California 2022 Legislative Session Preview

The 2022 California legislative session began Jan. 3, following projections of record state revenues. The legislature will consider Gov. Gavin Newsom’s budget proposal until the June deadlines. The governor’s $286.4 billion budget proposal would make deep investments in climate change, healthcare access, public safety and inequality, homelessness, and fighting COVID-19.

There is at least a $45 billion surplus in expected revenue, more than the amount forecast last year, with $16 billion of the surplus automatically going to schools and $9 billion going to state reserves or debt payments.

Climate Investments

The governor’s proposal would build on the $5.2 billion water infrastructure package approved last year by proposing an additional $750 million in spending to help residents, farmers and wildlife. There also would be $1.2 billion in new spending on wildfire prevention initiatives and $650 million in new funds to support firefighting efforts, $400 million of which will go to CalFire firefighters directly.

Gov. Newsom also proposed an investment of $10 billion to reduce California’s reliance on fossil fuels by encouraging the switch to electric vehicles. $1 billion was proposed over the next three years in new tax credits for businesses that “create cutting edge climate solutions [and] develop green energy technologies.”

The assembly noted that drought response and water resilience will be top priorities for 2022-23. To meet the state’s clean energy goals, $2 billion would go toward providing incentives for long-duration storage projects, renewable hydrogen, and industrial decarbonization and electrification of buildings in disadvantaged communities, as well as infrastructure improvements to facilitate the development of offshore wind energy production.

Infrastructure and Transportation

The budget proposal includes $9.1 billion to support the continued development of the nation’s first electrified high speed rail system in California, regional transit and rail projects, and climate adaptation projects with a particular focus on aligning the state’s transportation system with its climate goals. There is also $6.1 billion over five years to advance California’s climate goals. These funds would support zero-emission vehicles and charging infrastructure in low-income communities across the state.

Healthcare

The budget proposal also targets health inequality, expanding MediCal health coverage to undocumented immigrants who are between ages 26 and 50. California will begin experimenting with ways to bring down the cost of prescription drugs by entering into agreements to produce its own insulin, with more details being released in the coming months. California legislators are also moving forward with a plan to create an Office of Health Care Affordability, which will set cost targets for health plans, hospitals, physician groups and prescription drugs.

In the assembly, legislation introduced by assembly member Ash Kalra would create a single-payer healthcare system. AB 1400 calls for creation of a program that would administer healthcare for all Californians under one public system, CalCare, regardless of immigration status. AB 1400 does not estimate a total cost, although the number was pegged at $400 billion during a previous legislative effort.

ACA 11, a constitutional amendment, is touted as a partial funding mechanism. AB 1400 and ACA 11 are not linked, which means the legislature could send Gov. Newsom AB 1400 (which would need a majority vote) without moving the funding mechanism (which would need a two-thirds vote). If this occurs, the basic structure of CalCare would be created, leaving confusion and uncertainty for the California healthcare environment. Some single-payer supporters believe Gov. Newsom will promote MediCal as an alternative route to universal healthcare. 

COVID-19

To be responsive to spiking omicron case numbers, the governor proposed $1.4 billion in emergency funding to bolster the state’s COVID-19 response efforts as part of Gov. Newsom’s larger $2.7 billion package for COVID-19 response efforts proposed in the new state budget. Of the $2.7 billion in new spending, about $1.2 billion would be for testing, about $614 million would be for hospital staffing and $583 million would be for vaccine distribution, which includes a public information campaign. While the governor has requested quick action on the $1.4 billion, it is unclear if the legislature will agree.

Additionally, the governor is asking the state Legislature to renew a law requiring companies to give workers more paid time off if they get sick. The previous COVID-19 supplemental sick leave policy ended last year. The governor’s proposal does not outline exactly what he wants but is asking for new legislation to implement supplemental paid sick leave policies, given the current situation driven by the omicron variant, to better protect frontline workers.

Public Safety

In terms of other notable activity on the agenda for 2022, Gov. Newsom vowed to work with state lawmakers and Attorney General Rob Bonta to draft a bill that would allow private citizens to sue anyone who manufactures, distributes or sells illegal assault weapons or DIY ghost guns. Assembly member Mike Gipson is working to introduce a bill to allow private lawsuits against makers of assault weapons and ghost guns.

Regulatory

On the regulatory front, the California Public Utilities Commission (CPUC), which is overwhelmingly controlled by the governor’s appointees, is set to soon consider a proposed Net Energy Metering 3.0 program. Many view the proposed decision as a severe undermining of the value of solar in California, lowering solar export payments by nearly 80 percent and adding steep fixed monthly charges of $8 per kW to solar customers. For a customer with a moderate system size of 7 kW, there is an additional $56 per month for fixed charges alone. The governor has publicly said a lot of work is left on the proposal and it remains unclear how the CPUC will proceed.