2026 Legislative Year in Review

By Jason Rhine, senior director of legislative affairs

The 2026 legislative session began business as usual, but as Gov. Gavin Newsom's final year unfolded, lawmakers started challenging his priorities and advancing their own. They pushed back against proposals to cut funding for homelessness, change wildfire liability rules, and redirect local revenues to the state's high-speed rail project.

Through all these twists and turns, the League of California Cities was there, working proactively to protect local authority, secure critical funding, and advance policies that support California's cities. Despite state budget constraints, Cal Cities helped secure funding for housing, homelessness, and environmental programs, as well as the implementation of Proposition 36.

By the end of the session, lawmakers had introduced over 1,800 bills and sent roughly 1,160 to the Governor. The Governor signed seven of Cal Cities' sponsored bills, along with several bills that will help cities. In the end, he vetoed just 120 measures, his lowest veto rate in six years.

Budget wins in a budget shortfall

The state budget included some big wins for cities, including $900 million for the Homeless Housing, Assistance and Prevention (HHAP) grant program - $400 million more than the Governor proposed in his May Revision. Cal Cities also helped secure $500 million for the Low-Income Housing Tax Credit program and $200 million for the Multifamily Housing Program. Both programs help finance the construction, rehabilitation, and preservation of affordable housing.

On the climate front, the Legislature approved a second-year allocation of the 2024 climate bond, Proposition 4. The funding supports a range of city priorities, including water supply, wildfire prevention, coastal resilience, extreme heat mitigation, and microgrids. Lawmakers also approved an additional $450 million from the Greenhouse Gas Reduction Fund to support, among other things, city efforts to spur the construction of affordable housing and sustainable communities and local actions to improve wildfire resiliency. However, new changes to the state's Cap-and-Invest framework increased incentives for manufacturers that pledge to invest in decarbonization at the expense of future funding for key climate programs.

One budgetary area that remained challenging is funding to implement Proposition 36, a voter-approved retail theft and fentanyl reduction measure. The final budget deal included $50 million for behavioral health services - well below Cal Cities' request for $400 million to support probation and other pretrial services.

Local revenues protected

As cities navigated increased economic uncertainty, protecting local revenues became a major theme of Cal Cities' advocacy. That's why Cal Cities led a robust opposition campaign against AB 1383 (McKinnor), which would have expanded pension benefits and increased costs for cities already struggling to fund essential services. Fortunately, the Governor shared those concerns and vetoed the bill.

The measure would have rolled back key provisions of the Public Employees' Pension Reform Act (PEPRA)by allowing public safety employees to retire earlier with full benefits and their unions to bargain for more generous pension formulas. Some provisions, including an automatic increase to the pensionable compensation cap, would have applied to all employees covered by PEPRA.

Of course, the Governor and Cal Cities were not always on the same side. Cal Cities blocked a late-session proposal by the Governor that would have redirected up to $300 million annually from road maintenance revenues to finance a sustainable aviation fuel tax credit. Cal Cities raised concerns about using funding intended for local infrastructure to subsidize fuel production.

Cal Cities also halted an attempt by the California High-Speed Rail Authority to redirect local tax revenues to finance the state's high-speed rail project before it was even introduced. In its advocacy, Cal Cities raised concerns about local fiscal autonomy, constitutional protections for local revenues, and the precedent of allowing a state entity to redirect locally generated tax dollars without local approval.

Cal Cities secures changes to new reporting requirements

Over the years, lawmakers have repeatedly introduced legislation seeking to increase local government responsibility for addressing homelessness, often without providing corresponding funding. This year, SB 866 (Blakespear) proposed extensive new homelessness-related reporting requirements through cities' housing elements, even though most cities do not receive direct allocations of state homelessness funding.

Following strong opposition from cities, the proposal was significantly amended. The revised measure limits reporting to data within a jurisdiction's control and shifts the requirements from the housing element to the annual progress report. These changes will substantially reduce the potential administrative burden and cost to cities.

Cities gain additional time for housing element updates - and more funding for affordable housing

For the second time, Cal Cities partnered with Asm. Diane Papan to sponsor AB 2296. The bill - passed with bipartisan support and signed into law - allows cities to begin their housing element updates six months earlier, giving them additional time to obtain technical assistance from the California Department of Housing and Community Development and meet statutory deadlines.

Cal Cities also worked with lawmakers and other stakeholders to pass SB 417 (Limón), an $11.2 billion housing bond measure that appeared on the November ballot. The bond will fund several proven housing programs that cities rely on, including the Infill Infrastructure Grant Program and the Multifamily Housing Program.

Wildfire liability compromise falls apart, but other disaster measures make it through

The legislative session ended with a dramatic breakdown in negotiations over wildfire liability when Assembly leadership halted a high-profile compromise bill on the final day of the session. Notably, the proposal did not include provisions sought by the Governor that would limit public agencies' ability to recover costs from utility-caused wildfires - thanks to the Cal-Cities-led advocacy of over 200 cities, and our work alongside counties, local elected officials, and public sector organizations.

Several other disaster measures that Cal Cities supported - most introduced in response to the devastating 2025 Palisades and Eaton fires - did become law. AB 1642 (Harabedian) establishes science-based standards for wildfire cleanup and reoccupancy at sites contaminated by lead, asbestos, and other hazardous chemicals. SB 1370 (Stern) streamlines environmental permitting and review for wildfire vegetation management projects. AB 2513 (Petrie-Norris) supports local assistance grants for vegetation management by expanding an existing state program.

Fiscal relief provided

Cal Cities secured critical fiscal relief for cities in two key areas this year. SB 1187 (Durazo), which Newsom signed into law, removed some new language access requirements for certain public meetings, including agenda translation. The changes preserve local agencies' ability to voluntarily provide additional language access services while addressing implementation challenges and costs.

Cities can also now recover the costs of repairing damage caused by waste-hauling vehicles. That long-standing authority was disrupted by a recent court decision. Sponsored by Cal Cities, SB 922 (Laird) restores and clarifies that authority.

Lawmakers make limited progress on public agency liability reform

For two years, a group of lawmakers in both houses worked to address the rising costs of lawsuits involving childhood sexual assault claims, along with broader public entity liability concerns. SB 577 (Laird) emerged from those discussions late in the session. While Cal Cities appreciates the Legislature's efforts to address a complex and sensitive issue, the final measure fell short of the meaningful reforms needed to address escalating costs for public agencies - a sentiment shared by the Governor in his bill signing message.

Public safety remains a top priority

Cal Cities successfully advocated for several policies that address crime, protect public infrastructure, and help cities respond to emerging public safety challenges. This includes AB 1941 (Gonzalez, M), a co-sponsored measure that increases penalties for organized metal theft. Another sponsored measure, SB 758 (Umberg), addresses the illegal and dangerous use of nitrous oxide. The new law prohibits retailers with a tobacco license from selling nitrous oxide, with an exception for grocery stores.

For many cities throughout the state, perhaps the most visible public safety challenge was dangerous e-bike behavior. Working with city officials, Cal Cities adopted an e-bike policy that allowed it to advocate on a range of measures that balance safety, active transportation, and local flexibility: SB 1167 (Blakespear), AB 2346 (Wilson), AB 1569 (Davies), and AB 1614 (Dixon). Together, these measures strengthen labeling and advertising requirements, update vehicle classifications, improve consumer disclosures, and help ensure that higher-powered vehicles are appropriately regulated.

State audit prompts stronger oversight of sober living homes

Since renewing its focus on recovery housing oversight in 2023, Cal Cities has sponsored nine bills aimed at establishing reasonable state oversight. Gov. Newsom has signed five of those measures into law. This year, Cal Cities sponsored SB 329 (Blakespear) in response to a state audit that found deficiencies in the state's investigation of complaints against residential alcohol and drug treatment facilities. The new law requires new, tighter timelines for completing investigations, as well as annual public reporting on investigations and missed deadlines.

Advocating with an eye to the future

A new Governor will bring both new opportunities and challenges for cities. The Governor-elect will have different priorities, new staff, and potentially a different approach to working with the Legislature and stakeholders than his predecessor. Notably, unlike Gavin Newsom, Xavier Becerra does not have a background in local government.

For Cal Cities, this year was an opportunity to build relationships with the incoming administration, communicate the priorities and challenges facing cities, and advance shared goals. The Legislature will also welcome 22 new members, creating similar opportunities.

Looking ahead, many of this year's biggest debates, including wildlife liability and pension law changes, will likely return next year. But regardless of what happens, Cal Cities will enter the new year like it has any other: committed to protecting local authority, securing resources for essential services, and ensuring that state policies recognize the important role cities play in building safe, healthy, and thriving communities.