California Legislature passes key bill, ensures state budget stays intact

SACRAMENTO, Calif. (CN) — The Golden State’s budget hinged on the Monday passage of a housing-reform trailer bill, getting the votes it needed in the hours before a looming deadline.

Governor Gavin Newsom and many Democratic colleagues in the Legislature lauded his Friday signature on the $321.1 billion fiscal year 2025-26 budget. Some Democrats grumbled over significant cuts, pointing to Medi-Cal cutbacks to noncitizen immigrants. Republicans slammed the budget for providing any dollars to those immigrants, adding that funding for Proposition 36 — the November ballot measure that increased penalties for certain drug and theft offenses — should have been boosted.

Praise and denunciations aside, the budget contained a wrinkle: A budget trailer bill that reforms the California Environmental Quality Act, called CEQA, had to pass the Legislature on Monday to secure the budget’s passage.

That legislation — Senate Bill 131 — passed 33 to 1, with Republican state Senator Roger Niello, vice chair of the Senate Budget and Fiscal Review Committee, opposing. Another trailer bill that changed CEQA to exempt infill housing also passed.

Newsom signed the bills shortly after the Legislature passed them. The governor must sign the budget by June 30 each year.

“We have too much demand chasing too little supply,” Newsom said of the state’s housing stock. “That’s Econ 101.”

Reforming the environmental law that has a massive effect on construction was a high priority of Newsom’s. The trailer bills signed Monday provide several exemptions to the law. Those include exemptions for any rezoning that implements an approved housing element, with some exceptions for: new agricultural employee housing projects; a federally qualified health center or rural health clinic; and advanced manufacturing facilities, among many others.

“It provides targeted reforms that make CEQA better,” said state Senator Scott Wiener, a San Francisco Democrat and chair of the budget committee.

The exemption for those manufacturing facilities drew much opposition, both from the public and lawmakers. Assemblymember Al Muratsuchi, a Torrance Democrat, said over 100 environmental organizations opposed the bill. He called it the worst anti-environment bill in recent memory.

Muratsuchi expressed hope the state Senate and Newsom would work on new language for the bill to correct what he saw as an issue.

Many Democrats argued the bill made targeted reforms to CEQA, and provided $500 million to the state Homeless Housing, Assistance and Prevention grant program.

Assemblymember Rick Chavez Zbur, a West Hollywood Democrat, said he shared the concerns of environmental groups. However, he’d vote for the bill because of its link to the budget’s passage.

Others shared that critique.

Some Republicans slammed the link between the bill’s Monday passage and keeping the budget intact. Niello, a Fair Oaks Republican, called it unprecedented for a governor to make such dictates to a coequal branch of government.

“For that reason alone, I think that this bill deserves a ‘no’ vote,” he added.

State Senator Steve Padilla, a San Diego Democrat, called it undemocratic and inappropriate to undertake significant policy changes in a trailer bill.

Such bills move along a different legislative pathway than is typical, leading critics to say they’re a method of avoiding public scrutiny.

“We owe them a better process than this,” Padilla said.

Arguing in favor of the bill moments before its passage, Wiener said CEQA affects everyone, calling it one of the state’s pillar laws. That’s why debate over it reaches intense levels.

“SB 131 cuts down on unnecessary process — often having nothing to do with the environment — that makes it harder and more expensive to build housing, advanced manufacturing child care centers, food banks, broadband, health centers, water systems and so much more,” Wiener posted on X, formerly Twitter, after the vote.