SACRAMENTOAt the state capitol on Monday, California lawmakers gathered around Governor Gavin Newsom to commemorate the approval of the state budget and historic housing legislation.
There was little recognition of the power dynamics that occurred behind the scenes between handshakes and mutual acclaim in front of television news cameras: Democratic lawmakers once again catered to the wishes of the soon-to-be outgoing governor.
“There are a number of instances right now where it’s evident that the governor is in one place and the Legislature is in another, whether it’s dragging the Legislature along on budget bills or bills that have passed overwhelmingly and been vetoed,” said Lorena Gonzalez, the leader of the California Labor Federation. The Legislature must eventually enact laws.
Earlier this year, Newsom made a rare move by openly endorsing two measures that would have lowered environmental review requirements in order to expedite housing development in California. Newsom had previously only supported smaller-scale measures, and construction has stalled despite his pledge to boost homebuilding.
Homelessness & Housing
According to experts, two legislation signed into law by Governor Gavin Newsom will significantly alter the California Environmental Quality Act for the first time in many years. Lawmakers anticipate these reforms will spur a surge in public infrastructure and housing projects.
Journalist Ezra Klein made the case in his recently released book Abundance that California’s signature environmental law impedes the development of new homes, a criticism that resonated with the governor. This year, Newsom, who is thinking about running for president in 2028, was determined to show that he is the type of Democrat who can help solve problems and break through political and governmental impasses.
Despite the objections of progressive lawmakers, environmental interest groups, and labor unions, Newsom successfully pushed through a crucial bill that was intended to expedite housing building after it had stalled in the state Senate. The governor accomplished this by making sure the state budget measure contained a poison pill clause requiring lawmakers to approve housing legislation before the spending plan could take effect on July 1.
On Monday night, Newsom referred to the legislation as the most significant housing reform in California’s modern history.
Newsom stated that this was too crucial to leave to chance and expressed concern that if he had let the process proceed in the conventional manner, he would have encountered the same resistance as in previous years.
Powerful labor organizations have fiercely opposed Democratic lawmakers’ attempts for years to sift through the maze of rules under the California Environmental Quality Act, or CEQA. According to these organizations, particularly the State Building and Construction Trades Council, any assistance provided to developers must be combined with pay and other benefits for employees.
Those labor demands were circumvented in the legislation that Newsom signed on Monday.
The majority of urban housing projects are exempt from CEQA under Assembly Bill 130, which is based on legislation presented by Assemblymember Buffy Wicks (D-Oakland). Only developers of low-income and high-rise structures taller than 85 feet are required to pay construction workers union-level wages.
Additionally, Senate Bill 131 removes the environmental limits for certain residential rezoning amendments and narrows CEQA requirements for home construction. The plan, spearheaded by state senator Scott Wiener (D-San Francisco), also exempts a number of nonresidential projects from CEQA, including food banks, child care centers, health clinics, and innovative manufacturing facilities.
According to development experts, the new law may offer the biggest changes to CEQA in its fifty-five-year existence, particularly with regard to urban housing.
In principle, CEQA mandates that proponents reveal and, if feasible, mitigate the environmental impacts of a building proposal. Although the procedure seems straightforward, it frequently leads to years of litigation and hundreds of pages of environmental studies.
According to renowned Southern California land-use lawyer Dave Rand, previous attempts to lessen the costs of CEQA failed, and it puts homebuilders and developers at significant legal risk. “The great majority of housing is being helped by the bills that were signed Monday,” he stated. Construction of inexpensive and high-rise homes frequently already calls for union-level compensation.
According to Rand, CEQA has always been the worst cog in the wheel. Projects always come to a standstill there. This is the first clear-cut, uniform, impartial, and uncomplicated exemption that everybody can understand.
According to him, customers are excited to benefit from the new regulations, which go into force right now.
Rand stated, “We’re going to push the go button on over ten projects with this exemption, probably Tuesday.”
According to Bill Fulton, publisher of the California Planning & Development Report, the modifications are significant even though they do not constitute a complete redesign for non-housing projects.
State legislators have already granted limited, one-time CEQA waivers for initiatives they backed, such UC Berkeley’s 2022 enrollment expansion. According to him, SB 131 maintains the Legislature’s practice of exempting some types of construction from CEQA regulations, but the nine project categories it affects offer more comprehensive relief than previous attempts.
“They’re picking and choosing what they want to get through quickly,” Fulton added, coining the term “Swiss cheese CEQA.”
California
Democratic lawmakers have expressed skepticism about the extent of California’s financial issues, which is reflected in the spending plan, which displays resistance to making drastic cuts to alleviate a $12 billion budget shortfall anticipated in the next year.
According to observers, Newsom’s efforts to get comprehensive housing measures through the Legislature were his most forceful to yet.
On the campaign trail in 2017, Newsom famously pledged to promote the development of 3.5 million new homes by the end of this year, a goal that is likely to fall millions short of the ambitious promises the governor has made for years. According to Chris Elmendorf, a law professor at UC Davis, he has been more inclined to work in the background or to intervene and applaud legislation after it has been approved than to openly influence housing policy.
Elmendorf, who is in favor of the new legislation, described Newsom’s arm-twisting and willingness to oppose powerful interests as a remarkable reversal of his approach to the legislative process on contentious housing and environmental issues over the previous six or seven years.
With varying degrees of success throughout the years, the governor has already pushed his policy preferences through the Legislature on a number of other issues, such as infrastructure, oil restrictions, and climate legislation.
Early in 2027, Newsom’s term comes to an end. As his tenure in office draws to a close, his support of substantial housing policy and his plan to advance one through the state Senate were indicators of his strength in the Capitol.
Wicks claimed that in order to push the measures through, Newsom had a great deal at stake.
He really pushed for taking on these holy cows like CEQA because, according to Wicks, he understands that we need to address this issue.
Legislators were under more pressure to support the bills because Wicks’ legislation had already passed the Assembly before the proposal was included in the state budget process. As it passed through the Capitol, she said she was cautiously optimistic and that her chamber recognized the need for reform.
Wiener’s law took longer to take effect. The announcement of a budget agreement was delayed just last week due to the Senate and the governor’s office’s inability to agree on the proposal.
The idea was then connected to the budget by Newsom, thus forcing lawmakers to approve the package or risk the fiscal year beginning on July 1 without a spending plan.
Sen. Henry Stern (D-Calabasas) stated during the SB 131 discussion that although the law had serious problems, he would support it because he was certain that the problems would be resolved in the end.
I believe that abundance and nature can coexist. Stern stated that they actually have to. Living in a moonscape California is not what we desire. Desire to reside in a livable city.
On Monday, lawmakers approved both proposals in spite of the reservations.
Gonzalez criticized lawmakers, claiming that no one is voting in accordance with their principles. She likened Republicans in Congress to the Legislature supporting Newsom’s plan.
California Democrats are crying foul that legislators and senators are passing things that they don t even know the effect of that aren t in line with their constituents that are just being shoved down their throats by Donald Trump, Gonzalez said. And those same California lawmakers are letting themselves suffer that fate.
