AEP Legislative Update 2021 Session Recap Sept 2021

Recall Election

First and foremost, this session was unlike any in the last 20 years because we had the second ever gubernatorial recall election.  Driven largely by his COVID-19 restrictions, a fateful dinner with a lobbyist, and a court ruling that gave recall proponents several extra months to gather signatures, enough Californians signed a petition to recall Governor Newsom.  However, as we learned just minutes after the polls closed on September 14th, not nearly enough people joined their cause.  Following concerning poll results in early August, Governor Newsom’s campaign and Democrats in California and DC rallied in a big way to defeat the recall attempt.  As of this writing, the NO campaign is winning by a 63-37% margin.  While more votes are left to be counted and the official results will not be certified until October, the spread is so wide that the campaigns and all news outlets declared the results almost immediately.

Conservative talk show host Larry Elder continues to lead the group of replacement candidates by a very wide margin, with 47% of the vote compared to second place Democratic YouTube personality Kevin Paffrath with less than 10%.  Larry Elder conceded the race on election night and said that his supporters should “stay tuned” for his next steps in politics.  With the recall in the rearview mirror, Governor Newsom can now turn to the hundreds of bills awaiting his signature or veto … and of course his reelection in 2022.

Also, the recall was not the only election this month.  Now Assemblymember Mia Bonta was sworn into the Assembly on September 7 to fill the AD 18 seat in Oakland left open when her husband, Rob Bonta, was appointed to be the new Attorney General.

Legislative Session

The 2021 Legislative Session was in many ways a continuation of the 2020 session, with COVID-19 being the most important item on the agenda and shaping much of the activity.  While bill hearings and floor session were held in person, most of the public participation was remote and lobbying meetings were almost exclusively remote as well.  Both the Senate and the Assembly agreed early in the year to limit to 12 the number of bills each legislator could carry.  While this was far more bills than moved last year, it’s still below the usual 20-25 bills per legislator per year.

Perhaps the biggest difference between 2020 and 2021 was that the state budget went from a $54 billion deficit to a $76 billion surplus.  The anticipated negative impact to state coffers did not materialize as high-income earners continued to do well and pay large amount of state income taxes, combined with the success of the stock market and many large CA companies.  When combined with support from the Federal Government, California had nearly $100 billion in extra money to spend.  Nearly every section of the state budget received extra one-time money, with education, health care, homelessness and housing, social services and climate change being the primary buckets receiving extra funding.

This year’s budget cycle was also unique in that it carried into September.  While it is common for some budget bills and trailer bills (policy bills that “implement” the state budget) to be completed after the Constitutional budget deadline on June 15, it is rare that tens of billions of dollars be left to be allocated and dozens of potential trailer bills be up for discussion at the end of session.  In the end, the final budget bills included the following changes, among many other things: (1) accelerated almost $1 billion in wildfire funding and extended a $200 million per year allocation from GGRF to wildfire prevention efforts, (2) dedicated almost $1 billion to water resilience as the state faces a worsening drought, (3) dedicated approximately $800 million to climate resilience, agriculture and waste circularity, (4) created CEQA exemptions for projects that conserve, restore, protect, or enhance, and assist in the recovery of California native fish and wildlife, as well as the Klamath River Dam Removal Project, (5) extended fuel cell NEM, (6) provided $25 million to OPR for regional climate adaptation planning and projects, and (7) dedicated $600 million to create the Community Economic Resilience Fund (CERF) aimed at fostering equitable economic recovery from COVID-19.  However, major budget proposals to fund clean energy and transit projects, including High Speed Rail, did not come together by the deadline, meaning that billions of dollars of earmarked funding for those items will need to be renegotiated next year.

On the policy front, several major issues that were left over from last year made it to the Governor in 2021.  Housing bills were the highest profile of these.  With several major housing bills failing in the Legislature last year due to time management and running out of time before the midnight deadline, the pressure was increased to pass bills this year.  To avoid a repeat, the Legislature passed the Senate Housing Package bills a full week ahead of the deadline.  In that package were SB 9 (Atkins) to allow duplexes and lot splits on most single family properties, SB 10 (Wiener) to give local governments a CEQA exemption to zone land for up to 10 units/parcel of housing, SB 290 (Skinner) to make changes to the Density Bonus Law and promote student housing for low income students, and SB 477 (Wiener) to collect better data from local governments about housing costs and applications.  Related bills also passed, including SB 263 (Rubio) to require implicit bias training for real estate agents.  Not all of the housing package bills passed however.  SB 6 (Caballero), which would have allowed housing developments to be built on land zoned for office and commercial uses, failed to make it out of the Assembly.

In the final weeks of session, AB 455 (Wicks) and AB 1102 (Low) were floated as measures to require vaccinations at workplaces or at the very least clarify the law to explicitly allow employers to require vaccinations.  Both of those measures were shelved in the final weeks.  Similarly, a proposal to extend the existing COVID-19 paid sick leave, which expires on September 30, failed to make it into legislation as it was paired with negotiations about the vaccine mandate bills.  SB 674 (Durazo), which would have placed new labor requirements for procurement of electric buses and other transit vehicles, was shelved just two days before the end of session.  A related bill, AB 794 (Carrillo), which would have placed numerous employment requirements on the state’s clean vehicle incentive programs, only passed the legislature after all provisions regarding light duty vehicles were removed.

Regarding technology and government, two bills passed that temporarily allow government agencies to continue conducting public meetings remotely via video conference.  AB 339 (Lee) requires local governments to continue allowing the public to participate remotely and AB 361 (Rivas) allows governments to avoid certain Brown Act rules during a state of emergency like the current COVID-19 state of emergency.  Both bills have sunset provisions and will be revisited next year.  Finally, AB 13 (Chau), which sought to study and implement guidelines related to automated decision making, was held in Senate Appropriations.  As it was a handful of bills tagged “2-year”, we will see it again in 2022.

While the budget made major investments in infrastructure and programs to address climate change, few major policy bills related to climate change passed this year.  The most contentious bill, AB 1395 (Muratsuchi), would have codified the state’s 2045 carbon reduction goals that are currently established only by Executive Order and created a framework for CARB to begin exploring the use of carbon sequestration technologies like Direct Air Capture.  The bill failed mightily on the Senate Floor however, facing opposition from the oil industry, labor unions and environmental justice groups.  A bill to begin examining how clean hydrogen technologies can help meet our climate goals, SB 18 (Skinner), also failed after being held by the Asm. Appropriations Committee.  Some bills did pass, however: SB 343 (Allen) will prohibit the use of the ‘chasing arrows’ symbol on items unless they are actually recycled in the state; AB 525 (Chiu), which directs the CEC to study the potential of and identify suitable locations for offshore wind energy development, passed the legislature; and SB 1 (Atkins), which directs the Coastal Commission and local entities to begin planning for and mitigating the risks of sea level rise, as well as create a program to provide funding for such activities, also passed.

With several significant bills and budget deals failing to cross the finish line, we will certainly see many bills return next year.  We will also see many new introductions to build on bills passed this year.  One big item to watch next year will be the state of the state budget.  Will we see solid surpluses like 2021 or budget cuts?  And lest we forget, 2022 will be a gubernatorial election with all statewide seats up for election and freshly drawn district maps that could pit sitting elected officials against one another or open up new seats.