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HomeMy WebLinkAbout17 LEGISLATIVE UPDATE DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B Agenda Item 17 Reviewed: ?IDS AGENDA REPORT City Manager Finance Director N/A MEETING DATE: FEBRUARY 1 , 2022 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: MATTHEW S. WEST, CITY MANAGER SUBJECT: LEGISLATIVE UPDATE SUMMARY: Recap of 2021 Legislative activities by the City's advocacy consultant Townsend Public Affairs (TPA), consideration of 2022 Legislative Platform and updates on legislative activity at the state and federal level. RECOMMENDATION: 1 . Receive presentation on 2021 Legislative recap by TPA 2. Adopt 2022 Legislative Platform 3. Receive and file legislative update prepared by TPA FISCAL IMPACT: Not applicable. DISCUSSION: 2021 Legislative Activities TPA has prepared a presentation with a recap of the 2021 Legislative session. 2022 Legislative Platform Each year, the City prepares a Legislative Platform that is designed to do the following: - Provide direction to the City's legislative delegation on priorities, projects and principles of the City Council - Allows staff and TPA to identify priority bills being discussed in Sacramento to create a targeted outreach plan - Allows staff and TPA to act quickly on priority issues being discussed in Sacramento DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B Agenda Report— Legislative Update February 1, 2022 Page 2 The Legislative Platform includes guiding principles that give broad direction to staff and TPA when considering legislative issues: - Preserve Local Control - Promote Fiscal Stability - Support Funding Opportunities The Legislative Platform also includes more specific statements in various policy areas such as: - Local Governance - Economic Development - Land Use Planning and Housing - Parks and Recreation - Public Works - Water Quality and Water Supply - Human Resources and Risk Management - Public Safety Each City department was given time to review and recommend modifications to the draft Legislative Platform prior to City Council consideration. Adoption of the Legislative Platform does not mean that staff and TPA will focus solely on bills or issues that fall within the Legislative Platform, nor does it mean that TPA will not continually seek the City's input or positions on specific legislation. Staff and TPA will continue to keep the City Council apprised of legislation and proposals (whether specifically addressed by the Legislative Platform or not), and TPA will continue to seek input from the City as legislation of legislative proposals are discussed. Legislative Update TPA has created a summary of state legislative activity for the month of January that also includes updates on the Governor's budget proposal and previews the 2022 Legislative session. Attachments: - Draft 2022 Legislative Platform - TPA January 2022 update DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B CITY OF TUSTIN 2022 LEGISLATIVE PLATFORM The Mayor and City Manager are authorized to submit advocacy letters on behalf of the City of the proposed state or federal legislation clearly follows the City's adopted legislative platform. PURPOSE The City of Tustin's 2022 Legislative Platform confirms the City Council's position on current issues with the potential to directly or indirectly impact the City, thereby establishing guidelines to actively pursue pending legislation through monitoring and communications activities. Below are the Guiding Principles and Policy Statements that will allow City staff to address 2022 legislative and regulatory issues in a timely manner, without precluding the consideration of additional legislative and budget issues that may arise during the legislative session. GUIDING PRINCIPLES I. PRESERVE LOCAL CONTROL Preserve and protect the City's powers, duties and prerogatives to enact local legislation and policy direction concerning local affairs and oppose legislation that preempts local authority. Local agencies should preserve authority and accountability for land use planning, revenues raised and services provided. II. PROMOTE FISCAL STABILITY Support measures that promote fiscal stability, predictability, financial independence, and preserve the City's revenue base and maximum local control over local government budgeting. Oppose measures that shift local funds to the County, State or Federal Governments and/or make cities more dependent on the County, State or Federal Governments for financial stability, such as unfunded mandates or mandated costs with no guarantee of local reimbursement or offsetting benefits. III. SUPPORT FUNDING OPPORTUNITIES Support opportunities that allow the City to compete for its fair share of regional, state and federal funding. Support funding for programs including, but not limited to economic development such as infrastructure investment and housing, transportation projects including road resurfacing, bicycle and pedestrian safety, multi-modal transportation systems and transit-oriented development, air quality, water quality and local water reliability, parks and recreation, historic preservation, natural resources, hazard mitigation, public safety, public health and COVID-19 business and government recovery. DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B POLICY STATEMENTS Local Governance 1. Oppose State or Federal efforts to "borrow local revenues and encourage the State to find other methods of balancing its budget. 2. Support local government action, rather than the imposition of state, federal or regional mandates upon local governments, as well as federal mandates placed on the state. 3. Support maximum flexibility for local government in contracting and contract negotiations. 4. Support open government initiatives as well as the principles of the open meetings provisions of the Ralph M. Brown Act at all levels of government. 5. Support legislation that facilitates the flexibility of local governments to share resources to increase efficiencies and decrease costs. 6. Support legislation that preserves the ability of local governments to determine the appropriate type of election and representation for their jurisdiction. 7. Oppose and monitor efforts to increase City contribution cost to CalPERS. 8. Support the reimbursement of local governments for COVID-19 related expenses, including the need for essential public safety service overtime, personal protective equipment, and small business relief. 9. Support and monitor efforts to increase the City's ability to recover payment related fees from customers Economic Development 10. Support international, statewide, regional, and local efforts to attract, retain and provide resources for current and future commercial and industrial businesses. 11. Support policies and programs that encourage working with other cities, counties and government agencies to jointly leverage resources and assets to create and strengthen economic clusters within the region. 12. Support economic development initiatives that preserve and enhance a positive business climate and maintain and grow the business tax base. 13. Support policies and initiatives that will facilitate development of City owned property, including Tustin Legacy and Pacific Center East. Oppose policies and initiatives that run counter. Land Use Planning and Housing 14. Oppose legislation, proposals, or regulations that impose regional, state, or federal growth development or land use planning standards within the City without the City's direct input. 2 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B 15. Oppose legislation, proposals, or regulations that penalize local governments for noncompliance with their housing element or regional housing needs assessment requirements. 16. Support efforts to provide flexibility to local governments as well as resources for local governments to allow them to submit compliant housing elements. 17. Support housing measures that promote the development and enhancement of safe and affordable housing and accessible housing within the City for all economic segments of the population, while still retaining local control. 18. Monitor local, state, and federal actions related to medical and recreational marijuana regulatory changes. 19. Support local control over the licensure and regulation of alcoholism or drug abuse recovery or treatment facilities. 20. Oppose legislation that would erode local control over City owned property, including Tustin Legacy and Pacific Center East. 21. Support proposals that provide funding or tools to preserve historic neighborhoods and structures. 22. Oppose proposals that increase requirements and place undue burdens on the City with regard to the Surplus Land Act and Tustin Legacy. 23. Oppose efforts that require the City to ministerially approve housing development projects without adequate input from local agencies or a robust public engagement process. Parks and Recreation 24. Oppose efforts that erode funding for vital regional and community services that negatively impact Californian's access to parks, open space, bike lanes and bike ways, after school programming, senior services and facilities that promote physical activity and protect natural resources. 25. Support efforts that strengthen policies to fund parks, open space acquisitions, bike lanes, and active transportation opportunities. 26. Promote local agency control over policies that recognize the benefits of parks and recreation facilities. 27. Support efforts to increase funding, accessibility and programs for seniors. Public Works 28. Support increased State and Federal funding of transportation improvements with regional or sub-regional benefits for all modes of transportation. 3 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B 29. Support protection of dedicated transportation-related tax revenues and enhance the ability of local agencies to finance local transportation programs and facilities. 30. Support all efforts to create efficiencies within CEQA. 31. Support measures and reforms which streamline the CEQA process for the development of housing and mixed-use infill projects that support transit. 32. Support legislation that allows local governments to continue to retain full authority to reject projects or to condition project approvals and impose mitigation measures. 33. Support efforts to facilitate public private partnerships to complete development projects. 34. Oppose efforts to remove City representation on regional boards that oversee water, drainage and/or sewage. 35. Support efforts that fund broadband infrastructure. 36. Support efforts that assist the City in meeting its waste and recycling mandates and adding flexibility to comply with state regulations. Water Quality and Water Supply 37. Support and monitor legislation that increases the availability of, and funding for, water conservation, water reuse technologies, water recycling, local water storage and other water supply technologies such as the Groundwater Replenishment System project. 38. Support the enhancement of a reliable and sustainable water supply for California as well as measures that improve water quality in the region. 39. Monitor the development of a State framework for long term water conservation measures. 40. Support policy development, funding and research for water conservation, addressing urban runoff and beach closures and required programs associated with OC NPDES permits. 41. Support efforts to address long term water resiliency and affordability without implementing a statewide water tax. 42. Oppose efforts that restrict or eliminate local permitting and enforcement of water quality measures. 43. Oppose efforts that unilaterally reduces the indoor water use standards without the input of local and regional stakeholders. Human Resources and Risk Management 44. Oppose measures that reduce local control over employee relations issues or mandate new or enhanced local government employee benefits. 4 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B 45. Support pension reform measures designed to control or decrease employer liability or increase transparency in reporting without imposing undo hardships or administrative burdens on local government. 46. Oppose redundant or unnecessary proposals that require excessive human resources burdens without sufficient reimbursement. Public Safety 47. Support measures that encourage community safety and well-being including those which support state and federal reimbursement of homeland security related expenses. 48. Oppose legislation that places burdensome restrictions on law enforcement and limits their ability to protect public safety. 49. Oppose legislative attempts at early release of incarcerated prisoners and measures that would further de-criminalize non-violent offenses. 50. Support funding for local mitigation related to Proposition 47 and Proposition 57 51. Support initiatives involving county, state, and federal governments to reduce and prevent homelessness in Orange County. 52. Support measures that provide funding and local resources for wildfire fire prevention, suppression, and mitigation. 53. Support local control over adult entertainment facilities, alcohol establishments and properties where illegal drugs are sold. 54. Support local control for the regulation of cultivation, storage, manufacture, transport and use of medicinal and recreational marijuana and monitor legislative and administration activity to create a regulatory structure for medical and adult use. 55. Support legislation increasing resources and local authority for abatement of public vandalism, especially graffiti. 56. Support regional and state proposals to increase funding for locally operated homeless shelters. 57. Oppose efforts to limit the City's ability to enforce parking rules and regulations and recover the costs of doing so. 58. Support efforts that adds de-energization to the list of conditions that constitutes a state and local emergency. 59. Oppose efforts that changes the certification framework for public safety personnel and subjecting the City to additional litigation. 5 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B TOWNS END P V [S L I C ,v r r /A I K - EST TPA 1998 MEMORANDUM To: City of Tustin From: Townsend Public Affairs Date: January 10, 2021 Subject: Monthly Report and Legislative Outlook STATE LEGISLATIVE UPDATE AND OUTLOOK 2022 is gearing up to be a busy legislative and budget year. Notably, state legislators are saddled with a large number of circumstances that are atypical for other years' start of session dates. These circumstances include the legislature's relocation as the State Capitol building undergoes renovations, new Assembly and Senate district lines that will place many legislators' place of residence outside of their new districts, and a significant number of legislators opting to pursue other political and career opportunities outside of their elected positions in response to upcoming elections dates and term limits. Moreover, the onset of the Omicron variant at the start of what was expected to be a year of transitioning back into in-person meetings and committee hearings now appears to be up in the air once again. Despite all of these changes, the Legislature and Governor appear to be ramping up for another budget surplus year and pursuing legislation that remained unfinished in 2021. Below is an overview of anticipated issue areas the Legislature will act on in 2022, and how they relate to the outcomes and circumstances that were present in 2021. BUDGET On January 10, Governor Newsom released his January Budget Proposal for the 2022-23 fiscal year. Overall spending trends reflect a more "down to earth" budget framework compared to the 2021-22 FY budget, which included a larger surplus with federal COVID relief funds. Additionally, most of the proposed expenditures—86% in total —will be made available via one-time spending formulas. The Framework incudes $286 billion in total spending, reflecting a 9.1 percent increase from last year's final budget. The budget framework also includes a proposed $34.6 billion deposit into the state's reserves accounts, which includes approximately $20 billion into the rainy-day fund and investments in the school stabilization reserve and the safety net reserve. The Legislative Analyst's Office (LAO) also released its fiscal outlook report for the State's 2022- 23 upcoming budget cycle, which revealed a prediction that the state would have a close to $31 billion operating budget surplus. Despite the economic impact of the ongoing COVID-19 pandemic, the LAO stated that state revenues are growing at "historic rates," which can be attributed to an annual 30% rate increase in tax collections in the 12-month period ending in September, representing the fastest rate in roughly 40 years. While this report serves as merely a projection, it does provide important clues to how the state's budget allocation process will Page 1 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B function in the upcoming year. For example, while the surplus is great news for the state's fiscal stability and earmark potential, it's important to note that not all of the $31 billion will be under the Legislature's discretion. The report estimates that in order to meet the State Appropriations ("Gann") Limit requirements, which limits state expenditures to the annual growth in population and to growth in average personal income, the state would need to divert roughly $14 billion between statutorily available avenues. These avenues include such things as infrastructure and education investments, tax rebates, and paying down the state's debt, which are expected to be featured in the upcoming budget. In addition to the LAO report, the Assembly and Senate Budget Committees released overviews of their priorities for 2022 in advance of the Governor's January 10 proposal. The Assembly's key budget priorities include the following: • Implementing the 2021 investments including broadband infrastructure, wildfire prevention, and climate resiliency, • Ensuring that existing homelessness and affordable housing investments provide permanent supportive housing, • Drought response and water resilience funding to the most vulnerable communities, • Increased funding for education, particularly as it relates to mental health and learning loss, • Addressing the State Appropriations (Gann) Limit by allocating budget funds to major infrastructure transportation projects and education investments, • Leveraging federal infrastructure funds; and, • Promoting the creation of living wage jobs. The Senate's key budget priorities include the following: • Sustaining existing programs through building upon reserves, paying down debts, and ensuring one-time funding is used for one-time purposes, • Maximizing state and federal infrastructure investments, • Expanding targeted tax relief programs for families, • Improving higher education quality, affordability, and accessibility, • Improving public health, mental health, and health access and affordability; and • Enhance climate, environment, and resource protection, including wildfire mitigation. THE COVID-19 CLIMATE The onset of the Omicron variant has sparked quick reactions from California leaders in order to mitigate its spread. In December, the California Department of Public Health (CDPH) issued statewide indoor masking mandate, beginning December 15 and ending January 15 in order to temper the spread of the Omicron variant during the holiday season. The mandate applies to all public indoor settings and all people, irrespective of vaccination status. This mandate ultimately brings all California counties into mandatory compliance with indoor masking rules. Before, many counties had existing indoor mask mandates that have been in effect since the summer. However, roughly half of the state's population, in areas such as San Diego County, the Inland Empire, and the Central Valley, had no existing masking mandate and are now mandated to comply with this new rule until mid-January, unless it is extended further. Page 2 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B In addition to the new masking mandate, there have been updates to Cal/OSHA COVID-19 workplace standards. In mid-December, the Cal/OSHA Standards Board voted to readopt the COVID-19 Emergency Temporary Standard ("ETS")with changes that will take effect January 14, 2022. This readoption includes many changes to the current ETS, including an elimination of many of the current distinctions between vaccinated and unvaccinated workers. California administrative procedure allows an emergency regulation to be readopted up to two times. The Cal/OSHA ETS was first readopted (and revised) on June 17, 2021. The recent December 16, 2021 readoption represents the second of two re-adoptions. However, also on December 16, 2021, the Governor issued an Executive Order permitting a third readoption of the ETS, so long as it does not extend beyond December 31, 2022. It is likely that Cal/OSHA will consider adopting permanent standards in 2022 instead of reconfiguring temporary standards. The newly revised ETS includes restrictive changes, some of which are summarized below. • A new COVID-19 test definition: When testing is required under the ETS, it cannot be both self-administered and self-read unless observed by the employer or an authorized telehealth proctor. Which means that employees won't be able to simply report results of a home-test to their employer. • Permissible types of face coverings: Despite harsh opposition from commenters, Cal/OSHA's new standard says that permissible face coverings include surgical masks, a medical procedure mask, a respirator worn voluntarily, or a tightly woven fabric or non- woven material of at least two layers that does not let light pass through when held up to a light source (except for clear face coverings worn for accommodations purposes). This means that many of the cloth masks that have been used by employees will no longer be acceptable under this new standard. • A new definition of"worksite".The revised ETS clarifies that a "worksite" does not include locations where the worker worked by themselves without exposure to other employees, or to a worker's personal residence or alternative work location chosen by the worker when working remotely. This new definition may, in some circumstances, enable employers to forego employee notification that it would have otherwise been obligated to provide under the previous version of the ETS. • Testing must be provided to all close-contact employees, vaccinated or not: It used to be that employers only needed to offer COVID-19 testing to unvaccinated workplace close- contacts. But now, because of the rapidly evolving virus and breakthrough cases in the workplace, Cal/OSHA will require employers to offer testing to employees, vaccinated or not, who had a workplace close contact. The only exception for close-contact testing are employees who recovered from COVID-19 in the past 90 days and are asymptomatic. As the pandemic continues, the Legislature plans to continue its remote meeting accessibility for committee hearings and individual meetings. After planning to require employees to return to the new temporary offices at the start of the 2022 session, Assembly Speaker Rendon announced that the Assembly would temporarily reinstate its remote work flexibility plan until February 14 in order to accommodate those affected by the pandemic. It is unclear how the Omicron variant will continue to affect Legislative procedure. As of now, it appears that Legislators and their staff are operating in a hybrid environment, with limited staff in office and in-person meetings taken on a case-by-case basis. Page 3 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B REDISTRICTING The decennial process of re-drawing state district lines to ensure districts have equal population size, maintain minority voting power, and are contiguous has officially concluded. The districts will take effect beginning in the 2022 election cycle and will continue for the next decade. The new line-drawing process garnered massive amounts of public comment regarding maps protecting communities of interest and Latino representation, as well as complications from the COVID-19 pandemic which among other things, delayed census data intrinsic to drawing maps. Major changes brought forth by the new district lines include one less congressional district and a greater number of districts with a Latino citizen voting age population greater than 50%. The new districts have also prompted many legislators' retirement announcements and will force many to move into new districts and court new voters or will pit incumbents of the same or opposing political parties to run against one another in what used to be their old districts. ANTICIPATED LEGISLATION 2022 marks the second of the two-year session, meaning legislation introduced in 2021 that has not yet moved to the second house must move forward in Januaryor will be dead for the legislative session. At the start of Session, there are a total of 140 measures eligible to be considered in the Assembly as 2-year bills and 83 measures in the Senate eligible to be considered as 2-year bills. Thus, January will feature a policy and fiscal committees in rapid fire in addition to the release of the Governor's budget proposal by January 10. Below is a summary of recent developments that may materialize into legislation in 2022. COVID-19 Legislation The 2021 session produced a number of bills aimed at reducing the economic impacts of COVID on California's most vulnerable residents and ensuring that essential functions of government could be held remotely. Of note was the passage of AB 361 (R. Rivas), which created criteria for state and local governing bodies to hold remote meetings under modified Brown Act standards. In addition, the Governor vetoed AB 339 (Lee). Which would have required local jurisdictions with a specific population to produce call-in and internet-based participation options in addition to in person options for members of the public during any public meeting. While the passage of Brown Act modification legislation was beneficial as local governments grappled with the need to social distance, its implementation was quick and is likely to need reform if applied to future emergencies. Despite this, there appears to be little appetite to modify AB 361 in 2022, which some say needs more time to understand its strengths and weaknesses. In addition to updates related to remote meetings legislation, there are likely to be a number of bills introduced related to the ongoing pandemic. These could include legislation allowing or restricting personal belief exemptions, mandating vaccinations for unvaccinated individuals, and expanding the definition of"fully vaccinated" to include booster shots. Near the end of the 2021 Legislative Session, gut & amend language circulated that would have required employees and patrons of certain industries to be vaccinated. Specifically, the bill would have required patrons of restaurants, bars, cafeterias, gyms, hotels, indoor sports arenas, and movie theaters either be fully vaccinated or submit to weekly testing and show proof of a negative COVID-19 test before entering the workplace/establishment as a condition of employment. While the language Page 4 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B ended up not being amended, it may signal a desire from the Legislature to use similar language in 2022 legislation. Public Safety Following the death of George Floyd and the civil unrest that ensued, it became apparent early on that 2021 would be the year for the Legislature to prioritize public safety reform legislation. The session produced a reform package that included changes to police immunity standards and a de-certification process, the release of records related to officers engaging in unreasonable or excessive force, and creating a robust curriculum for young officers entering the police force. Despite these massive reforms, there is still an appetite for a continued focus on public safety heading into 2022. In recent months, organized retail theft has dominated conversations related to public safety reform. In response to this, the Governor and the Attorney General unveiled a comprehensive public safety package that addresses organized retail theft, gun reform, and transnational drug trafficking. With regard to upcoming gun safety measures, the Governor officially announced that he will be working with the Legislature in 2022 to limit the sale of assault weapons and "ghost guns" in the state. The measure will be modeled almost identical to Texas' Senate Bill 8, which enacts an enforcement scheme by allowing private citizens to sue an abortion provider or someone suspected of aiding an abortion performed after the six-week window of time the state established as permissible to receive an abortion. The legality of the Texas law was adjudicated in the courts and was recently upheld by the Supreme Court. Governor Newsom's idea for similarly structured legislation would allow Californians to sue anyone who manufactures, distributes, or sells an assault weapon or ghost gun kit or parts for damages. On the budget front, Governor Newsom will plan to include the following investments into the budget sometime in January. What is unclear is if he will include it in his budget framework which set to be released on Jan. 10, meaning the funds would likely be available in summer of 2022. However, because 2022 marks the second year of the two-year session, there is another viable avenue,which would include amending a 2-year bill from 2021 and inserting the funding language to then expedite through the legislative process. This avenue could result in funds being available as soon as February. Below is a brief overview of the proposed investments: • $255,000,000 in competitive grants for local law enforcement agencies over the next three years to help advance the prosecution of retail crime rings. • $30,000,000 in grants to District Attorney offices throughout the state over a three-year period. • $20,000,000 in business assistance grants for small businesses affected by the recent uptick in retail theft crimes. • $25,000,000 to create a statewide gun buyback program by providing matching grants and safe-disposal opportunities to local law enforcement agencies. • $20,000,000 to enforcement along the border to fight transnational crimes related to drug trafficking. • $18,000,000 over three years for the creation of a dedicated state team of special investigators and prosecutors in the Attorney General's office to go after perpetrators of organized theft crime rings that cross jurisdictional lines. Page 5 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B In addition to the anticipated legislation and investments, the Governor and Attorney General emphasized the expanded collaboration of law enforcement personnel throughout the state to share information and help bring perpetrators to justice collectively. Housing and Land Use Similar to public safety legislation, the Legislature in 2021 was dedicated to implementing top- down housing and land-use reform, with the passage of bills like SB 9 and SB 10 which significantly increased development potential throughout the state. In addition, the Legislature passed bills like AB 215 (Chiu)which increases the enforcement authority within the Housing and Community Development Department(HCD)when it comes to pursuing legal action against local governments deemed noncompliant with their housing production goals. With regard to what to expect in 2022, its appears that the focus on new reform measures may be set aside to focus on the implementation and enforcement of existing measures. The start of the 2022 session also comes on the tails of the introduction of two new housing accountability units established in both the Attorney General's office and HCD, with a focus on holding local jurisdictions accountable for accomplishing their housing production targets. However,there are a handful of 2-year bills that have potential to reemerge in 2022.These include AB 1401 (Friedman), which would prohibit public agencies from imposing or enforcing a minimum parking requirement on developments near public transit, and AB 989 (Gabriel) which would establish a system capable of appealing a local government's decision to deny a housing development. Environmental Quality and Climate Resiliency After significant cuts to climate resiliency and disaster preparedness were made in the 2020 budget to account for pandemic-related budget shortfalls, the 2021 budget included a massive $3.7 billion appropriation over three-years to bolster the state's response to climate change and its effects. Notably, only a small portion of the $3.7 billion was appropriated in 2021, meaning that there is likely to be more funding available in 2022. Several compounding factors, such as the current drought and the annual threat of catastrophic wildfires, is sure to result in new legislation to both fund and support first responders and water-related infrastructure. Cannabis Tax Reform and Retail Expansion The interim period between the end of the 2021 session and the beginning of the 2022 session saw increased media attention related to the cannabis industry. Specifically, cannabis industry leaders have drawn attention to circumstances that they say undermine the legal cannabis activities and bolster illicit market activities. They claim that the plans to increase the cultivation tax, on top of the exacerbating amount of taxes already lodged at all cannabis activities have hindered industry expansion. In a recent meeting between legislative leaders like Governor Newsom, and cannabis industry CEOs, activists, and growers recently arranged a meeting with Governor Newsom, Senate Pro Tem Toni Atkins, and Assembly Speaker Anthony Rendon to discuss their legislative needs in the upcoming session. The conversations resulted in three legislative demands: to permanently eliminate the state's cultivation tax on cannabis, institute a three-year tax holiday for the cannabis excise tax and asking the Legislature to pass a law requiring local jurisdictions to allow retail commercial cannabis activity. It is likely that if the Legislature decides to take up these actions, Page 6 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B the first two demands related to tax reform would be incorporated in the Governor's 2022 budget, and that the last would be brought forth as legislation. Supply Chain Resilience Supply chain disruptions became a major issue in 2021 as a result of the pandemic. While major legislation addressing the issue did not come to fruition during the last session, it is anticipated in 2022. During the Legislature's interim recess period, the Assembly and Senate held a joint select committee hearing on California's ports and the goods movement. During the hearing, industry and port leaders discussed the need for collaboration at all agency and government levels to address the crisis and discussed their needs, which included investments in zero emissions infrastructure, workforce and training incentives, and data interconnectivity and visibility. In 2022 there is an anticipated focus on supporting the state's ports through legislative action that may include properties designated for temporary container storage, reassessing overweight corridor designations, and establishing a single individual leader as the point person responsible for leading the state on the sustainability of ports and the goods movement. Transportation In July 2021 the Legislature passed a comprehensive Transportation Infrastructure Plan, providing more than $5 billion ($3 billion from the General Fund) for transportation infrastructure across the state. This increase in funding was only to become available if the Legislature sent implementing legislation to the Governor by October 10th which included the appropriation of$4.2 billion in Proposition 1A High-Speed Rail funding. The transportation funding contingent on the additional legislation included the following: • $1 billion (General Fund) to deliver critical transportation projects in the LA region prior to the 2028 Olympics. • $1 billion (General Fund) for transit and rail projects statewide that improve rail and transit connectivity between state and regional/local services. • $500 million (General Fund) for the Active Transportation Program to fund more projects in the program's recently-adopted program. • $500 million (General Fund) to support critical safety improvements throughout the state. • Roughly $2 billion in special funds and federal funds for streets, roads, and highway projects. • $400 million for the development and implementation of projects intended to adapt to the changing climate to ensure that the state highway system is safe for the traveling public. Due to concerns with where the high-speed rail funding was going to be spent, the Legislature did not pass the necessary implementing legislation prior to the deadline. Instead, Legislative leaders and the governor's office agreed to continue negotiations on high-speed rail into 2022, and with those negotiations will come the promise of additional funding for various transportation priorities. Page 7 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B FEDERAL LEGISLATIVE UPDATE AND OUTLOOK BIPARTISAN INFRASTRUCTURE LAW Over the next few months, various agencies that are tasked with implementing and distributing funds allocated by the Infrastructure Investments and Jobs Act--now known as the Bipartisan Infrastructure Law will begin the process of outlining allocation amounts and procedures. Moving into the new year, there will be implementation of several new grant programs aimed at providing states and local governments with the needed funds to invest in their most in need infrastructure projects. A few highlights from the bill implementation in December include: • The FAA announced its first round of airport funding through the bipartisan infrastructure law. The FAA is investing $2.89 billion in airports around the nation in response to the Bipartisan Infrastructure Law. The money can be invested in runways, taxiways, safety and sustainability projects, as well as terminal, airport-transit connections and roadway projects. California is slated to receive $294,572,149. The money will come from the Airport Infrastructure Grant program, one of three new aviation programs created by the Bipartisan Infrastructure Law. • The U.S. Department of Transportation's Federal Highway Administration (FHWA) announced that it is providing $52.5 billion in funding to all 50 states and the District of Columbia under the Bipartisan Infrastructure Law. California is getting $4,862,447,187 in federal-aid highway funds. • On December 31, the FCC launched the Affordable Connectivity Program (ACP). This longer-term program was created by Congress in the Infrastructure and Jobs Act and replaces the Emergency Broadband Benefit program. The ACP provides eligible households a $30 monthly subsidy to purchase broadband internet services. The Affordable Connectivity Program will become a permanent program to provide households with discounted broadband service and allow participating providers to receive reimbursement for providing discounts. STUDENT LOAN REPAYMENT FREEZE Student loan forbearance, which started in March 2020 during the height of the COVID-19 pandemic, was set to expire on January 31. However, because of the omicron variant and intense public pressure, the White House paused student loan payments for an additional three months. The extended freeze will last through May 1,2022. COVI D-19 In early December, the Biden Administration laid out guidance to expand access to at-home testing. Americans with private insurance — who now are able to get tests covered in physician offices, pharmacies, and clinics with no cost sharing — will also be able to get at-home tests reimbursed by their insurance. For those not covered by private insurance, in addition to more than 20,000 federally supported free testing sites across the U.S., at-home tests will be distributed through key community sites, such as health centers and rural clinics. Additionally, to expand Page 8 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B access and affordability of at-home COVID-19 tests, the Departments of Health and Human Services, Labor, and the Treasury will issue guidance by January 15th to clarify that individuals who purchase OTC COVID-19 diagnostic tests will be able to seek reimbursement from their group health plan or health insurance issuer and have insurance cover the cost during the public health emergency. To ensure equitable access to free at-home tests for our uninsured and underserved communities, the President plans to double the commitment from September to distribute 25 million free tests to community sites to 50 million tests and will add rural clinics to the program. Partnerships with trusted community providers will aid in getting these important testing supplies into the homes of our hardest-hit communities. Under its authority to reimburse States for direct federal assistance to establish and expand COVID-19 testing sites, FEMA reinforced its commitments to fighting COVID-19. FEMA will fund testing to detect COVID-19 infections. This includes both in a medical setting (primary medical care facilities, temporary medical care facilities, and community-based testing sites) and testing needed to safely open and operate public facilities, including schools and government offices. Funding may be used to support both diagnostic and screening protocols. In general, FEMA will fund diagnostic and screening testing to determine if an active coronavirus infection is present and if an individual should take steps to quarantine or isolate from others. This funding may include costs for: • Laboratory testing materials and test kits, including antigen self-tests. • Contracting for testing support by a third party. • Testing facilities, including temporary facilities or expansion of space used for testing. • Staffing to administer tests. • Training for individuals to administer tests. • Signage and other communication materials. • Personal protective equipment and other administrative supplies to conduct testing and technology to register and track testing results. • Mobilization and demobilization of testing activities. • Facility operating costs (equipment, supplies, security, and cleaning/disinfection). FEMA is committed to working with states and their public health departments to establish and expand access to testing. LOCAL ARPA FUNDS FLEXIBILITY ACT In October, the US Senate unanimously passed the bill S.3011, the State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act. The bill would provide flexibility in the way State and Local Fiscal Recovery Funds provided by the American Rescue Plan Act (ARPA) can be spent. If enacted the bill would allow $10 million or 30 percent of distributed funds, whichever is greater, to be spent on a broad range of infrastructure projects. See the attached section by section summary for greater detail on the list of eligible projects. Although the bill passed the Senate in October, the House of Representatives has not taken action. Local governments are being asked to send in letters of support for the legislation to their congressional representatives urging them to take up the Senate-passed bill as soon as possible. A companion bill in the House has 10 cosponsors from California, they are: Representatives Page 9 DocuSign Envelope ID: BEEAB75A-8508-4310-BF6D-8D90EB180C2B Huffman, Panetta, Carbajal, Correa, DeSaulnier, Peters, Mike Levin, LaMalfa, Mike Thompson, and Lowenthal. BUILD BACK BETTER BILL Momentum on President Biden's $2 trillion climate and social spending bill which passed the House a month ago, appeared to slow to a halt. Democratic senators in December conceded there was no chance of passing the Build Back Better Act before the end of the year. It appears that portions of the bill may need to be reworked in order to garner support from Democratic Senator Joe Manchin (D-W.VA), who has expressed opposition to the bill's inclusion of a one- year extension of the expanded child tax credit, which he argues would result in tax hikes over the next decade. This recent issue comes after Senator Manchin expressed his opposition to the legislation's price tag, and that going over$1.5 trillion would be out of the question for his support. LOOKING AHEAD 2022 The actions of Congress and the Biden Administration will be influenced by one central occurrence in 2022: the midterm elections scheduled for November. Both congressional chambers and the White House are under Democratic control, but history and polling suggests that Republicans are poised to take the majority in the House of Representatives in the November elections. With this in mind, Democrats are motivated to advance as much of their agenda as possible in 2022. This includes social spending policies such as paid family leave, universal Pre- Kindergarten education, subsidized child-care, support for Affordable Care Act marketplaces, actions to curb greenhouse gas emissions, and more. Disagreements over the scope and scale of this agenda led to a breakdown in negotiations in late 2021. Expect Democrats to move forward with portions of their agenda in the first two quarters of 2022. The decennial process of redrawing congressional lines will have an impact on policies and representation in 2022. Following the certification of new congressional districts in December 2021 by the California Citizens Redistricting Commission, the state will lose a congressional seat due to slow population growth in the last decade, thus requiring an adjustment that wound up costing Los Angeles County one of its seats. Nevertheless, the overall trajectory of the new congressional maps favor Democrats, which could play a role in which party controls the House after the midterm elections. Additionally, in 2022 federal agencies will be busy at work implementing the Bipartisan Infrastructure Law passed in November 2021, the Infrastructure Investment and Jobs Act. This law provides $1.2 trillion over 5 years for roads, bridges, rail, transit, water, broadband, grid resiliency, and more. Funding will begin to roll out in 2022 through a combination of formula grants and competitive discretionary grants. The coronavirus pandemic will continue to impact federal policy making. Much will depend on the trajectory the pandemic takes and if additional federal funds are determined to be necessary to stem negative economic impacts. Throughout 2022, both Congress and the Biden Administration will be focused on the midterm elections. Decisions will be based on their ability to help win and actions will be heavily influenced by these political calculations. History has shown that this dynamic often limits the ability for Congress to enact sweeping legislation, which will be compounded by the historically slim majorities in both the House and Senate. Legislative inaction often leads the Administration to take bolder action through executive orders, rule makings, and litigation. Page 10