Just before the June 30 deadline, Gov. Gavin Newsom used his experience and the clout of his office to push through the Legislature two excellent pro-housing bills. The bills reform the California Environmental Quality Act and were key parts of the budget package for fiscal year 2025-26, which began on July 1. Unfortunately, the overall budget spends at an unsustainable level.

Assembly Bill 130’s main provision grants a CEQA exemption to housing projects “located on an infill site.” Those are sites already in a developed urban area, such as vacant lots, Nolan Gray told us; he’s the senior director of legislation and research for California YIMBY, a pro-housing group. Unlike previous reform bills, which included numerous qualifications, AB 130 will “provide a clean exemption from the state’s onerous environmental laws.”

Senate Bill 131 streamlines the process for housing projects still subject to CEQA. The bill language requires studies only of factors “that may have a significant effect on the environment.” Gray said, “The two bills are complimentary. This is one of the most important things California has done to encourage housing production in a generation.”

To push through this housing reform, Newsom had to buck the state’s powerful special interests, especially environmentalists. It also was outrageous past CEQA exemptions had been given to SoFi Stadium and other sports arenas. Fans need housing, too.

It’s too bad Newsom didn’t exercise such leadership in passing the overall budget. The $321 billion total budget price tag was up $118 billion from the $203 billion of fiscal 2018-19, Gov. Jerry Brown’s last budget. That’s a 58% increase in just seven years.

In a Substack post, budget expert David Crane of Stanford University explained that, even as the state’s population declined in that time, state employee staffing increased 21% and compensation 48%. Meanwhile, private sector unemployment rose from 4.2% to 5.3% in May 2025. That’s 1.1 percentage points above the national rate; and third worst among the states, behind only Nevada and Michigan. Rival Texas is 4.1% and Florida 3.7%.

In May, Newsom blamed President Trump’s tariffs for a projected $12 billion state budget deficit, later closed through some cuts and fund shifts. We oppose the tariffs. But it’s obvious the real budget problem is over-spending, especially on state-employee compensation.

“Clearly, California has become less attractive to employers – and in my view, you ain’t seen nothin’ yet,” Crane concluded. “That’s because of inevitable tax increases to cover deficits papered over by Newsom and escalating payments on unfunded pension and other obligations to – you guessed it – public employees.”

California already suffers the third highest top state income tax rate, 14.4%, below only Oregon’s 14.69% and New York’s 14.78%. And our overall 7.25% sales tax rate, with add-ons in some locales, is the highest.

California has more than enough money to do what Californians expect state government to do. However, California’s Democratic supermajority continues to prioritize special interests and political convenience over the needs of Californians.

It is deeply unfortunate that a majority of Californians have yet to realize that they’re being shaken down by those they’ve chosen to oversee state government.

It’s great we will get more housing. But the next governor will have to grapple with an immediate budget crisis Newsom will leave behind as he’s busy campaigning to bring this “wisdom” to America.

- Los Angeles Daily News