Legislative Update

By Brian White, KP Public Affairs, and Larry Camp, Legislative Committee Co-Chair

COVID-19 Takes Huge Toll on State Budget, Bill Packages Dwindle

The 2020 legislative session started with an ambitious agenda for both Governor Newsom and legislative leaders as they introduced more than 2,000 new bills to address several key policy issues such as housing, energy, wildfires, transportation and health care. Before COVID-19 hit, the state's budget was in good shape with healthy economic activity, including a $6 billion surplus and a $16 billion rainy day fund. As a result, Governor Newsom included several new ambitious proposals in his January budget, including an effort to place a $5 billion climate resiliency and wildfire bond for voter consideration on the November ballot. But several ambitious plans came to a grinding halt in mid-March as the State Legislature, state government agencies and all non-essential business activity were essentially put on hold for nearly two months due to the COVID-19 pandemic.

In May, legislators resumed legislative activity but under strict social distancing orders, a shortened legislative calendar and limited public access. These actions forced them to dispense with most of the non-essential issues as they shifted their attention to focus mainly on COVID-19 response, the state budget, wildfire issues, PG&E's bankruptcy and social issues related to recent activities about police use of force. On June 29, the Senate and Assembly concluded their house of origin deadlines and then adjourned for a brief summer recess where they were expected to return on July 13. However, legislative officers issued an emergency notice on July 6 that all State Capitol offices would be closed for deep cleaning, and all future hearings would be postponed until July 27 due to several legislators and legislative staff who tested positive for COVID-19.

When the Legislature returns to business on July 27, legislators will have only five weeks to act on roughly 700 bills that are still alive before the August 31 end-of-session deadline. A revised schedule of committee hearings will involve around-the-clock hearings between July 27 through August 20, followed by two weeks of respective Senate and Assembly Floor sessions on bills that happen to make it to the floor for final votes. Considering the health risks caused by COVID-19, each house is setting up a process to allow legislators who decide to not attend in-person hearings, the ability to vote remotely or provide a proxy to have their vote taken by another legislator. But with 500 Assembly bills that the Senate must consider under a short timeframe, the committee chairs have already signaled that they will dispense with unnecessary Assembly bills. This action will inevitably lead to what is known as the "hostage taking" process where each house decides to keep bills from moving in their respective house until there is an agreement from leadership that certain priority bills will move. Ultimately, the governor will have the final word on legislation as he must act (sign or veto) on all bills that are sent to his desk by September 30.

2020-21 Budget Update - Adopted on Time, Defers Future Pain with Federal "Trigger Cuts"

Meanwhile, the COVID-19 pandemic has wreaked havoc on the state's economy, especially tourism, retail and restaurant industries, which caused a domino effect impacting every sector. California has incurred a loss of 2.4 million jobs and the state unemployment rate currently sits at 17%. The impact has been deep and wide affecting the state's budget, which resulted in a $54 billion budget structural deficit for the 2020-21 fiscal year. As a result, California was forced to adopt a baseline budget with several cuts to various programs.

On July 1, Governor Newsom signed a $202 billion budget that seeks to close the $54 billion budget gap by protecting public education and supporting those facing the greatest hardships. The budget represents a compromise between Governor Newsom and legislative leaders as COVID-19 continues to have a disproportionate impact on lower-wage workers and is further exacerbating income inequality at a time of increased homelessness due to the lack of affordable housing. The budget deal relies on a hope that $11 billion in so-called "trigger cuts" could possibly be avoided if the state receives at least $14 billion in federal funds by October 15. In the meantime, the budget deal temporarily avoids significant cuts to health care and education programs by temporarily suspending the use of net operating losses for medium and large businesses and temporarily limits the amount of business incentive credits a taxpayer can use in any given tax year to $5 million. These short-term limitations, which are essentially tax increases, will generate $4.4 billion in new revenues in the first year and a total of $9 billion during the next three years. On the budget trailer front, the Legislature passed, and the governor signed legislation that establishes a Good Neighbor Authority (GNA) Fund in the State Treasury to facilitate the implementation of forest management projects on federal lands. The new fund will serve as a depository for timber sale revenues generated by state agencies through the completion of GNA projects, which will be reinvested to help increase the pace and scale of forest treatment activities on federal lands.

With the budget now in place, California leaders and the state's fiscal analyst are waiting for new revenue numbers to come given the delayed tax filing deadline. The reopening of several businesses in late spring to early summer, coupled with higher wage earners filing late returns have helped bolster early reports that indicate the state received about 12% more revenues than it anticipated since April. When legislators return, they will be pressured by various groups to provide additional funding for various programs that were previously cut or deferred, particularly those tied to education and social programs to address distance learning, health care and housing. This will likely be followed by several so-called "clean up" budget trailer bills that seek to supplement the Legislature's July's budget actions, including plans to disperse roughly $900 million from the state's cap-and-trade program. The budget trailer bills could cover a range of topics and do not go through the normal policy committee process.

2020 Legislation - The Final Lap

As noted above, most legislation introduced in 2020 has not moved except for key issues related to COVID-19, housing and wildfires. But legislative leaders are also seeking last-minute pushes to pass legislation that would clarify additional exemptions to last year's landmark independent contractor law (aka, AB 5); expand paid family leave on all employers to include non-immediate family members; provide rent relief or loan forbearance for those impacted by COVID-19; and establish a narrow form of liability protection for small businesses that may face potential lawsuits due to COVID-19 exposure claims. To spur economic growth, the governor will also be seeking job and economic recovery proposals in the final weeks influenced by recommendations from his Economic Recovery Task Force.

Regarding the natural resources and environment categories, several bills that would have impacted forestry operations and forest landowners were held and did not move out of their house-of-origin due to limited abilities by committees to hold hearings as a result of COVID-19. However, of the bills that remain alive in these areas, they fall in the categories of the following: 1) two-year carry-over bills from 2019; 2) new 2020 bills that passed under the COVID priority test; 3) recent "gut-and-amend" bills that are in the second house. These bills address a range of topics, including efforts to promote more wildfire protections and defensible space in high fire severity zones; protection of certain lands under new conservation goals; new state planning coordination efforts to address climate change and adaptation; and an effort to relax takings of certain candidate species that are proposed for listing. Below are some of the key bills that remain alive (click on bill for language and status):

Bill Status
FLC Legislative Bill Update (07-24-20)

Current Year

Legislative Archives

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Appellate Decision on WFMP Case

Read More

Good News -- Exemptions and NTMPs

CAL FIRE has reversed its policy change regarding the acceptance of exemptions for NTMPs. Please refer to the link below to view the letter from the California Department of Forestry and Fire Protection (Ken Pimlott) to the California Board of Forestry and Fire Protection (Keith Gilless).

Should you have any questions, please send an email to the FLC Legislative Committee at legchair@forestlandowners.org.
 
Letter and Supporting Content from CAL FIRE to Board of Forestry

Download Letter

Legislative Committee Assignments

• Assembly Committees Webpage
• Senate Committees Webpage

Public Policy Institute of California

The Public Policy Institute of California (PPIC) issued a report in mid-September on the status of forest health in the Headwaters Forests. On September 20, there was a panel debriefing on the report. Click on the links below to download the documents.

• PPIC Forest Health Report (Sept 2017)
• PPIC Forest Health Panel Debrief (Sept 2017)

If you are interested in wathcing the panel debrief, the video is posted on the PPIC's website:

Agency and Advocacy Letters

• FLC Letter - USFWS - NSO TA