One of the most significant state Capitol news stories this year unfolded over last weekend, as lawmakers pieced together a budget with a July 1 signing deadline. The overall budget is a $321-billion atrocity that’s a whopping 60% higher than the budget seven years ago. It relies on borrowing and modest cuts to close a $12-billion projected deficit. That’s business as usual, but the real story involved an unrelated measure that Gov. Gavin Newsom inserted into the negotiations.
The Legislature rejected many of Newsom’s proposed cuts and instead passed a budget based on “hope,” but as they limped toward the finish line the governor threw lawmakers for a loop. He tied his signing of the final budget to the Legislature’s willingness to approve a major overhaul of the state’s “landmark” environmental law, the California Environmental Quality Act (CEQA). He based the changes upon some existing bills.
Capitol observers couldn’t ever remember a time that a governor threatened to hold up the budget over one unrelated bill. This was a gutsy move to achieve a needed result. Last Friday, it was unclear whether Newsom would win this game of brinksmanship. By the end of the day Monday, however, the governor had succeeded. The Legislature overwhelmingly passed what ended up as two trailer bills. It’s a worthy effort that should help jump-start housing construction.
Specifically, the reform restricts CEQA legal challenges and, reports CalMatters, “exempts nine types of projects from environmental reviews: child care centers, health clinics, food banks, farmworker housing, broadband, wildfire prevention, water infrastructure, public parks or trails and, notably, advanced manufacturing.” It’s particularly satisfying that the governor and Legislature stood firm in the face of environmentalist outrage. They did cave in to union opposition to a separate CEQA reform measure, but the most important measure passed.
This Editorial Board has long called for far-reaching CEQA reform. We still believe—more strongly than ever—that the Legislature needs to revisit and revise (or dump) the law in its entirety. Previous legislative exemptions have been too narrow. They mainly have focused on incentivizing multi-family housing projects in cities. They’ve sometimes been little more than a special favor granted to, say, sports-team owners looking to build an arena. They usually include union wage requirements that undermine the value of the streamlining reforms. They rarely apply to market-rate housing.
However, these bills take a giant leap in the direction of broader-based reform. It will take some time to see if it garners the hoped-for results. Recent analyses suggest that past reforms haven’t led to major increases in housing construction. So we’ll wait and see if this goes far enough. California’s home prices remain stubbornly high. There are myriad reasons including urban-growth boundaries that limit construction, excessive county permit fees, high taxes and endless regulations.
But CEQA is high on the list of culprits, as it in many cases requires extensive and costly environmental reviews and—most significantly—gives virtually anyone the tools to hold up or halt projects by filing lawsuits. Such suits often are unrelated to the environment. They are sometimes filed by unions seeking wage concessions and by slow-growth groups.
We’re pleased the Legislature recognizes the problem. And we’re pleasantly surprised the governor used his political capital to secure such a noteworthy result.
