May 2026 Sacramento Update

The Legislature has now passed the policy committee deadline and officially moved into fiscal season, where the focus shifts to bills with state costs and their prospects in the Appropriations Committees. This is often where major proposals are narrowed, delayed, or stopped altogether. Attention will also soon turn to the Governor’s revised budget, expected the second week of May, which will provide an updated fiscal outlook and shape negotiations heading into the June 15 budget deadline.

For the banking industry, several priority measures remain active. AB 2674 (Schiavo) continues to advance, though recent committee amendments removed the private right of action and investigation mandate—significant improvements. Concerns remain, however, that the bill’s core fraud-intervention standard is still broad and subjective. AB 1842 and AB 1847 (Harabedian), which extend the state’s mortgage forbearance allowances, also remain in play after clearing policy committees, though both received tough scrutiny and are likely to face additional debate as they move forward. Meanwhile, AB 2243 (Haney) regarding the State Bank Act continues through the process after prior amendments scaled back some provisions (deleting the provision permanently extending the sunset on local public banks and bringing any State Bank Commission report back to the Legislature, it’s not self-executing). 

On the political front, the 2026 Governor’s race continues to take shape. Congressman Eric Swalwell has exited the race following controversy, further consolidating the Democratic field. Current polling shows Steve Hilton (R) and Tom Steyer (D) near the top, making the prospect of a Republican-versus-Republican general election increasingly unlikely under California’s top-two primary system. With months still to go, fundraising, endorsements, and voter sentiment will remain highly fluid.