Welcome to Capitol Confidential! I’m Kathryn Palmer, your newsletter host bringing you in-depth reporting on the most impactful state Capitol in the country. 

Powered by legislative tracking platform USLege, Capitol Confidential will dive deeper into the debates, bills, personalities and power players shaping legislation in the state. 

As we get up and running, I’ll start out with a weekly dispatch from Sacramento, offering a rundown of the leading news coming out of the state Capitol. As I get a bit more settled we’ll amp it up to a thrice-weekly newsletter. In the meantime, I’ll be roaming the Capitol halls (make sure to say hi!), scheduling meet-and-greets and lamenting to my fellow Sacramento natives about the outrageous price of parking downtown. 

If you’ve got some parking hacks, opinions about the goings-on in the Legislature and bills or discussions flying under the radar, reach out to me at [email protected]. 

While I’m slowly settling back into life in the City of Trees after a few years of political reporting in New York City (I call it a reverse Lady Bird), the Capitol is buzzing with a more frenetic energy.

The constitutional deadline to wrap up the budget is a few days away, on June 15, and last-minute pitches, rallies and press conferences have been a steady feature along the Capitol steps.

– SEIU California members fanned out across the Capitol Park in a high-energy rally on Wednesday that underscored one of Gov. Gavin Newsom’s central budget challenges as negotiations among lawmakers continue: healthcare costs.

Newsom’s proposed $300 million in healthcare premium assistance has drawn criticism from healthcare groups, alleging it doesn’t do enough to backfill federal cuts. The Senate has backed the Fair Share Contribution, which would require the top 1%-2% of the largest California corporations to contribute to the Medi-Cal costs of their workers in a bid to shore up funding lost to federal slashes, setting up a potential tug-of-war with the Assembly as it considers its own response. 

– Meanwhile, state Sen. Scott Wiener, D-San Francisco, made the case for what has become arguably his signature issue: transportation funding. 

In a press conference on Wednesday backdropped by a raucous and purple-tassled caravan of SEIU California workers, Wiener joined state Sen. Jesse Arreguín, D-Berkeley, and a coalition of climate, housing and transportation advocates to urge legislative leaders to prioritize transit funding. The last-minute appeal came after Wiener, Arreguin and more than two dozen other lawmakers sent a June 5 letter to Newsom, Senate Pro Tempore Monique Limón and Assembly Speaker Robert Rivas, raising alarm over impacts of the California Air Resources Board’s recent overhaul of California’s cap-and-invest program. The lawmakers say the changes will “fully defund” two programs that have provided capital investments and operation assistance to public transportation systems and agencies across the state, aimed at reducing greenhouse gas emissions and improving functionality. Between the two programs, it’s $600 million in annual funding that Wiener and the 28 other lawmakers say needs to be protected from cuts. 

– Unlikely allies are howling over what they say is a worthy cause that’s not getting enough funding in Newsom’s proposed state budget: wolves. Newsom’s plan includes little or no funding for programs central to managing California’s emerging wolf population, the Chronicle’s Kurtis Alexander reports.

For years, California’s emerging wolf population has pitted wildlife and conservation groups against ranching communities, with the two sides at loggerheads over how to manage the iconic predator’s return to parts of the state.

But now the two sides have forged an unlikely alliance, Alexander writes, and are urging the governor and Legislature to comprehensively increase funding for wildlife management.

Groups representing ranchers and farmers across dozens of counties take issue with the lack of 2026-2027 funding for the state’s Wolf-Livestock Compensation Program, which provides financial reimbursement to ranchers whose livestock is killed by wolves. In the current budget, the program was allotted $2 million, while this year’s proposal offers zero new dollars.

Prominent wildlife and conservation groups say the Human Wildlife Conflict Program, which works to help lessen human-wildlife conflicts, is underfunded. The program is set to receive $1 million under the proposed budget, but the interest groups say that’s millions short of what it should be.

Two bills making their way through the Legislature, AB1675 by Assembly Member Alex Lee, D-San Jose, and AB2465 by Assembly Member Liz Ortega, D-San Leandro, would bar companies connected to private immigration detention operations from receiving certain California tax benefits and public contracts. Authors and supporters of the legislation say it would financially isolate the detention industry, and contribute to broader efforts by immigrant-rights advocates and lawmakers to pressure corporations from investing in ICE detention centers. 

But, that’s not all the bills could do, as the Chronicle’s Laura Waxmann reports.

Affordable housing developers and investors say that the two measures, as currently written, could also disrupt a section of the state’s affordable housing finance market, and inadvertently draw it into a broader political fight. 

Some affordable housing investors could now face new risk under the bills, including large U.S. banks, because of their broader corporate relationships with private prison or detention operators. 

A representative for one bank, which has invested billions in affordable housing through the state’s Low-Income Housing Tax Credit program, told the Chronicle that it has halted tax credit transactions that were set to close in recent weeks. The reason? “Uncertainty” over AB1675 and AB2465, Waxmann reported.

Affordable housing advocates say affordable housing projects have already been stalled and many more could be impacted unless the legislation provides a carve-out for affordable housing tax credits.