AI Rules, Big Ticket Bills Face Veto Threat at Governor's Desk

(TNS) — Proposals to regulate AI, cap insulin costs and provide lawyers to children in immigration court are among the policies California lawmakers are debating this week as they conclude their work for the year.

But the Legislature isn't the final hurdle: Once lawmakers wrap up their work on Saturday, the bills they pass will have to win approval from Gov. Gavin Newsom.

Newsom, a Democrat, will probably sign most of the bills the Democratically controlled Legislature sends him. But ones at particular risk for a veto include bills with high price tags, which Newsom frequently targets. During the same period last year, he vetoed about 18% of bills lawmakers sent him, often citing cost concerns.

That dynamic could be exacerbated this year as federal cuts and budget pressures intensify demand for limited state funding. Newsom and lawmakers reduced state spending in their June budget agreement to make up for a projected $12 billion deficit. That happened before federal lawmakers passed a massive spending bill with deep cuts to health care, food assistance and other safety net programs. President Donald Trump is also targeting California for other federal funding cuts, including to schools.

"The threat of the federal government is very real in terms of our budgetary concerns," said Assembly Member Buffy Wicks, D-Oakland, who chairs the Assembly Appropriations Committee. "I think at every turn the federal government is looking for opportunities to punish California."

Some of the bills with significant price tags are in response to Trump's policies. One, by Assembly Member Mia Bonta, D-Alameda, would require the state to provide lawyers for unaccompanied children in immigration court. The measure would cost between $17 million to $77 million, according to the Assembly Appropriations Committee, which analyzes bill costs. Lawmakers voted to send that bill to Newsom on Thursday.

Bonta, who introduced the bill in response to Trump's mass deportation efforts, said she thinks the bill is worth the price and hopes the governor will sign it out of concern for immigrant children.

"What's the price of doing what is morally the right thing?" Bonta asked. "I can't think of anything more vulnerable than an infant or a 6-year-old or a 12-year old having to sit in a court of law unaccompanied without the right or even access to counsel, facing deportation."

Assembly Member Tina McKinnor, D-Hawthorne, said she's optimistic the governor will sign two of her bills aimed at advancing racial justice, even though they would cost the state money.

AB57 would dedicate 10% of state subsidies for first-time homeowners to the descendants of enslaved people. The bill would need money appropriated in a future budget year, and would likely cost tens of millions of dollars each year, according to an analysis by the Senate Appropriations Committee.

AB62, also by McKinnor, would compensate people who were not properly compensated when the government took their property because of their race. The bill's cost would depend on how many people take advantage of the program, and could range from tens of millions to hundreds of millions of dollars, according to the Senate Appropriations Committee.

"If I get one, I'm very happy, but you know, I always wish for two and hope that I get them both signed," she said of the bills, which both passed Tuesday. "But I know what kind of budget constraints we're in."

While the budget outlook always affects what governors sign or veto, there are exceptions, like expensive bills signed during deficit years, said Sen. Scott Wiener, D-San Francisco.

"Governors look at the cost, but they also look at what they think about the bill," said Wiener, who chairs the Senate Budget Committee. "So it's always complicated."

Newsom historically has also been sensitive to arguments by the tech industry that overregulation could hurt innovation and companies' profits. That industry in particular is also a cornerstone of California's economy and, by extension, the state budget. Last year, he vetoed a sweeping AI regulation bill authored by Wiener, while signing what he described as more "surgical" AI bills that placed more targeted guardrails on the rapidly advancing technology.

This year, Wiener has returned with a pared-back approach to regulating AI: SB53, which requires developers of the most powerful and expensive AI models to test and plan for potentially catastrophic risks that could kill more than 50 people or result in more than $1 billion in damage. Those could include using the technology to create a biological weapon or destroy critical infrastructure.

The bill is one of many aimed at the tech industry this year, including proposed regulations for AI companion chatbots and digital age verification requirements for companies.

Assembly Member Rebecca Bauer-Kahan, D-Orinda, has advanced multiple tech regulation bills this year, including ones to bar companies from making potentially harmful chatbots available to children, crack down on artificially generated pornography and require warning labels on social media websites. She said she's hopeful that Newsom's experience as the father of four children will influence him to sign regulations intended to protect children. And she noted that his own AI working group produced a report providing a framework for regulation, which she said she hopes he takes into consideration.

One of her tech regulation bills, AB1018 attempts to ensure automated decision-making algorithms don't discriminate against people based on characteristics like gender or race. State agencies estimate the bill could cost them hundreds of millions of dollars. Bauer-Kahan said she's still hopeful Newsom will sign it if it passes this week.

"I'm hopeful that that will guide him to be thoughtful in signing bills," she said of the report. "He is very cost-conscious, as he should be ... so we will see how that shapes up, because I think choices will have to be made about resources."

Wiener also pointed to the AI report as a sign that his SB53 will fare better than his sweeping AI bill did last year.

"We based the bill on that report," Wiener said. "He has not said that he is signing it, but I am cautiously optimistic."

Wiener has multiple bills this year that Newsom vetoed previous versions of before, including SB40 to cap insulin copayments and deductible costs to $35 for a 30-day supply and SB41 to impose new restrictions on prescription drug middlemen known as pharmacy benefit managers. Both bills passed earlier this week. Wiener said he's optimistic about those measures, too.

Newsom has already committed to signing some bills. He announced Wednesday that he made deals with legislative leaders to extend the state's cap-and-trade program, add funding to cover costs of catastrophic wildfires and increase oil production.

Those deals, which were secured Wednesday morning, are forcing lawmakers to extend their legislative session by a day. They had been scheduled to end their work for the year Friday, but now plan to convene Saturday morning to pass the environment bills agreed to Wednesday.

For most bills, however, we don't know how Newsom will act. He faces an Oct. 12 deadline to sign or veto all bills lawmakers send him this week.

"He has tough choices to make," Wicks said. "It's a difficult budget year, but yet we have really important needs for our constituents."

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