial, as they directly impact which bills will navigate through committees and in what form.
Although committee chairs had less dictatorial power in 2024 compared to previous years, their influence over committee votes remains substantial. Chairs are chosen based on their favorability with chamber leadership and their ability to navigate legislation through the complex legislative process. Both Assembly Speaker Robert Rivas and Senate President pro Tempore Mike McGuire are expected to remain in their leadership roles moving into 2025.
Continued Budget Deficit
As projected in the final budget released in June 2025, the State will likely continue to see budgetary problems and therefore, additional actions to continue to pass a balanced budget can be expected. In September, California saw significant tax collections, with personal income taxes and corporation taxes both exceeding budget forecasts by 20% and 22%, respectively. Quarterly estimated personal income tax payments were particularly strong, driven by a rise in domestic stock prices. For the fiscal year 2024-25 so far, personal income tax is 11% ahead of forecasts, and corporation taxes are 42% ahead. While this is welcomed news, it’s likely that this revenue boost will primarily benefit public schools due to obligations under Proposition 98.
In early November, it became clear that personal and corporate income taxes for October exceeded 2024 state budget projections by $1.2 billion. For fiscal year 2024-25 to date, income taxes are $5.2 billion above projections, and 2023-24 General Fund revenue receipts were $3.2 billion above projections. Most of the revenue overage is already allocated for school funding obligations, new ballot measures, unmet savings efforts, and future unfunded costs. Additionally, potential federal changes and the Governor’s proposed expansion of the film and television tax credit may impact the state budget going forward.
The Legislature’s non-partisan Legislative Analyst’s Office (LAO) recently released a report estimating that the fiscal year 2024-25 budget solved a $55 billion deficit, which is somewhat higher than the $46.8 billion deficit the Administration had said it had closed.
The LAO attributes this difference to the treatment of baseline spending for schools and community colleges, and stated that the key solutions for addressing the budget include reserve withdrawals, spending reductions, revenue increases, and cost shifts. The Department of Finance is currently working with other agencies to craft the Governor’s fiscal year 2025-26 budget, the proposal for which must be released by January 10, 2025.
For local government, an extended period of state fiscal uncertainty has the potential of cutting both ways. On the one hand, polices that aim to reduce local authority by mandating a new program have the potential of being held due to the state’s budgetary concerns associated with new state reimbursable mandates. On the other hand, the Legislature has a long history of raiding local budgets to close that gap on its own budgetary challenge. Local governments need to remain vigilant in aggressively fighting any attempts by the state to reduce local funding formulas, or other longstanding tools that local agencies rely on to provide critical services.
Special Legislative Session
Given the political dynamics and historical context of the Legislature, along with the Newsom Administration’s response to the impending Trump Administration, a variety of new policy initiatives aimed at pushing back against policies that contradict progressive ideals can be anticipated. On November 7, Governor Newsom announced in a press release the convening of an extraordinary session, which is set to begin on December 2, 2024.
Typically, special session bills need to be in print for several days after the session starts, and committee hearings may be expedited compared to those in a regular session. The stated intent of the special session is to “safeguard California values and fundamental rights in the face of an incoming Trump Administration” and to “focus on bolstering California legal resources to protect civil rights, reproductive freedom, climate action, and immigrant families.”
Importantly, by calling a special session, lawmakers are not bound by the usual “bill limit.” This means that they can introduce several measures during the special session, provided they are germane to its purpose, while still advancing their normal number of bills during the regular session. Generally, standing legislative committees must be established for each new regular or extraordinary session, and it is common for special sessions to run concurrently with regular sessions. More broadly, major policy areas of focus for the special legislative session will likely center around the following:
Climate Change and Environmental Policies: One of the most significant areas of focus will likely be environmental policies. California has positioned itself as a leader in climate change action. Under a Trump presidency, which has been characterized by skepticism toward climate science and a rollback of environmental regulations, California’s leadership may further emphasize sustainable practices and push for stronger state-level regulations to counteract federal policies. Initiatives aimed at green energy, emissions reduction, and conservation efforts to gain traction can be expected.
Healthcare: With the Trump Administration’s efforts to repeal or modify the Affordable Care Act (Obamacare), California’s government may react by reinforcing its commitment to healthcare access. This may include expanding Medi-Cal, promoting state-level insurance solutions, or even exploring universal healthcare initiatives, as the state’s population leans towards protecting and expanding healthcare access.
Immigration: California has a large immigrant population and has long opposed hardline immigration policies. The state government is likely to double down on policies that protect undocumented immigrants, such as sanctuary laws, and may actively resist federal immigration enforcement actions, which could manifest in legal challenges against the Trump Administration’s policies.
Social Justice and Equality: Given California’s progressive stance on social issues, a focus on policies promoting racial equity, LGBTQ+ rights, and economic justice can be expected. Any perceived federal efforts that threaten these rights or reverse progress in these areas will likely provoke a legislative response aimed at bolstering protections at the state level.
Economic Policies: Economic policies will also be crucial, particularly in addressing any federal tax changes or economic initiatives that could adversely affect California’s diverse economy. The state may aim to protect its own industries, such as tech and entertainment, from any disruptive federal policies.
Anticipated Policy Trends – Regular Legislative Session At the end of the 2023-24 legislative session, there were several policy areas with specific impacts on local agencies that were left unfinished. With no anticipated change to legislative leadership, it is anticipated that emerging policy trends in the regular session will include the following:
Housing: As has been the case during the past several years, housing and land use policy will continue to be a major policy area of focus for the Legislature. During the 2023-2024 legislative session, there were a total of 127 housing related measures advance to the Governor’s desk where he signed 97% into law. However, many of the housing measures introduced in 2024 were aimed primarily at increasing production of market rate developments and reducing local planning discretion.
Despite these legislative efforts, California has yet to realize the production boom that Governor Newsom hoped for when he unveiled his “Marshall Plan for Housing” in 2019, which was a mandate to build 3.5 million new housing units by 2025. Local government planning and land use is often easier for legislators to focus on rather than grappling with the realities of private markets, addressing the lack of adequate energy supply, allocating major funding for subsidized housing, and challenging developers, environmental organizations, and other powerful interest groups. During a press event in September to announce the signing of several housing bills, the Governor, along with several other elected officials, doubled down on the narrative that local agencies bear sole responsibility for California’s housing crisis.
In the summer of 2024, the Assembly Select Committee on Permitting Reform released a “Purpose Statement“ and held its first informational hearing on “Understanding the Permitting Impediments to Addressing the Housing and Climate Crises”. In a statement on the hearing, the chair of the Committee, Assemblymember Buffy Wicks (D-Oakland), stated that the Committee would take “an inclusive, equitable and evidence-based approach to address systemic issues within the state’s permitting processes.” Areas of focus include “permitting impacts on housing, climate resilience, including water and wildfire, and clean energy” across California. The Committee held another informational hearing in October that focused on “Permitting Reform to Facilitate Climate Resiliency.” The Committee, in consultation with Bay Area Council, a business association located in San Francisco, is studying a broad range of permitting processes at the state and local levels that it claims act as barriers to private investors. The goal of Committee members would be to eventually introduce legislation that would aim to lower the overall number of permits required for a given project, especially in cases where permits may overlap. A report with recommendations by the Committee will be issued at the culmination of the Select Committee and will provide more insight into potential legislation over the next two-year legislative session.
Given the above, we will likely see housing policy proposals that focus on:
•Increased enforcement and oversight from the Attorney General and the Department of Housing and Community Development, respectively. •Further measures to streamline local permitting.
•Increased production and density measures in single-family neighborhoods. •Reduced local authority on development impact fees.
Energy Package: In the final days of session, the Legislature passed several energy bills designed to cut electric bills and streamline clean energy. However, two bills related to fast-tracking renewable energy projects and increasing oversight of utilities’ wildfire costs did not advance to the Governor’s desk. The California Energy Commission (CEC) has adopted updates to the Building Energy Efficiency Standards, which will take effect on January 1, 2026. These standards aim to improve energy efficiency in newly constructed buildings, renovations, and certain existing buildings. It is likely that the Legislature will continue to advance legislation surrounding clean energy, reducing greenhouse gas emissions, and streamlining energy projects in order to continue to try to meet the Governor’s goal of 100% clean electricity by 2045. The Governor’s plan includes accelerating the development of solar, wind, and battery storage projects, and modernizing the electrical grid to be more resilient and efficient.
Water: Water legislation in 2025 will also continue to focus on several key areas to address the challenges posed by climate change and ensure sustainable water management, including conservation, disaster preparedness and rate assistance for low- income households. We will likely see more bills that aim to create a more resilient water supply system, protect against extreme weather, and promote long-term sustainability.
In addition, we are likely to see legislation designed to protect the state’s wetlands and add new safeguards for the water supplies of rural communities. Starting January 1, 2025, new regulations will require approximately 400 of California’s largest cities and water districts to develop annual water-use budgets. These budgets will consider factors such as residential indoor and outdoor water use, commercial and industrial landscapes, and allowable water loss from leakage. We could also see legislation in 2025 designed to alter or address any implementation issues that arise from these regulations, such as costs or regulatory hurdles.
AI and Technology: We anticipate that artificial intelligence (AI) will continue to be a “hot” issue going forward in 2025. Legislation addressing several issues of concern regarding AI use, including ethics, data, privacy, surveillance, transparency, job displacement, safety, and the environmental impact of the technology will continue to emerge as AI continues to develop and integrate into various aspects of society.
California Environmental Quality Act
Not Applicable
FISCAL IMPACT
There is no fiscal impact associated with receiving this report.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Smart Planning, Development, and the Local Economy
ATTACHMENTS:
Attachment 1 – Priority Legislation (as of November 2024)