The California Legislature returns to the State Capitol this week to begin the second year of the two-year session. With a tight January 31 deadline for two-year bills and a looming $18 billion budget deficit for the upcoming fiscal year, lawmakers faces a fast-paced and consequential start to the new year.
The looming deadline to advance measures designated as “two-year bills,” those introduced last year that have not yet passed out of their House of Origin, adds a sense of urgency this month. These bills must move to their respective second House by January 31 or they will expire. This compressed timeline heightens the stakes for legislators and advocates seeking to advance measures that stalled last year.
One bill we are closely watching is AB 914 (Garcia), which grants the California Air Resources Board (CARB) authority to adopt and enforce a statewide Indirect Source Rule aimed at reducing emissions from “indirect sources” such as ports, warehouses and distribution sites that attract diesel trucks and equipment.
Before the bill stalled on the Assembly Floor last May, CRTA lead a coalition opposed to this measure on the basis that it: pursues an electrification strategy that fails to address the key barriers to adoption such as charging infrastructure and vehicle availability; imposes new administrative fees and regulatory uncertainty that could result in higher consumer costs and reduced investment by businesses; and restricts local air districts’ ability to address local air quality conditions using the most effective tools available. The bill also runs counter to the guidance from the Legislative Analyst’s Office and the Assembly Budget Subcommittee, both of which previously rejected a similar proposal contained in last year’s budget proposal.
AB 914 is currently on the Assembly Floor Inactive File. The author must state his intent to remove the bill from the Inactive File (making it eligible once again for a vote) by January 27 (January 21 if he wants to make changes) or the bill will die.
At the same time, fiscal issues loom large. Governor Gavin Newsom is preparing to release his final budget proposal January 9, outlining his plan to address the state’s projected $18 billion deficit. Rising programmatic spending, increased disaster recover expenses, lack of federal funding, and fluctuations in tax revenues have contributed to this shortfall, which is predicted to balloon to $35 billion in future budget years without drastic changes. The Governor is expected to preview his priorities and approach to addressing these challenges before a joint session of the Legislature in his State of the State address scheduled for January 8.
The first day of the 2026 Session also marked a historic leadership change in the California State Senate, as Senator Monique Limón (D-Santa Barbara) was sworn in as the 50th President pro Tempore of the Senate yesterday. She became the first Latina, first woman of color, and first mother to hold this influential position. In her remarks, Senator Limón emphasized the importance of strong legislative oversight of state spending and reaffirmed her commitment to advancing equity and representation, expanding opportunities in Pre-K through higher education, and supporting childcare services for working families.
As the Legislature moves swiftly into the second year of the session, the coming weeks will be critical in shaping California’s regulatory, fiscal, and environmental policy direction. CRTA will continue to closely monitor these developments and engage with lawmakers to ensure practical, cost‑effective solutions that support cleaner air, economic stability, and regulatory certainty.