Midterms cast a pall on coming Capitol session

The 2025 Capitol session was dominated by some particularly contentious political battles, with our Legislature focused on thwarting the Texas Legislature’s pro-GOP redistricting efforts. California lawmakers placed gerrymandered wildly congressional maps before voters, which they approved. The maps will potentially give Democrats five more seats in the 2026 midterms. It wasn’t the Legislature’s (or voters’) finest hour, but lawmakers acted sensibly on some other issues.

Gov. Gavin Newsom signed into law Senate Bill 79, which provided by-right development approvals for mid-rise apartment buildings close to transit lines. This was sensible, as it streamlined regulations to promote high-density housing in areas that are a natural fit for it. Legislators overcame overheated opposition from groups that claimed the bill threatened suburban neighborhoods.

Another highly contentious measure, Assembly Bill 84, was the latest attempt by the state’s teachers’ unions to slow the spread of charter schools via a series of unnecessary “oversight” regulations. Fortunately, that measure failed. Unfortunately, AB 84’s supporters have signaled their interest in reviving it given that a moratorium on new charter schools is expiring on the first.

The housing debate isn’t going away either, of course. Lawmakers will surely introduce more exemptions to the California Environmental Quality Act, which remains an impediment to construction. Home prices remain high and previous CEQA exemptions have yielded disappointing results. We’ve long urged the Legislature to reform CEQA in its entirety, but we doubt lawmakers will change their ways. However, the California Chamber of Commerce is working on a ballot initiative to provide wide-ranging CEQA reforms.

The big housing question, legislatively, is whether new Senate President pro Tempore Monique Limón will be on board. As the Sacramento Bee reported, Limón “raised eyebrows at the end of session due to a peculiar carve-out that seemed to exempt a proposed apartment building in her district from changes” to CEQA. And Democratic San Francisco Sen. Scott Wiener, who has driven the YIMBY (Yes In My Back Yard) agenda, is likely to head to Congress.

Then there’s the elephant in the room: California’s budget deficit is projected at $18 billion. That could nearly double, per the Legislative Analyst’s Office, given inflation and baked-in spending increases. Since blowing a massive budget surplus a few years ago, Newsom and the Legislature have avoided major cuts and have apparently been hoping the national economy will bail them out. The economy is struggling, so we expect the New Year to bring constant debate about budgets.

On a related note, the LAO noted the state’s leading role in Artificial Intelligence is increasing revenues (although not by as much as hoped for). But Democratic lawmakers keep pushing new AI regulations, which could slow the industry. The Trump administration, which is pushing a national model with a lighter touch, might save California from itself.

Given the national issues that will emerge as elections loom, these policy battles will surely take on the expected partisan tilt. Newsom likely will continue to play the foil to Donald Trump as the governor stakes out a potential run for the presidential nomination. Same old, same old — only more so.

It’s likely to be a frustrating year for Californians who are more interested in public policy (housing, immigration, budgets and education) than raw partisan politics. At least Sacramento will be interesting.