REPORT TO COUNCIL
SUBJECT
Title
Informational Report on 2022 Q1 & Q2 Legislative Updates
Report
COUNCIL PILLAR
Enhance Community Engagement and Transparency
BACKGROUND
On October 9, 2018, the City Council adopted Resolution No. 18-8611 to approve a Legislative Advocacy Position (LAP) Policy (Attachment 1). The LAP Policy establishes clear guidelines for advancing City goals and positions through legislative review and advocacy at the regional, state, and federal levels of government. The policy also provides guidance for City officials who serve on regional, state, and national boards, committees, and commissions when they are asked to review public policy matters and issues.
On April 20, 2022, the City Council adopted ten (10) LAPs for 2022 on the following key issues:
• Broadband, Cable Services, and Wireless Facilities
• COVID-19 Legislation
• Energy Legislation, Regulations and Issues
• Housing
• Human Resources and Public Sector Employment
• Public Safety
• Regional Issues and Collaboration
• Sustainability and Environmental Protection
• Transportation Issues
• Water Supply and Conservation
In addition to requiring the City Council to adopt or update LAPs annually to identify specific legislative priorities, the LAP Policy also requires staff to provide quarterly legislative updates on public policy items of interest to the Council and provide Council copies of letters or summary of actions on legislative items.
The City has an existing agreement with Townsend Public Affairs for state and federal legislative advocacy services, which includes tracking and monitoring legislation and advocating the City’s position on various legislation at the State and federal levels of government. This update provides information on such legislation.
DISCUSSION
Since the start of the calendar year, staff and Townsend Public Affairs have been tracking and monitoring various legislative items. The 2022 Q1 & Q2 legislative tracking matrix summarizes State priority legislation (Attachment 2). The bills are grouped by their aligned LAP, guiding principle for legislative advocacy or approved City policy (e.g., City Council Goals and Priorities), and a summary has been provided for each bill.
The LAP Policy states, “Letters and other communications expressing the City’s position on legislation will customarily bear the signature of the Mayor in accordance with City Charter Section 704.2 - 704.3. If the legislation’s principal impact affects the City’s operation, the communication may be signed by the City Manager.” The City has taken action on some of the issues that are outlined below (e.g. submitted a letter of support, opposition, or oppose unless amended, voted at a Cities Association Legislative Action Committee meeting, etc.). Those actions are documented in the 2022 Q1 & Q2 Legislative Action Summary (Attachment 3).
Below are legislative updates from Townsend Public Affairs:
State Legislature
The spring has been very busy in Sacramento as legislators addressed several regular deadlines, such as the development of the new state budget and moving bills through policy and fiscal committees, as well as several unanticipated developments, such as potential changes to the Assembly Speakership, with Assembly Member Robert Rivas announcing that he had secured enough votes from the Democratic Caucus to replace the Current Speaker, Anthony Rendon. Below is an overview of recent state legislative developments.
The month of May featured two major legislative deadlines that bills needed to pass in order to advance to the second house: the fiscal committee deadline, and the house of origin deadline.
On May 19th, both the Senate and Assembly Appropriations Committees held their “suspense file” hearings, wherein hundreds of bills were held under submission and will not move forward for the remainder of the Legislative Session. The appropriations suspense process was borne out of a desire for fiscal prudence, and essentially serves as a filter for the hundreds of bills introduced each year that are deemed to have a significant fiscal impact on the state’s finite resources. Bills may be held under submission for a number of reasons - their structure may be duplicative to existing budget spending proposals, bill authors may have identified other bills within their portfolio as having a greater priority, or a bill may be deemed politically unfeasible for a number of reasons.
Suspense file hearings are done in rapid speed, with Appropriations Chairs reading the outcomes of hundreds of bills. This year, the Assembly Appropriations Suspense file featured 601 bills, of which 175 were held under submission (29%). The Senate Appropriations Suspense file featured 358 bills, of which 48 bills were held under submission (13%).
Because May’s suspense file hearings mark the first iteration of two such hearings, more bills tend to pass out of their house of origin’s suspense file than the suspense file hearing in the second house. This can be somewhat attributed to political favorability of bills authored by colleagues within the same house.
Following the outcomes of the suspense file hearings, the last week of May featured another major legislative hurdle for bills - the house of origin deadline. The House of Origin deadline marks the last day for any bill introduced in the Senate or Assembly to pass off the floor and into the second house for consideration. Typically, most bills that advance out of the Appropriations Committees and to the Floor receive favorable consideration and this was the case again this year with only a handful of bills failing to pass out of their House of Origin.
With the passing of the House of Origin deadline, the Legislature will have a dual focus for the upcoming month, as they look to finalize the state budget, as well as advance policy bills through the Second House policy committee deadline.
State Budget
On May 13, Governor Newsom released the May Revision of his budget proposal for the 2022-2023 fiscal year. The “May Revise” edition of the budget framework reflects revised revenue and expenditure estimates for both the current and budget years and allows the Administration and the Legislature to reconcile and reconfigure spending plans appropriately.
In total, the updated spending plan includes $300.7 billion in total spending, reflecting a 5% increase from January’s total spending plan of $286 billion. In the spirit of fiscal prudence, Governor Newsom iterated that 99% of new programs included in the May Revise would utilize one-time spending formulas because ongoing programs can be difficult to fund in the long-term.
In what was perhaps the most astonishing revelation from the May Revise presentation, the Governor announced that the state had a $97 billion-dollar projected surplus - up over $50 billion dollars from January’s projected surplus of $45.7 billion. To put this into perspective, it was just 20 years ago that the state’s entire budget hit $100 billion for the first time. Now, the surplus is almost that much, in an over $300 billion spending plan. Of the $97 billion surplus, $49.2 billion is marked for discretionary use.
Despite this massive revenue growth, the Legislative Analyst’s Office (LAO) cautions that the implications of unanticipated revenues for the state's budget are not straightforward, and that the state should anticipate significant spending constraints due to the requirements of the State Appropriations Limit (SAL). Having reached the Proposition 4 (1979) SAL, each additional dollar of revenue must be allocated consistent with SAL requirements, generally making them unavailable to fund baseline expenditures. In addition, the state must allocate its statutorily dedicated percentages of funds toward education, reserve, and debt payments, consistent with provisions pursuant to Propositions 98 (1988) and 2 (2014). The LAO estimates that for every dollar of tax revenue above the SAL, the state faces approximately $1.60 in constitutional funding obligations. This is expected to materialize into major budget issues during the 2025-26 fiscal year, if not met with SAL reform or other resilience-enhancing actions.
Regarding the state’s reserve accounts, the Governor announced the May revise projects a total of $37.1 in total reserves, broken down into the following accounts:
• $23.3 Billion in the Rainy-Day Fund,
• $9.5 billion in the School Stabilization Reserve,
• $3.4 billion in the Operating Reserve; and
• $900 million in the Safety Net Reserve.
While January’s proposed budget framework focused on addressing what Governor Newsom referred to as “California’s five existential threats” which included addressing the COVID-19 crisis and investments in climate resiliency, the rising cost of living, homelessness, and public safety, the May Revise doubled down on the issues of the rising cost of living, infrastructure investments, and climate resiliency.
As global inflation and war in Europe drive up costs across the country, the Governor is proposing an $18.1 billion inflation relief package to get money back into the pockets of Californians and bring down costs for families. The package includes an additional $2.7 billion in rental relief and utility bill assistance, $400 rebates to offset the rising cost of gas, stipends to nursing and hospital staff, family fee waivers for childcare, and more.
In addition to the inflation relief package, another top spending adjustment was made to the Climate resiliency package, which the Governor now touts as comprising $47.1 billion in total spending. The May Revise built upon recent investments and proposed increasing funding for drought mitigation, wildfire and forest protection, and energy storage and capacity.
Noticeably absent from the May Revise were typically massive investments in housing and transportation. During his presentation, Governor Newsom mentioned that “local governments have received unprecedented support in terms of flexible dollars” and that the allocation of future flexible dollars will depend on local governments’ ability to meet accountability metrics - with special attention focused on the Homekey, Encampment Resolution Grants, and CARE Court programs. While his revised Budget proposes $500 million in additional encampment resolution grant dollars and $150 million in new Homekey funds, the Senate’s budget priorities outline an additional $3 billion in HHAP funds over a three-year period. It is likely that negotiations between the Governor, Senate, and Assembly will result in a modification of the Senate’s proposed allocation to HHAP.
With regard to transportation funding, the Governor’s presentation glossed over the topic entirely. However, May Revise budget summary documents reveal that the Governor’s updated plan proposes an additional $500 million for the Active Transportation Program, along with $750 million in incentive grants to transit and rail agencies to provide free transit for Californians for three months. The other major modification to the transportation spending package includes directives for the spending of funds provided via the Federal Infrastructure Investment and Jobs Act (IIJA). Last year, the Governor and the Legislature failed to reach a deal on transportation package funds due to a disagreement on the use of Proposition 1A funds for the high-speed rail project. While the January budget framework accounted for massive investments in high-speed rail, the May Revision notably did not reconfigure these proposed investments. It is likely that negotiations on the transportation spending package are currently happening behind the scenes. Even more, the California Transportation Agency noted it would not be holding a budget briefing for the May Revise because not enough had changed from January’s proposed investments to warrant a new briefing.
Following internal negotiations and informational budget hearings, the Assembly and Senate will release their implementing budget language within their chosen budget vehicles - AB 1624 for the Assembly and SB 840 for the Senate. It is important to note that the budget process will include reconciliation between the Governor’s, Assembly’s, and the Senate’s versions.
Below is a high-level overview of proposed expenditures, organized by issue area:
Inflation Relief Package ($18.1 billion total new investments)
• $11.5 billion: Tax Refunds
• $2.7 billion: Emergency Rental Assistance (Bringing total amount of dispersed rental assistance to $8.1 billion)
• $1.4 Billion: Helping people pay utility bills
o $1.2 billion for electricity
o $200 million for water
• $933 million: Health care worker retention stipends
o $1,500 payments to hospital and nursing home staff
• $750 million: Free Public Transit for three months
• $439 million: 12-month pause on diesel tax
• $304 million: Middle class health care subsidies
• $157 million: Fee waivers for childcare (savings up to $595 per month)
Housing and Homelessness
• $500 million: Adaptive re-use projects: Converting malls and office buildings into housing
• $500 million in Encampment Clean Up Grants
• $500 million: Crisis Response/Interim Housing (i.e., Tiny Homes)
• $125 million: Additional Homekey funds
• $3 million: Transitional housing to youth discharged from CDCR's Division of Juvenile Justice by the Board of Juvenile Hearings in 2022-23
• HHAP funding: No additional funds, however, pursuant to 2021 budget allocations, $1 billion is currently available for 2022-23. The Governor wishes to see tangible “accountability data” revealing effective use of funds to extend HHAP allocations in future budget cycles.
Public Safety
Building off January Investments, the May Revise includes an additional $193 million in Spending for the following programs:
• Fentanyl task force at DOJ
• Combatting cartel fentanyl trafficking
• Victim’s services
• Officer wellness
• Child se trafficking/exploitation
• Missing and murdered Indigenous persons
• Nonprofit security grants
Climate Resiliency:
• Total Commitment: $47.1 billion
o 2021-22 Budget investments: $15.1 billion
o January budget framework: $22.5 billion
o May: Additional $9.5 Billion
Climate Resiliency (Drought: $1.3 billion in new proposed spending):
• Total $7.2 billion
o $5.2 billion: 2021-22
o $750 million: January
o $1.3 billion: May
• $1.3 billion in additional May Revise funds for the following projects:
o $533 million: Drought Relief projects, food assistance for farmworkers
o $530 million: Water recycling, groundwater cleanup, clean water projects
o $280 million: habitat/nature-based solutions to address drought impacts on fish and wildlife, habitat, and water resilience projects
o $187 million: agricultural and water conservation practices
Climate Resiliency (Wildfire and Forest Protection: $233 million in new proposed spending)
• $1.5 billion: 2021-22
• $1.2 billion + $648 million: January
• $233 million: May
• $233 million in additional May Revise funds for the following projects:
o $104 million: Fire crews - CA Conservation Corps and Military
o $83 million: 2022 Fire Season Augmentation
o $37 million: Mission Operations Support
o $9 million: Air Attack Staffing
Climate Resiliency (Energy: $8 billion included in new spending in the May Revise)
• $5.2 billion: Strategic Electricity Reliability Reserve
• $1.2 billion: Energy bill supports (utility arrearages)
• $970 Million: Accelerate renewable energy development - residential solar and storage systems
• $225 million: New Electricity transmission, including from Salton Sea
Transportation:
• $500 million: Active Transportation Program
• $750 million: incentive grants to transit and rail agencies to provide free transit for Californians for three months
• $50 million (annually): To Caltrans to administer and implement the state and local transportation funding provided by the IIJA
• $144 million: Add 626 positions to Caltrans to provide engineering and design support associated with the increased project workload
Jobs/Economy
• $2.1 billion: Grow and Relocate to California
o $1.05 billion: Clean Energy Grants (over a 4-year period)
o $1.02 Billion: Cal Compensates tax credits and grants (over 5-year period)
o $45 million: sales tax exemptions (over 3 years)
• $500 million in small business grants
• $450 in conformity expansion
• $439 million: Diesel sales tax pause
• $75 million: supporting agricultural businesses impacted by drought conditions
On June 13, the Legislature approved a budget bill, SB 154, which puts forth a plan for how the state will expend $300 billion over the next fiscal year. While the passage of this bill meets the Legislature’s constitutional obligation to approve a budget by June 15th, the bill does not represent a comprehensive budget agreement with the Newsom Administration. As such, negotiations over a complete budget package continue and a final budget will be implemented through additional budget trailer bills that are likely to materialize prior to the start of the new fiscal year on July 1.
“Taxpayer Protection and Government Accountability Act” Proponents Announce They will not Move Forward with Measure for November Ballot
In May, the California Business Roundtable (CBRT) announced they will not be submitting signatures in time to get the “Taxpayer Protection and Government Accountability Act” on the November 2022 ballot. Instead, they will look to submit signatures so that the initiative can be place on the ballot in 2024.
The Taxpayer Protection and Government Accountability Act would amend the California Constitution to restrict the ability of the state, local governments, and the electorate to approve or collect taxes, fees, and other revenues. It would require voter approval of all state taxes, would further restrict local fee authority by limiting it to the “minimum amount necessary” to provide government services, and would require voter approval for local measures such as franchise fees. Its provisions would make it easier to challenge local revenue measures by increasing the burden of proof on local agencies while disallowing an agency’s characterization of a measure from being considered in court.
The measure would prohibit city charter amendments that provide for any revenue whatsoever from being submitted to the electorate. It would also prohibit local agencies from placing advisory measures on the same ballot as any general revenue measure and would raise the threshold for voter approval of local revenue measures proposed by initiative to two-thirds. Notably, the threshold to pass this measure is only by majority vote.
To be placed on the November 2024 ballot, the measure must garner no less than 997,139 valid signatures by August 2, 2022. On March 16, 2022, the Secretary of State’s Office reported that the measure gathered 25% of its required signatures, signaling the proponent’s campaign funding stability and momentum. However, with this news, the measure will no longer appear on the ballot for voter consideration.
State Water Board Moves to Increase Water Conservation Efforts
Last month, the State Water Resources Control Board voted unanimously to implement a statewide ban on the watering of non-functional turf in the commercial, industrial, and institutional sectors, as well as regulations requiring local agencies to implement water use restrictions. These new regulations come amid projections that available water supplies may be 20% lower than average due to extreme weather conditions, which includes drought.
The regulation also requires all urban water suppliers to implement conservation actions under level two of their water shortage contingency plans. Level two water shortage contingency plans are meant to address up to a 20% shortage of water supplies. In addition to implementing level two actions, the regulation requires urban water suppliers to fast-track supply and demand assessments to plan for potential extended dry conditions. Level two actions often include limiting outdoor irrigation to certain days or hours, increasing patrolling to identify water waste, and increasing water conservation outreach communications. However, about half of the state’s 436 water suppliers (both urban water retailers and wholesalers) have not yet activated level two, and 36 have not submitted drought plans. Thus, the emergency regulation will require those suppliers who have not yet activated level two requirements to do so once the regulation becomes effective.
The approved regulation will be submitted to the Office of Administrative Law (OAL) for approval.
Legislative Leaders Address Gun Violence, Move Forward with Legislation
Following the devastating school shooting in Uvalde, Texas, Senate Pro Tem Atkins and Assembly Speaker Rendon gathered with Governor Newsom in the Capitol last month to reaffirm their commitment to gun violence prevention and highlight California’s success in reducing firearm deaths while vowing to expedite more than a dozen bills currently in the Legislature. One of the bills on the list is SB 1327 by Senators Hertzberg and Portantino, which employs the same legal mechanism used in a Texas abortion ban to create a private right of action against makers and distributors of certain firearms, in the event those weapons are used illegally. The Governor announced he is working with the authors to add an urgency clause to the measure, which would make its provisions effective immediately. Other bills include AB 1621 by Assembly Member Gipson, which would crack down on ghost guns, AB 2571 by Assembly Member Bauer-Kahan which would restrict marketing of firearms to minors, and AB 1594 by Assembly Member Ting, which would allow the state attorney general and private citizens to sue manufacturers and sellers of firearms for the harm caused by their products.
Priority Legislation
The legislative deadlines to introduce legislation in the new session was February 18th. The Assembly and Senate combined to introduce over two thousand bills for consideration in 2022. Over the coming weeks, the two Houses will hold numerous policy committee hearings to consider these new proposals.
Below are the upcoming relevant dates for the Legislature:
• July 1st - Last day for Second House policy committees to pass bills
• July 2nd to August 1st - Legislative Summer Recess
• August 12th - Last day for Second House fiscal committees to pass bills
• August 31st - Last day to pass bills. Final recess begins upon adjournment
As noted above, the City and Townsend are tracking State priority legislation as documented in Attachment 2.
Federal Legislative Updates
Below is an overview of federal legislative updates that transpired during the month of May.
President Biden Announces New Housing Supply Action Plan
The White House announced actions they are taking with the goal of lowering housing costs. The Housing Supply Action Plan aims to create thousands of affordable housing units in the next three years. The complete announcement from the White House is included in the White House fact sheet below, with details on the actions being taken through executive action and actions being requested of Congress.
Highlights of the action plan include the following:
• The Administration urges local governments to dedicate more of their American Rescue Plan funds to build affordable housing
• Biden officials will reward jurisdictions that have reformed zoning and land-use policies with higher scores when they apply for certain federal grants
• The Administration wants to make it easier to re-use federal properties as housing for the homeless. New regulations will be issued this summer
• HUD, which oversees code for manufactured housing, will try to resolve inconsistencies with local codes by issuing waivers or by updating the code
• By the end of September, the administration will finalize “income averaging” regulations in the Low-Income Housing Tax Credit program to allow developers take the average of the income for some households in the property, as opposed to requiring each household to meet the same threshold
Update on 2022 Water Resources Development Act (WRDA)
Last month, the House Transportation and Infrastructure Committee advanced their 2022 Water Resources Development Act (WRDA) to authorize improvements to the nation’s waterways and investments in flood control and coastal resiliency projects. The biennial legislation is popular with both Democrats and Republicans as most have Corps projects within their states and districts.
Earlier in May, the Senate Environment and Public Works Committee advanced its WRDA legislation unanimously. It is likely the Senate will take up this legislation this summer, according to a staffer familiar with the negotiations.
The House and Senate bills are similar but not identical. Both seek to provide more assistance and resources to tribal communities and underserved community harbors to complete important water projects.
• The House bill does not create an advisory committee to provide advice and recommendations to the Corps on water resources projects, unlike the Senate bill.
• The House bill would direct the Army Corps of Engineers to conduct 72 new feasibility studies to begin assessing projects’ risk and opportunities. It would also direct 8 studies to modify existing projects and authorize construction of 16 pending proposed projects.
• The Senate bill would direct 36 new feasibility studies by the Army Corps of Engineers and authorize or modify 21 projects for construction.
The House will likely take up their bill this summer which will kick off a conference between the House and the Senate. Final passage is likely to occur during the lame duck session between the November election and the end of 2022.
Biden Administration Releases “Internet for All “Initiative
Last month, the Biden-Harris Administration Launched a $45 Billion “Internet for All” Initiative to Bring Affordable, Reliable High-Speed Internet to Everyone in America
The Internet for All initiative will invest $45 billion to provide affordable, reliable, high-speed internet for everyone in America by the end of the decade. The Initiative will be administered and implemented by the U.S. Department of Commerce’s National Telecommunications and Information Administration (NTIA).
The Internet for All programs launched with three Notices of Funding Opportunity:
• Broadband Equity, Access, and Deployment (BEAD) Program ($42.5 billion);
• Enabling Middle Mile Broadband Infrastructure Program ($1 billion); and,
• State Digital Equity Act programs ($1.5 billion).
To participate in the BEAD Program, states and other eligible entities must submit a letter of intent and a planning funds budget, which will unlock $5 million in planning funds and allow states to begin creating their five-year action plan. Each state will have direct support from dedicated NTIA staff through every step of the process. Each participating state is guaranteed a minimum $100 million allocation, with additional funding determinations made based on the forthcoming coverage maps from the Federal Communications Commission. The Enabling Middle Mile Broadband Infrastructure Program will award grants on a technology neutral, competitive basis to eligible entities for the construction, improvement, or acquisition of middle-mile infrastructure. The launch of the State Digital Equity Planning Grant Program kicks off a series of Digital Equity Act steps that will invest $1.5 billion to heighten adoption and use, like digital literacy training, for those who need it most, including communities of color, rural communities, and older Americans.
The opportunities are the first half of programs that will allow for states and local communities to increase access to broadband infrastructure. These first programs offer opportunities for states to propose their plans for BEAD and middle mile programs. Direct opportunities for local communities will be announced later this year.
USDA Seeks to Address Infant Formula Shortage
As part of the Biden Administration’s coordinated drive to end the infant formula shortage, the U.S. Department of Agriculture (USDA) is urging states to take advantage of flexibilities the department is offering in the Special Supplemental Nutrition Program for Women, Infants, and Children, commonly known as WIC, to help families get the safe formula they need. USDA’s Food and Nutrition Service (FNS) has reached out to states and announced a suite of flexibilities available, such as allowing states to broadly offer alternate sizes, forms, and brands of formula and allowing stores to accept exchanges of formula purchased with WIC benefits. USDA continues to work with WIC agencies as they review and implement these flexibilities, in coordination with their vendors and local offices. USDA also asked WIC agencies to encourage families to exchange their recalled formula, issued reminders about options for returns and exchanges of recalled products, and posted several resources on infant formula safety including guidance for parents and caregivers
In the last week of May, President Biden signed H.R. 7791 into law, which aims to ease the shortage for Special Supplemental Nutrition Program for Women, Infants and Children (WIC). Each state normally exclusively contracts with one of the four major baby formula companies to provide for WIC, but this legislation gives low-income parents the opportunity to use their government benefits to purchase more types of formula during emergencies. Senators have also urged Abbott Laboratories to extend WIC rebates across all infant formulas through the rest of the year without unnecessary directives.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The City’s three-year agreement with Townsend Public Affairs for state and federal legislative advocacy services is for an amount not to exceed $252,000. The services outlined in this report are included at no additional cost as part of the consultant’s monthly service fee.
COORDINATION
This report has been coordinated with Townsend Public Affairs and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any report to Council may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Note and file the informational report on 2022 Q2 legislative updates.
Staff
Prepared by: Christine Jung, Assistant to the City Manager
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. Legislative Advocacy Position Policy
2. 2022 Q1 & Q2 Legislative Tracking Matrix
3. 2022 Q1 & Q2 Legislative Action Summary