State Legislative Update - May 9, 2024
Budget Update
As Governor Newsom prepares to unveil his updated 2024-25 California state budget proposal — commonly referred to as the May Revision or May Revise — we anticipate new insights into the state’s economic forecast and revenue projections. It is due to be released on May 14, however, we are hearing it will be out as soon as May 10. The revised proposal will delineate the governor’s strategy for navigating the substantial deficit while maintaining a balanced budget.
May is the time when the Governor updates the budget based on the latest revenues and expenditures. Estimates of the budget shortfall have been between $38 and $73 billion and back down to $68 billion since January. Either way, a significant deficit. To date, the Governor has been resistant to increasing revenue in the form of tax reform, but whether that holds true remains to be seen.
The Legislative Analyst’s Office has released a report proposing several tax reform measures including eliminating the capital gains step-up basis on inherited assets, the mortgage interest deduction for second homes, and tax subsidies for oil and gas companies. Once the Governor presents updated estimates, the magnitude of the shortfall will be known and will significantly influence the forthcoming 2024-25 budget negotiations, serving as a deciding factor in shaping the state’s spending priorities for the coming fiscal year.
Legislative Update
The deadline for bills to pass the Appropriations Committees is May 17. After that time, the focus will be on the Floor. Below is an update on several key pieces of legislation that we have been engaged in this year.
Priority Bills
AB 2216 (Haney) - Household Pets - Requires landlords to accept pets in their rentals without charging any additional refundable or non-refundable fee. As such, rental property providers would not be allowed to charge pet security deposits or prohibit common household pets in residential tenancies. This bill is pending a vote on the Assembly Floor. OPPOSE
AB 2347 (Kalra) - Evictions - Would make various procedural changes to landlord-tenant law, including specified extensions of time for tenants to respond to notices and eviction papers. AB 2347 extends the time for the defendant's response to be filed from five court days to 10 court days after the unlawful detainer complaint and summons is served on the defendant. It also prohibits the clerk from entering default in an unlawful detainer action less than three court days after the plaintiff files the proof of service of the summons and complaint. AB 2347 is pending a vote on the Assembly Floor. OPPOSE
AB 2785 (Wilson) - Security Deposits - Would require a landlord to, within 30 days of receiving a tenant’s security, deposit the sum into an account of a bank or other financial institution regulated by the state or federal government. If it is deposited in an interest-bearing account, any interest accrued on that balance would be payable to the tenant. The bill also caps screening fees and sets parameters for reimbursement, including if the tenant doesn’t qualify. We have been actively meeting with the author’s office on suggested amendments. - OPPOSE
Other Bills of Importance
AB 2187 (Bryan) - Office of Tenants’ Rights and Protections - Would establish the Office of Tenants’ Rights and Protections, which is duplicative and costly. Although there are multiple existing government agencies that provide services and education in this area, including the Business, Consumer Services, and Housing Agency and the Department of Justice, this bill seeks to add another resource for renters within the Civil Rights Department (CRD). CRD is currently responsible for enforcing, among other things, the state’s housing discrimination laws. This bill is set for a hearing in the Assembly Appropriations Committee on May 8. - OPPOSE
AB 2278 (Carillo) - Publishing Rental Rates - This is a CalRHA sponsored bill regarding the publication of the maximum allowable annual rent increase by the Attorney General. The bill has already passed the Assembly and is in the Senate, where it has been referred to the Senate Judiciary Committee. - SUPPORT
AB 2498 (Zbur) - Rent Relief - Establishes the California Housing Security Program to provide counties with funding to administer a housing subsidy to eligible persons to reduce housing insecurity and help Californians meet their basic housing needs, subject to an appropriation. The bill would create a 2-year pilot in eight counties, including Los Angeles, Orange, and San Diego. The bill is pending a hearing in the Assembly Appropriations Committee. - SUPPORT
AB 2584 (Lee) - Corporate Owned Single-Family Homes - Would prohibit owners of more than 1,000 homes from buying more single-family properties. This bill was sent to the Suspense File in the Assembly Appropriations Committee, due to the cost. We will know whether it is held or passed by the May deadline.