June 2026 Government Affairs

SCCA covers the latest developments affecting California's heavy civil construction industry, including transportation funding, labor and compliance updates, environmental regulations, energy policy, and key legislative actions. Laurie and Scott break down what these changes mean for contractors and the future of infrastructure across the state.

Transcript

SPEAKER_00 0:04

Welcome to the Southern California Contractors Association's June Government Affairs Update. I'm Lori.

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And I'm Scott. This month we're covering labor and compliance updates, transportation funding concerns, major regulatory developments, and several policy shifts that could directly impact contractors across California.

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Let's start with a practical compliance reminder.

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The California Department of Industrial Relations hosted a public works workshop focused on key compliance requirements for contractors and subcontractors this month. And that included apprenticeship compliance, prevailing wage requirements, contractor registration, certified payroll reporting, and a live QA.

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It's a useful opportunity, especially because public works compliance remains one of the most important risk management areas for contractors working in California. Staying with policy, transportation funding remains one of the biggest long-term concerns for the industry.

SPEAKER_01 1:00

Absolutely. Transportation California released another funding bulletin examining alternatives to the gas tax, including a potential road user charge, or RUC.

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And that conversation matters because California's traditional transportation funding model continues to weaken.

SPEAKER_01 1:16

Right. Higher fuel efficiency and EV adoption mean fewer gas tax dollars coming into transportation programs overall.

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On the regulatory side, there was a major development involving emissions policy.

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There was AB 1777, which could have expanded greenhouse gas regulation in ways that impacted construction equipment on project sites, failed to advance.

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That's a significant win.

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It is, but the broader regulatory pressure hasn't gone away. The California Air Resources Board is again exploring pathways to push fleet electrification, including proposals that could affect public contracting requirements for contractors operating medium and heavy duty fleets. So SCCA is continuing to monitor those developments closely.

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Energy policy also remained front and center this month.

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Yes, and Governor Gavin Newsom's proposed sustainable aviation fuel incentive, often called the SAF proposal, faced major pushback.

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The concern is straightforward. Nearly $300 million in diesel tax revenue could be redirected away from transportation infrastructure.

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And that's why SCCA opposes the proposal. Those dollars traditionally support transportation projects.

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Transportation challenges also show up in commuting pattern reporting.

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They do. One recent study found that about one in 11 California commuters spent at least an hour driving to work.

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That reinforces why mobility and roadway efficiency matter so much for workforce reliability. There's also an important equipment deadline approaching.

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HARB reminded industry members that PERP deadlines are approaching for Tier 2 and Tier III equipment.

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Contractors with portable equipment should review those requirements now, especially if emergency use or low use exemptions may apply.

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Switching gears briefly to the political landscape. And polling suggests strong regional differences across the state.

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California launched a new rebate program for certain zero emissions trucks and buses, while Congress continues debating whether EV owners should pay additional highway use fees. And that brings us back to the same funding issue.

SPEAKER_01 3:36

Exactly. If more vehicles avoid fuel taxes, policymakers have to find alternative revenue sources. Because despite sounding helpful, suspending the gas tax doesn't usually reduce pump prices.

SPEAKER_00 3:59

Right. History shows those savings often disappear into the larger fuel supply chain instead of reaching drivers. Congress approved major funding tied to LA 28 preparations with potential federal support for transit improvements in the Los Angeles region.

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But long-term transit funding challenges remain.

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The report shows roughly 6.4 million workers in construction and extraction occupations nationwide, with laborers remaining the largest segment.

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Definitely. Governor Gavin Newsom has now signed California's new $351 billion state budget, closing month of negotiations.

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So that budget reflects roughly $100 billion in growth compared to just a few years ago. Even with the budget finalized, several transportation-related issues remain unresolved, including the SAF funding proposal.

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There was also movement on highway policy.

SPEAKER_00 4:49

Right. Lawmakers removed some of the strongest anti-highway provisions from AB 2560, which many in the industry viewed as encouraging overly restrictive transportation policy.

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And congestion remains costly.

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Very costly. A recent report found rough roads, crashes, and congestion cost California motorists nearly $100 billion annually.

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That's staggering.

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It is. And transit agencies are also facing growing budget deficits, with some already reducing service levels.

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We're also watching local policy proposals, including the city of Los Angeles exploring public asphalt production, as well as a proposal that could reshape California's top two primary system.

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Taken together, these developments show just how interconnected transportation funding, regulation, labor policy, and infrastructure delivery have become.

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And for contractors, these policy shifts don't stay in Sacramento. They eventually show up in bidding, scheduling, compliance, and project delivery.

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Well, that concludes our update for today. If you have specific questions, don't hesitate to reach out to the SCCA team for more information. Thanks again for joining us. We'll see you again next time.

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This broadcast was produced with the help of AI and is intended for general informational purposes based on materials from the Southern California Contractors Association. Labor and regulatory matters may change, so please stay informed on developments that may affect your business.