Governor Gavin Newsom signed the tax conformity bill (SB 711, McNerney) October 1, conforming state law to various federal tax changes made since 2015.
“Senator Jerry McNerney and Senate Revenue and Taxation Committee Consultant Colin Grinnell went through an extensive process with stakeholders to build consensus for a meaningful conformity bill,” CalTax President Robert Gutierrez said. “We commend the senator and Mr. Grinnell for their exceptional work during this process.”
SB 711 is the first major conformity bill since 2015.
The governor also signed SB 302 (Padilla), which conforms state law to federal environmental tax credits.
In other action from the Governor’s Office:
Governor Vetoes Bill That Would Have Reduced Transparency of Local Tax Elections. Newsom vetoed AB 699 (Stefani), a CalTax-opposed bill that would have allowed local governments to improperly influence local tax elections by moving important information about proposed tax rates to a separately mailed voter guide in lieu of providing such details in the ballot question itself.
“While I appreciate the author’s intent to provide local agencies with the flexibility to select an alternative tax rate disclosure option, I am concerned that this bill, as drafted, will reduce transparency for local tax and bond measures,” Newsom wrote in his veto message, agreeing with concerns that CalTax raised during the bill’s trip through the Legislature.
New Law Asks Voters to Allow More Local Governments to Spend Tax Dollars on Political Campaigns. Newsom signed SB 42 (Umberg), a CalTax-opposed bill that places a measure on the November 2026 ballot asking voters to allow tax dollars to be used to support state and local election campaigns – a practice currently banned by the Political Reform Act, except in charter cities.
“At a time the state is dipping into rainy-day reserves to pay ongoing expenses and local governments are asking voters to approve more and more tax increases, the government should prioritize spending on core programs that help hardworking Californians — not giving tax dollars to political campaigns,” CalTax President Robert Gutierrez said. “In addition to misusing tax dollars, this legislation raises significant First Amendment concerns by forcing taxpayers to finance political speech that they may not wish to support.”
Revenue Losses and “Hostile” Federal Policies Cited in Veto Messages. As has been the case in past years, some of Newsom’s veto messages cited the potential loss of revenue and his desire that all bills with a revenue impact be considered as part of the state budget process.
For example, he vetoed SB 76 (Seyarto), which cleared the Legislature with no opposing votes and would have required the Department of Motor Vehicles to waive delinquent vehicle registration fees and penalties for a transferee or purchaser of a used vehicle in a private sale when the fees and penalties accrued before the purchase of the vehicle, starting in 2030.
“This bill would exacerbate the structural insolvency of the Motor Vehicle Account (MVA), the primary funding source for the DMV and CHP,” Newsom wrote. “Shifting collection responsibility away from purchasers would reduce revenues, increase administrative costs, and deeper long-term deficits. … We must set a very high bar for any significant new fiscal commitments until the MVA structural deficit is addressed in a sustainable way.”
In his veto message for SB 785 (Caballero), an unopposed measure to authorize a personal income tax credit up to $5,000 for unreimbursed expenses for dependents under the age of 18 with specified “complex medical conditions,” Newsom wrote: “I share the author’s goal of easing the financial burden on families who must bear the high costs of medical equipment. … However, new tax expenditures, such as what this bill proposes, should be included as part of the annual budget process, given their General Fund implications.”
Newsom added: “In partnership with the Legislature this year, my Administration has enacted a balanced budget that recognizes the challenging fiscal landscape our state faces while maintaining our commitment to working families and our most vulnerable communities. With significant fiscal pressures and the federal government’s hostile economic policies, it is vital that we remain disciplined when considering bills with significant fiscal implications that are not included in the budget, such as this measure.”
Newsom Approves Ban on Nondisclosure Agreements in Legislative Negotiations. Newsom signed AB 1370 (Patterson), which prohibits a member of the Legislature from entering into or requesting a nondisclosure agreement (NDA) in connection with negotiations over legislation. The bill had no formal opposition and cleared both houses of the Legislature without any opposing votes.
Newsom Signs Bill Appropriating $672 to Reissue Expired Checks, Including FTB Payment. Newsom signed AB 1533 (Wicks), appropriating $672 to the Department of General Services for the reissuance of two checks that expired before being cashed by the recipients: a $600 check issued by the Franchise Tax Board for a “Golden State Stimulus” payment and a $72 check from the Motor Vehicle Account for a vehicle license tax rebate. (CalTax: The cost of taking a bill from introduction through passage has been estimated to be approximately $30,000, according to a 2024 CalMatters inflation update to a 2002 estimate by the Legislative Analyst’s Office.)
Reforms Made to Process of Selling Tax-Defaulted Properties. The governor approved AB 418 (Wilson), enacting new requirements on counties before a property can be sold pursuant to a Chapter 8 tax sale, with the intent of ensuring that California’s process for selling tax-defaulted property complies with a recent U.S. Supreme Court decision on tax sales.
Property Tax Relief Approved for Owners Near Burning Landfill. Newsom signed AB 985 (Schiavo), extending property tax relief to properties impacted by the “Chiquita Canyon elevated temperature landfill event.”
Sales and Use Tax Exclusion for Alternative Energy Extended. The governor signed SB 86 (McNerney), extending the sunset date for the California Alternative Energy and Advanced Transportation Authority’s sales and use tax exclusion program to January 1, 2028, adding fusion energy as an eligible alternative source, and modifying the stated purpose of the program.
Sales Tax Relief for Volunteer Firefighters’ Fundraisers Signed Into Law. Newsom signed SB 87 (Seyarto), supporting fundraising efforts of volunteer firefighting departments by extending the sunset for the designation of a qualifying volunteer fire department as a consumer, not a retailer, for the purposes of collecting and remitting sales tax.
Fuel Tax Exemption for Bus Operators Is Expanded. The governor approved SB 359 (Niello), adding counties to the list of bus operators that are exempt from diesel fuel and use fuel taxes.
Governor Signs Bill Intended to Increase Usage of Foster Youth Tax Credit. Newsom approved SB 624 (Caballero), requiring the California Department of Social Services to issue guidance to counties about practices to support nonminor dependents with filing state and federal income tax returns and accessing the foster youth tax credit.