With the election and the holidays behind them, the California Legislature returns to Sacramento today to kick off a new session in earnest. It will be several more months before the political wrangling over the state budget and thousands of proposed bills truly ramps up. Still, priorities are emerging as lawmakers try to stake their claim on the hottest issues of the day. Here are some stories to watch at the Capitol in 2025:

Tackling Affordability

After a disappointing election for Democrats, legislative leaders reemerged with a message aimed at easing voters’ anxieties about how expensive California is. Senate President Pro Tem Mike McGuire, a Healdsburg Democrat, and Assembly Speaker Robert Rivas, a Salinas Democrat, both told CalMatters last month that their focus this session will be advancing policies that lower the cost of living for working Californians, including by building more housing, making energy cheaper and improving public infrastructure.

“Our only way forward is to acknowledge that we have to do better,” Rivas said. “It’s clear — we haven’t done enough.”

Their colleagues have responded so far with bills that would ease construction standards for small apartment buildings and increase the amount of ethanol that can be blended with gasoline, an effort to reduce prices at the pump. Expect many more proposals as legislators finalize their agendas in the weeks ahead.

But Democrats, who hold a three-quarters supermajority in both houses, face an arduous messaging war with the emboldened Republican minority, which flipped three seats in November. GOP lawmakers quickly introduced far-reaching measures — ending gas and electricity taxes, voiding low-carbon fuel standards, exempting tipped wages from taxation — that will almost certainly go nowhere but stand to make Democrats’ efforts look less consequential by comparison.

“I would call it an invitation to the Democrats,” Assembly Republican Leader James Gallagher of Yuba City said in an interview. “In order to actually do something about affordability, they have to back away from the policies they’ve championed.”

Resistance 2.0

While the response from California politicians to Donald Trump’s victory in the November presidential election has been far more subdued than it was eight years ago, they are still gearing up for a fight.

Days after Trump’s win, Democratic Gov. Gavin Newsom called for a special session to set aside funding for the state to take his Republican administration to court. Democratic lawmakers plan to rush in the coming weeks to appropriate $25 million for legal resources before Trump takes office on Jan. 20.

Though some have warned against getting sidetracked by another showdown with the president, legislators are also already putting forward proposals to safeguard Californians against actions they anticipate Trump will take. These include bills to ensure access to medication abortion, make contraceptives more readily available over the counter, and protect the privacy of patients getting abortions in California, as well as to further limit collaboration by state prisons and school districts with federal immigrant enforcement.

“The United States of America is in the calm before the storm. The hurricane is about to hit,” McGuire told CalMatters last month. “And shame on us if we’re not battening down the hatches.”

But even California shifted toward Trump in November: He gained vote share in all but one county, albeit by only enough for him to reach 38% of the statewide vote. Newly elected Assemblymember Carl DeMaio, a San Diego Republican, said in an interview that the GOP has an opportunity to capitalize on an overwhelming “appetite for change” among Californians.

While Democrats are “dividing and distracting” the public with their fight against Trump instead of “getting things done,” DeMaio said, he plans to use his popular conservative podcast as a daily platform to ramp up public pressure on the Legislature to shift course. He has introduced a 10-bill package challenging liberal orthodoxy on border security, voter identification requirements, tax increases, and early prison releases.

“The political system is untethered from where the public is,” DeMaio said. “The only way politicians see the light is when they feel the heat.”

Budget Woes

Fiscal advisers to the Legislature warned in November that California’s finances are precarious: roughly balanced for now, but barreling toward increasing deficits in the years ahead. Fear of losing federal funding under Trump, who has repeatedly threatened to withhold disaster aid from the state, is adding another layer of uncertainty.

Yet even as legislative leaders endorsed a cautious approach to the upcoming state budget, Newsom has floated several new programs with hefty price tags — from expanding the film and television production tax credit to reviving a rebate for electric vehicles. His full budget proposal is due by the end of this week.

Lawmakers have yet to meet to discuss their priorities, so it’s unclear how much they will be at odds with the governor as they work to pass a spending plan by the end of June.

Assemblymember Jesse Gabriel, an Encino Democrat who leads the Assembly budget committee, said the Legislature will carefully vet Newsom’s proposals, but any new programs it approves will likely require spending cuts elsewhere.

“We’re very clear-eyed about the fact that there’s potentially a lot of tough choices ahead,” Gabriel said in an interview.

So he expects the Legislature will lean more into its oversight role through the budget process this year to determine which programs are actually moving the needle and delivering results. “If they’re not working as intended, then they don’t deserve continued funding,” he said.

Tilting at Tech Giants

California remains at the center of tech innovation — and is increasingly at the forefront of regulating it, too. That tension over how to rein in potential abuses of Silicon Valley without kneecapping an industry vital to the state’s economy has become inescapable at the Capitol, especially with the rise of artificial intelligence.

“We still want to be a leader in AI. We don’t want China to surpass us,” Gallagher said. “The trick is really finding the right balance. I think there’s going to be a lot of discussion on this front.”

Lawmakers introduced a gusher of AI legislation last year, though major tech companies managed to beat back the most ambitious proposal, which would have required them to test their models for potential harms to society, by winning Newsom over to their side.

Expect the clashes to intensify this session as legislators seek to weigh in on everything from autonomous vehicles to false impersonation assisted by AI.

Social media use among young people is another charged debate. A bill to hold platforms liable for causing harm to children is back after dying last year amid fierce industry opposition. With the backing of Attorney General Rob Bonta, lawmakers may also consider creating mental health warning labels for social media.

Return of Reparations

The previous legislative session exploded into unexpected rancor just before its conclusion last summer when key Black legislators tabled a pair of bills that would have established a new state agency to work on reparations for descendants of slaves, bitterly disappointing activists.

Though a dozen other reparations-related measures were signed into law, the disagreement about how far and how fast to push for a policy that does not enjoy broad public approval opened a schism in the movement that could undermine its political momentum.

Lawmakers have introduced a handful of follow-up bills this session, including to establish admissions preferences at California universities and set aside money in a home purchase assistance program for descendants of slaves.

Assemblymember Tina McKinnor, a Los Angeles Democrat, revived a proposal to provide compensation to people whose property was taken by the government through racially motivated use of eminent domain, a bill Newsom vetoed last year. She said reparations proponents must continue to take baby steps to build support for their ultimate goal of cash payments to descendants of slaves, which she expected would take five to 10 years.

“As leaders, we have to do things sometimes that are unpopular,” McKinnor said in an interview. “I know last year, it ended in a bang. That’s not going to stop the Black Caucus from our plans.”

About the Author

Alexei Koseff covers Gov. Gavin Newsom, the Legislature and California government from Sacramento.

About CalMatters

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