The start of the 2025 legislative year has been marked by deep uncertainty, as wildfires across Los Angeles devastated the region and the California legislature and Governor Newsom prepare for a second administration under President Trump. These developments have already had a large impact both on the state budget and on legislation introduced so far this cycle. We can expect that both of these factors will influence the California state budget and legislation throughout 2025 and beyond.
The key focus for the Governor and Legislature has been on wildfire response. Following the devastation of the Los Angeles wildfires, the Legislature passed several bills aimed at providing $2.5 billion in funding to expedite response and recovery efforts. The special session legislation also streamlined rebuilding efforts, with a focus on helping rebuild damaged schools.
In January, Governor Newsom issued an executive order to streamline the rebuilding of homes and businesses destroyed—suspending permitting and review requirements under the California Environmental Quality Act (CEQA) and the California Coastal Act. The Governor also issued an executive order reiterating that permitting requirements under the California Coastal Act are suspended for rebuilding efforts and directing the Coastal Commission not to issue guidance or take any action that interferes with or conflicts with the Governor’s executive orders.
In February, the Governor issued an executive order directing the State Board of Forestry to adopt regulations known as Zone 0, requiring an ember-resistant zone within five feet of structures located in the highest fire severity zones in the state. He also required that CalFire update its Fire Hazard Severity Zones for Local Responsibility Area maps to identify where new developments must adhere to the new standards.
Additionally, the state legislature has introduced a number of bills in direct response to the wildfires. From bills focused on limiting price gouging and streamlining the reconstruction of homes to those providing or extending CEQA exemptions for prescribed fires, thinning, or fuel reduction projects, members are focused on taking action.
On January 10, the 2025-2026 budget was unveiled. This begins a multi-month process between the Governor and the Legislature to determine the full scope of the state budget. Higher-than-expected revenues meant that there was no projected deficit, and in fact, the Governor projected a modest surplus. The budget proposal totaled $322.2 billion overall, the second-largest budget ever proposed. This includes $228.9 billion in general fund spending and $16.9 billion in total reserves.
While the Legislative Analyst’s Office recognized that the budget was roughly balanced, its future revenue projections were more uncertain, and the LAO anticipates reductions in spending or increases in taxes will be necessary in future years. As the budget is based on revenues from cash receipts, the stock market, and other sources, the total amount is subject to change as official tax receipts are paid between now and April (though the filing deadline was delayed for those impacted by the fires).
The Governor unveiled the first tranche of spending following the passage of Proposition 4, known as the Climate Bond. Over the course of several years, the bond will provide $10 billion toward water, climate, and wildfire resilience. The 2025 budget proposed $2.7 billion in spending, including $325 million for wildfire and forest resilience and $275 million for clean air and energy.
The Legislature has begun holding budget hearings, and we can expect to see changes in the Governor’s May Revision. From there, the Legislature is constitutionally required to pass a budget by June 15. Additional details will come in the form of budget trailer bills, which can pass until the end of the session on September 12.
On the legislative front, the new session began on January 6. On the Assembly side, Speaker Rivas named new committee membership, including a new Chair of the Assembly Housing Committee, Assemblymember Haney of San Francisco. Assemblymember Isaac Bryan continues to lead Assembly Natural Resources, and Assemblymember Buffy Wicks continues her work as the Chair of the Select Committee on Permitting Reform.
Senate Pro Tem McGuire continues in his role, though he will term out in 2026. On the Senate side, Senator Blakespear now leads the Senate Environmental Quality Committee, and Senator Wahab is the new Chair of Senate Housing. AEP looks forward to meeting with these new Chairs during our annual Lobby Day in March.
A new year brings new bill introductions. Below are several bills to note from January. The deadline to introduce bills is February 21, and we will see over 2,000 bills in print by then. Introductions thus far have been slow, as the Governor and Legislature focus their efforts on responding to the devastating wildfires in Los Angeles.