July 18, 2025

• State Budget

The State Legislature and Governor Newsom approved a state budget on June 27^th, successfully balancing an estimated $12 billion deficit. The budget did not enact new broad taxes, including a tax on businesses that was floated as a deficit reduction solution. The budget contains several Chamber priorities, including a $750 million tax credit for California’s film industry, an exemption of military retirement pay from state taxes, and CEQA streamlining legislation for infill housing development. Unfortunately, California’s budget challenges are unlikely to ease in the coming fiscal years. Budget analysts project continued deficits, especially in light of an uncertain economic climate at the federal level.

• CEQA Reform

Major reform to California’s Environmental Quality Act (CEQA) was enacted as part of the state budget. Governor Newsom made passage of the entire budget contingent on the Legislature approving two CEQA streamlining bills: AB 130 and SB 131.  These bills exempt infill housing projects – those located in urban areas- from CEQA review. This review process has long posed a costly and unnecessary barrier to the development of urgently needed housing. Eliminating it marks a major step towards reducing construction timelines and addressing state and regional housing shortages. The Chamber applauds the Governor and Legislature for approving these reforms and taking tangible action to tackle California’s housing crisis. We will continue to monitor changes to Vehicle Miles Traveled (VMT) mitigation policy that was adjusted as a result of these bills to ensure that development outside of infill areas is not unduly hindered.

• Chamber Advocacy

Over the last two months, the Chamber has led a broad coalition in opposition to AB 652 (Alvarez), a top priority this year. Coalition partners include the Working Waterfront, IEA, NAIOP, and CBPA. Additionally, the Chamber convened a coalition of nine San Diego Mayor’s to oppose the bill. Together, we raised serious concerns about the bill’s inequitable approach to the appointment process for Air Pollution Control District (APCD) Governing Board. AB 652 proposed a weighted vote process to break a tie during the appointment process, giving disproportionate influence to larger cities -such as San Diego- despite APCD’s regional impact. This would allow larger cities to override the voices of smaller municipalities within the same supervisorial district, including on critical issues like regulations impacting logistics and the trucking industry. This approach undermines the principle of equitable representation and risks marginalizing the interests of smaller communities throughout the region.

In positive news, the Chamber has been working closely with Assemblymember Alvarez’s office to address concerns with AB 652 over the past month. As a result, the Assemblymember has agreed to amend the bill to completely remove all provisions related to the APCD’s appointment process in the case of a tie, including the use of a weighted vote. We greatly appreciate Assemblymember Alvarez’s continued partnership and his support of San Diego’s binational business community. His willingness to listen and respond to our concerns demonstrates a meaningful commitment to inclusive policymaking.

The Chamber continues to engage on over 30 active bills moving through the state legislature. These bills cover various industries and policy priorities, from housing and commercial development to tariffs and cross-border pollution. Of these over 30 bills, Chamber staff has identified 8 as our priority bills for the rest of the legislative session, which include support of:

1. SB 80 (Caballero): The Fusion Research and Development Hub Innovation Program
   1. SB 80 will create the Fusion Research and Development Innovation Hub Program within GO-Biz to accelerate the development and growth of fusion energy by advancing fusion science and technology with the goal of delivering the world’s first fusion energy pilot plant in the state by 2040. The potential of fusion energy as a clean, abundant, and waste-free source of energy and the many economic benefits of California’s position at the forefront of fusion energy development is great, thanks to San Diego-based companies like General Atomics.
2. AB 470 (Mckinnor):
   1. AB 470 will incentivize investment in more advanced and affordable communications for all Californians. Modern network services are more innovative, reliable, fast and generally meet the twenty-first-century needs of Californians. With affordable modern internet-based and wireless-based phone services, consumers benefit from greater affordability and additional features that will keep all Californians connected to each other and people around the world.
3. AB 30 (Alvarez & Flora): State Air Resources Board: Gasoline Specifications: Ethanol Blends
   1. Allowing the sale and use of E-15 will provide a cleaner and cheaper fuel for California motorists, truckers, and businesses with fleets for their employees. This bill aligns cheaper fuel offerings with the rest of the United States, California is the only state that currently does not offer this type of fuel to its residents.
4. SB 569 (Blakespear): Department of Transportation: homeless encampments.
   1. SB 569 improves coordination and streamlines the process for clearing homeless encampments on California Department of Transportation (Caltrans) rights-of-way by allowing local governments under a DMA to follow their own policies and streamline the permit process, improving the efficiency of encampment abatement and enhancing public safety.

Opposition of:

1. AB 1331 (Elhawary): Workplace Surveillance
   1. AB 1331 would prohibit employers from using workplace surveillance tools to monitor workers in “private, off-duty areas” including breakrooms, cafeterias, and lounges, limiting surveillance that could undermine worker safety and anti-harassment efforts and would likely conflict with legitimate business needs such as cybersecurity, remote work supervision, and safeguarding employer property.
2. AB 446 (Ward): Surveillance Pricing
   1. AB 446 prohibits the use of surveillance-derived data to set or offer a price to a consumer based on information collected through various electronic surveillance technologies. While a well-intentioned bill to prohibit potential pricing based off discrimination, this bill would place civil penalties on non-problematic and widely-accepted practices (such as membership rewards programs, local discounts, or appropriate advertising) because of its overly broad language. While we do not support any targeting of consumers based on protected characteristics, we are concerned of the unintended consequences on the cost of goods for workers and the cost of doing business for employers due to its overbroad language.
3. AB 1415 (Bonta): California Health Care Quality and Affordability Act
   1. AB 1415 imposes additional regulatory burdens on the state’s healthcare industry, which is already grappling with the impact of unfunded state mandates and uncertainty from the federal government. It increases the role of a new agency, the Office of Healthcare Affordability (OHCA),  allowing OHCA to access private equity data.

No position, engaging in negotiations and amendments:

1. AB 735/SB 415(Carillo/Reyes)
   1. The Chamber actively engaged in efforts to oppose AB 98 last year, which introduced new burdensome regulations for the logistics, warehouse, agricultural, and manufacturing sectors. The Chamber has been working with a coalition, led by CBPA, to address the concerns brought forward by AB 98 via AB 735 and SB 415 this year. We continue to hold a “no position” with expressed issues and potential amendments to address AB 98 through these two bills, which allows this coalition to continue these important negotiations with the legislature.