As the California Legislature enters the second year of its two-year session, Sacramento is operating at a pace shaped by an open governor’s seat, a packed November ballot, and dozens of legislative seats in play due to retirements and term limits. The political dynamics of an election year are already influencing the policy agenda, making 2026 one of the more consequential sessions in recent memory for California business.

Bills held over from 2025 are back in play, and artificial intelligence continues to dominate the policy conversation. Dozens of measures address algorithmic transparency, automated employment decisions, and consumer data protections. California has been here before with technology regulation, and this year’s volume signals a serious push to establish rules governing AI use across both public and private sector operations.

Property insurance remains an unresolved issue for the Legislature. Carriers have continued reassessing exposure tied to wildfire risk, construction costs, and reinsurance pressures, and multiple reform proposals are moving through committee. How this resolves will directly affect housing development, commercial lending, and investment activity throughout the region.

Closer to home, water is central again this session. Colorado River allocation negotiations, agricultural water use mandates, and Salton Sea restoration funding are all active in Sacramento. Our agricultural sector remains directly exposed to any shifts in availability or pricing, and the air quality and public health dimensions of Salton Sea policy continue to require sustained legislative attention and funding.

Renewable energy policy carries significant local stakes as well. With some of the state’s highest solar generation capacity concentrated in the Inland Empire, proposals on transmission corridors, desert land use, and utility rate structures will directly affect landowners, businesses, and ratepayers. As the state accelerates its clean energy buildout, the desert’s role in that effort remains a consistent pressure point in Sacramento.

On transportation, AB 1421 continues moving a road usage charge framework forward as a potential replacement for the gas tax. No fee is imposed yet, but the policy groundwork is being laid. ACA 12 would constitutionally prohibit charging both a road usage fee and a gas tax on the same vehicle simultaneously, though as a constitutional amendment it would require voter approval to take effect.

Governor Newsom’s proposed budget also remains a backdrop to the entire legislative session. With the state continuing to navigate a structural deficit, funding for programs tied to water, infrastructure, and workforce development remains uncertain. Businesses should expect budget pressures to influence which policy priorities actually move and which stall for lack of funding.

Layered over all of this is the governor’s race. With Gavin Newsom term-limited, California has its first open seat in years, and the field is competitive. Under the top-two primary, the two highest vote-getters in June advance to November regardless of party. On the Republican side, Riverside County Sheriff Chad Bianco and former media commentator Steve Hilton are the primary contenders. Among Democrats, Congressman Eric Swalwell, former Congresswoman Katie Porter, and businessman Tom Steyer have each built campaigns with distinct policy identities and real fundraising operations. The next governor will shape California’s regulatory climate, labor policy, and energy direction for years, and chamber members are encouraged to follow where candidates stand on the issues that matter most to our regional economy.

The November ballot will add another layer of complexity. Transportation funding, housing, taxation, and environmental policy are all areas where initiative campaigns are being organized. This is already shaping up to be the most expensive ballot initiative year in state history, with spending estimates topping $1 billion before a single vote has been cast. California’s initiative process can move policy faster than the Legislature, and that level of investment signals just how consequential this cycle is expected to be. The Chamber will communicate its positions as measures qualify and campaigns develop.

Committees are already advancing early bills and the pace will accelerate through the summer. Water, energy, insurance, heat policy, and transportation will all see significant movement before the session ends. The Chamber’s advocacy in Sacramento is most effective when members are engaged and informed, and we will be there representing valley businesses every step of the way.

Brandon Marley
President/CEO