AEP Legislative Update June-July 2021

Good afternoon AEP Members,

Long awaited, the state administration removed the color-coded tiers and the indoor mask mandate that had been in place since the start of the COVID-19 pandemic.  However, as is happening across the country, vaccination rates have not been as high as anticipated and the increased indoor activity has led to rising cases.  Newsom attempted to encourage vaccinations through his “Vax for the Win” campaign which included giving Californian’s a $50 gift card for getting vaccinated an entering those who are vaccinated into a lottery with up to $1.5 million grand prizes, $50,000 prizes, vacations, theme park tickets, and more.  Despite the efforts, millions of adults in the state remain vulnerable as just 52% of the populations is fully vaccinated.  With restrictions lifted and new variants in play, the state has seen test positivity rates go from .7% to 4.5% in just a month.  In response, several counties have begun requiring masks indoors again, and the state has been cautious about school reopenings and has maintained mask requirements for some workers.  However, given that the Governor is facing a recall election in a matter of weeks, it is unlikely that a return to tiers or statewide mask mandate will occur in the near term.

The Secretary of State set Governor Newsom’s recall election for September 14, 2021.  The state has continued the all-vote-by-mail process that was enacted during the pandemic last year, so all Californian’s will receive their ballots a month in advance and have ample time to submit.  The two-part ballot will first ask whether you would like the Governor to be recalled and the second question will ask who, if that recall gets a majority of support, should replace the Governor.  While polling suggests Newsom should survive the recall, over 40 challengers have been certified to run against him, including several prominent Republicans. 

While June 15 marked the end of pandemic restrictions on indoor activities, it was also the Constitutional deadline for the Legislature to pass a state budget or forgo their pay.  Like last year, the Legislature opted to pass a placeholder budget by the deadline, leaving the real budget to be crafted over the coming weeks and months.  About two weeks later, the Governor and Legislative Leaders announced that they had come to an agreement on how to spend a record $262.6 billion.  Spending on infrastructure and climate change measures were among the major investment categories.  The deal allocates most of the state’s available budget but does leave some major items to be considered, including much of the state’s Greenhouse Gas Reduction Fund, which is funded by the state’s Cap & Trade auctions.

Only two CEQA-related items have passed in the many Budget Trailer Bills that implement the state budget.  The first extends the Secretary of Transportation's NEPA authorization for another 4 years, until 2025.  A second is a new CEQA exemption for a project consisting of linear broadband deployment in an existing right-of-way that meets certain requirements.  Below are additional budget items of interest:

• Transportation: Provides billions of dollars in new spending for transportation infrastructure, including $3 billion in funding for transportation infrastructure across the state, including for active transportation projects and projects identified for completion prior to 2028, $2 billion for streets, roads, and highway projects, and $400 million for a State and Local Transportation Adaptation program. Much of the transportation investments will require legislation to allocate the funds later this year.
• Housing/Homelessness: Significantly, the budget proposes homelessness spending of $4.8 billion over the next two years, including almost $3 billion for Project Homekey. Additionally, the budget provides $1.75 billion to alleviate the backlog in affordable housing construction, $300 million for the preservation of existing affordable housing, $130 million for the development, maintenance, and preservation of farmworker housing, and $600 million for planning and implementation grants to help local governments plan for and meet their goals under their Sustainable Community Strategies.  Also provides $4 billion over the next two years for various anti-poverty and homeless support programs.
• Wildfires: The deal reached provides an additional $333 million this year, borrows $500 million from next year's general fund to advance projects, and declared another $125 million will be given from the GGRF later this year. Much of the details remain to be ironed out in a trailer bill in August, but this is funding in addition to the early spending made in April of over $400 million.
• Electric Vehicles: Both zero emission vehicles and infrastructure received significant investments. $525 million was given to the Clean Vehicle Rebate Project (CVRP) vehicle incentive program and hundreds of millions were given to other medium and heavy duty programs.  The Clean Cars 4 All program focused on equity incentives for low income residents also received significant funding.  In addition, over $750 million was dedicated to ZEV infrastructure, with the bulk of that going to EV charging infrastructure. 
• Clean Energy: Taking advantage of the robust surplus this year, the budget also includes $400 million for green hydrogen, long duration storage, and industrial energy efficiency, with details of the funding to be determined in a trailer bill in August.

Along with the Budget, the Governor and Legislature agreed to extend the state's eviction moratorium for several more months, through September.  As part of the deal, the state will also adjust it's rental payment assistance program, which to date has been largely unused.  Now landlords can recover 100% of owed rent instead of 80%, which was discouraging many landlords from participating in the program.  The state hopes this deal will allow more of the $5 billion available for tenants to flow to people and allow the eviction moratorium to expire in September without significant consequences.

In the legislature, several major housing bills continue to move through the process.  SB 9 (Atkins), which would allow ministerially urban parcels to be split in two and allow duplexes to be built on any parcel zoned for single family, passed from policy committees and is now in Assembly Appropriations Committee.  SB 10 (Wiener), which would provide a CEQA exemption for local governments to upzone urban and transit rich areas to up to 10 units/parcel, also passed from policy committees and is now in Assembly Appropriations.  SB 6 (Caballero) however, which would have allowed certain housing projects to be built on any land zoned for commercial office or retail, failed passage in the Assembly.

Last, but certainly not least, the Legislature passed and the Governor signed AB 819 (Levine) which will require to submit all draft EIRs, proposed negative declarations, or proposed MNDs to the State Clearinghouse.  The bill will take effect on January 1, 2022.