1 M E M O R A N D U M
To: The Honorable Greer Stone and Members of the Palo Alto City Council CC: Ed Shikada, City Manager
C hantal Cotton Gaines, Deputy City Manager
From: Townsend Public Affairs
Christopher Townsend, President
Niccolo De Luca, Vice President
Ben Goldeen, Federal Advocacy Manager
Alex Gibbs, Grants Manager
Carlin Shelby, Associate
Date: January 18, 2024
Subject: January State and Federal Legislative Updates
Townsend Public Affairs, Inc. (TPA) has prepared this report for the City of Palo Alto to provide a summary of State and Federal efforts, highlight the current status of the legislative process, and identify various pieces of legislation that may be of interest to the City.
State Legislative Update
As of January 3, the State Legislature has reconvened for the second year of the 2023- 24 legislative session following the interim recess. This period is particularly crucial for bills marked as "2-Year Bills" from the previous session, as authors have until the end of the month to push for their progression.
Top-of-mind issues for members encompass housing affordability, climate change initiatives, disaster preparedness, and education reforms. During the initial weeks, over 100 new measures have been introduced, showcasing comprehensive policy proposals through press releases, spot bills, and intent bills acting as placeholders for future amendments.
Prominent legislative trends include the governance of artificial intelligence deployment, Proposition 47 reform and theft prevention, and firearm safety. The influx of new bills will persist until the February 18 deadline for bill introduction, marking the final opportunity for new bill vehicles. Throughout the session, members retain the flexibility to amend or perform a "gut and amend" strategy, transforming existing bills into entirely new policies, provided they adhere to the 72-hour in-print rule.
Anticipations suggest that the Legislature will align with recent trends, introducing close to 2,000 new proposals in the ongoing session.
Priority Legislation for the City of Palo Alto
The following measures provide a snapshot of newly introduced bills that align with City priorities.
Please note this list is not comprehensive nor does it provide an overview of the universe of new bills for the 2024 legislative session, because the majority of new bill introductions will happen
2 closer to the February 18 deadline. Additionally, some of the measures included are in “spot” or “intent” form, meaning they lack substantive language indicating specific provisions for their implementation. TPA will continue to update the Council on new and amended measures as they are introduced.
BILL SUMMARY/STATUS CITY IMPACT POSITION/
RECOMMENDATION
AB 1779
(Irwin)
This bill would no longer limit the
jurisdictional rules for theft crimes to
criminal actions brought by the Attorney
General, which would allow for the cross-
jurisdictional prosecution of theft crimes
that occur in more than one location.
Status: Pending Policy Committee Referral
The City’s legislative guidelines
support additional tools for law
enforcement to prevent and
prosecute theft crimes. This bill
would allow for additional
enforcement tools to hold people
accountable for prolonged,
multi-jurisdictional theft crimes.
Recommendation:
Monitor
AB 1820
(Schiavo)
Authorizes a developer that submits a
preliminary application for a housing
development project to request a
preliminary fee and exaction estimate, to
which a local government has up to 10
business days to comply.
Status: Pending Policy Committee Referral
The City’s legislative guidelines
advocate for the preservation of
local discretion in the
assessment, collection, and
usage of development fees. This
measure could lead to onerous
reporting requirements that
could burden staff and interfere
with local planning activities.
Recommendation:
Monitor SB 925
(Wiener)
States the intent of the Legislature to enact
subsequent legislation to authorize the
Metropolitan Transportation Commission
(MTC) to propose a revenue measure to
the voters in its jurisdiction to fund the
operation, expansion, and transformation of
the San Francisco Bay area’s public
transportation system, as well as other
transportation improvements.
Status: Pending Substantive Language and
Policy Committee Referral
The City and residents are
serviced by the MTC public
transit network. Anew revenue
measure to fund this
transportation network could
impact City residents and the
quality of public transit options; it
could also have financial
implications for all Bay Area
residents. .
Recommendation:
Monitor
SB 926
(Wahab)
Requires the State Transportation Agency
to develop a plan to consolidate all transit
agencies that are located within the
geographic jurisdiction of the Metropolitan
Transportation Commission.
Status: Pending Substantive Language and
Policy Committee Referral
The City and residents are
serviced by the MTC public
transit network; the
consolidation of all transit
agencies would impact City
residents and could potentially
change the quality of public
transit options.
Recommendation:
Monitor
State Budget Update
On Wednesday, January 10, Governor Newsom adhered to constitutional deadlines by unveiling his preliminary 2024 -25 State Budget proposal, revealing a projected budget shortfall of approximately $37.9 billion. Governor Newsom attributed this deficit to two primary factors: a substantial stock market decline in 2022 impacting revenues and an unprecedented delay in critical income tax collections.
3 Notably, the Governor's shortfall estimate contrasts significantly with the Legislative Analyst’s Office (LAO) projection of a $68 billion deficit in December. The LAO, responsible for an independent assessment of California's budget, often diverges from the Department of Finance in projections, with the $30 billion difference hinging on assumptions about revenues and expenditures.
To address the anticipated deficit, Governor Newsom's budget proposal employs several strategies. These include drawing $13.1 billion from state reserve accounts and employing deferrals, borrowing, clawbacks, and fund shifts to cover the remaining $24.8 billion gap. Across various accounts, the proposed budget maintains stability in funding allocations or im plements incremental reductions without introducing new funding. At this time, there have been no proposed reductions to programs Palo Alto is participating in.
While the budget proposal outlines spending reductions and deferrals, it is crucial to recognize that the budget situation will evolve over the next few months before enactment. The Governor's proposal will undergo updates in May, reflecting changes in tax returns, inflationary pressures, and federal monetary policy, potentially leading to additional spending cuts or the restoration of spending programs.
Looking ahead, late January sees the initiation of the Legislature’s budget subcommittees hearings, tasked with reviewing and recommending changes to the proposed budget. Following these hearings and negotiations between the Governor and the Legislature, a revised budget must be presented by May 14, aligned with updated revenue estimates. The Legislature's deadline to pass a balanced budget is June 15, and the Governor must approve the final 2024- 25 spending plan before the new budget year commences on July 1.
Despite the predicted deficit, TPA advocates are working with City staff to identify priority projects to present the City’s legislative delegation, should district request funding opportunities arise.
FEDERAL UPDATES
Congressionally Directed Spending Submittal
The City/TPA team worked in partnership to draft, fine tune, and submit a congressionally directed spending request for infrastructure funding to help redevelop the Buena Vista Mobile Home Park.
The Park, a locally significant affordable housing resource, is in desperate need of sustainable redevelopment, including 100% electrification. An award would assist the predominantly Latinx and very low-income residents who call it home. This application was in partnership with the Santa Clara County Housing Authority.
Congresswoman Eshoo put forward the project in the amount of $850,000. The request was included in the Transportation, Housing and Urban Development (THUD) appropriations bill, which is pending approval via the passage of the comprehensive federal appropriations package.
TPA advocates are in the process of meeting with City staff to identify funding priorities for the upcoming FY 2025 congressional spending requests process.
Federal Appropriations Updates
During the week of January 8, congressional leaders announced they reached an agreement on top-line funding levels for Fiscal Year 2024 appropriations, which projected optimism that 4 Congress could fully fund the government for an entire fiscal year. However, Capitol Hill sources have indicated that Congress is likely to consider and vote on another continuing resolution (CR), which will extend current funding levels until March 1 and March 8. This will allow negotiators more time to finish and vote on appropriations bills, which in turn will impact the final date for the passage of fiscal year 2024 congressional spending requests into law.
The agreement set overall spending at $1.6 trillion, with $886 billion for defense, and the remaining $776 billion for all other discretionary government agencies and programs. To achieve the agreement, Senate Majority Leader Chuck Schumer compromised by amending previous agreements made through the Fiscal Responsibility Act negotiations to raise the debt ceiling in May 2023. Speaker Johnson published a letter on January 7 applauding that he secured “hard- fought concessions” to secure votes for passage. The concessions cut $16 billion in IRS and COVID relief funds. These cuts were scheduled to be made in next year’s spending package but were expedited into FY24 under the agreement. This still is not enough for House Freedom Caucus members to release pressure on Speaker Johnson.
The focus of Congress has now shifted to passing a short-term clean resolution into early March to ensure the government does not shutdown. Majority Leader Schumer filed for a cloture vote on Thursday to begin the process of extension. Four of the bills are set to expire on January 19, with the remaining eight expiring on February 2. If the Schumer-Johnson agreement holds, leadership will need to finalize the twelve annual appropriations bills utilizing the top line spending amount.