The California Legislature has passed a state budget for the 2025-2026 fiscal year, beginning on July 1. The budget, amounting to $325 billion, aims to address a projected $12 billion deficit primarily through borrowing rather than spending cuts. According to CalMatters, lawmakers are required by law to pass a balanced budget by June 15 or risk losing their pay. Negotiations with Governor Gavin Newsom will continue as they work towards a compromise before the fiscal year starts.
Small businesses in California face challenges due to the state’s decision not to allocate funds towards repaying its $20.3 billion debt from federal unemployment insurance loans. This situation leaves California and the U.S. Virgin Islands as the only entities still owing money from such loans.
Some legislative actions have been expedited through the state budget process. Assembly Bill 609 and Senate Bill 607, both supported by NFIB, have been included in the budget to exempt certain housing projects from CEQA requirements and reduce environmental impact report usage.
In Washington D.C., President Trump recently signed measures that override some of California’s vehicle emission regulations set by the California Air Resources Board (CARB). These changes affect rules related to zero-emission vehicles and heavy-duty truck sales.
Despite these developments, CARB’s Low-Carbon Fuel Standard remains unchanged. NFIB has expressed concerns about its potential economic impact on small businesses.
Starting July 1, excise taxes on gasoline and diesel fuel will increase slightly in California. Additionally, several localities will see rises in their sales tax rates due to voter-approved district taxes.
NFIB reminds business owners of upcoming financial changes and invites them to stay informed through resources like the Main Street Minute newsletter.
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