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The Legislature adjourned for its month-long Summer Recess on July 2, 2026, and will reconvene on Monday, August 3, 2026, for the final stretch of the two-year session. When lawmakers return, the focus will shift to floor votes on two-year and newly amended bills, with the last day to pass bills out of the Legislature being August 31, and the Governor's bill-signing deadline on September 30, 2026. ACHD will continue to track and engage on priority bills through the remainder of session and will keep members updated on key floor votes and gubernatorial action.
Bills:
AB 1337 (Ward) – Information Practices Act of 1977
AB 1337 would have removed the current exemption that counties, cities, special districts, and other local agencies have from the state's Information Practices Act (IPA) and would expand the definition of "personal information" and related agency obligations. AB 1337 failed to be taken up in the new Senate Privacy Committee and therefore is dead for the remainder of this session. – ACHD OPPOSE
AB 2311 (Schiavo) – District Hospital Physician Employment Act
AB 2311 would create a narrow exemption to California's corporate practice of medicine restrictions to allow district hospitals, as specified, to directly hire physicians. AB 2311 passed out of Senate Health Committee unanimously on July 1. The Committee did require the author to accept an amendment limiting the applicability to hospitals with a combined Medicare and Medi-Cal rate of 75% or greater or those that received a distressed hospital loan. ACHD has surmised this allows for 14 of the 17 originally eligible hospitals to take advantage of the pilot. While the amendment is less than ideal, it did remove the majority of registered opposition, including the California Medical Association, the California Chapter of the American College of Emergency Physicians, the California Society of Pathologists, and the California Orthopedic Association. The bill will now move to the Senate Appropriations Committee – ACHD SPONSORED
SB 1304 (Wahab) – Respiratory Care Practice Act
SB 1304 is the sunset-review bill for the Respiratory Care Board, extending the Board's sunset date from January 1, 2027, to January 1, 2031, updating licensure examination requirements to align with the national Registered Respiratory Therapist credential, and establishing mandatory suspension/revocation of a license upon conviction of specified serious felonies. ACHD, alongside a coalition of stakeholders, has been requesting amendments addressing the LVN scope-of-practice issue as it relates to respiratory tasks provided in certain settings. The bill was amended out of Assembly Business & Profession’s Committee to specify certain tasks LVNs may still perform, including trach and vent suctioning. ACHD alongside the coalition continues to ask for amendments to the bill to simply make both hospitals and skilled nursing facilities exempt settings. – ACHD OPPOSE UNLESS AMENDED
AB 1811 (Rogers) – Health Professional Shortage Areas
AB 1811 would establish a state definition of "health professional shortage area" (HPSA) that state programs can rely on — including areas determined by the Department of Health Care Access and Information (HCAI), those designated by the federal Department of Health and Human Services, or those recognized as an HPSA as of January 1, 2025, regardless of whether the federal designation is later withdrawn — through January 1, 2035. The bill was also amended to include updates to the provider surveys to modernize our state data collection efforts. The bill moved out of the Senate Health Committee on July 1, on consent. – ACHD CO-SPONSOR
AB 2282 (Alanis) – Health Facilities: Emergency Medical Services
AB 2282 is a district-specific bill authorizing the Del Puerto Health Care District (Stanislaus County) to obtain a special permit to operate a rural emergency stabilization care unit, waiving certain general acute care hospital licensure requirements given the district's geographic isolation and long travel times/distances to the nearest full-service hospital. The bill was heard in Senate Health Committee on July 1, and passed out of committee, 6-1. - ACHD SUPPORT
AB 1923 (Soria) – Distressed Hospital Loan Program
AB 1923 is a California Hospital Association-sponsored bill that would turn the original Distressed Hospital Loan Program (DHLP) into a grant, offering complete loan forgiveness for qualifying hospitals. The bill passed out of Senate Health Committee on July 1 and will now head the Senate Appropriations Committee. - ACHD SUPPORT
Ballot Initiative Update:
June 25, 2026, was the deadline for sponsors of qualified initiatives to withdraw them from the November 2026 ballot in exchange for a legislative deal. Ahead of that deadline, the California Hospital Association and SEIU-United Healthcare Workers West reached an agreement to pull two competing, dueling initiatives from the ballot:
• The Health Care Executive Compensation Act of 2026, which would have capped total compensation for healthcare executives, administrators, and managers at $450,000 per year, has been withdrawn as part of the deal.
• The California Hospital Association's companion measure — which would have required health care labor unions to disclose and obtain member approval for political spending on ballot measures — was also withdrawn as part of the same agreement.
However, two other SEIU-UHW-sponsored measures were not part of that deal and are moving forward to the November 2026 ballot:
• The Billionaire Tax Act (a one-time 5% tax on the accumulated wealth of California residents with a net worth over $1 billion, estimated to raise approximately $100 billion, with 90% directed to health care programs such as Medi-Cal and 10% to education and food assistance) qualified for the ballot on June 17 and remains headed to voters despite Governor Newsom's efforts to broker a last-minute compromise.
• The Clinic Funding Accountability and Transparency Act (the FQHC "mission-spend" initiative), which would require nonprofit federally qualified health centers and FQHC Look-Alikes to spend at least 90% of annual revenue on mission-related expenses, also qualified and is moving forward to the November ballot.
ACHD will continue to monitor these initiatives as campaign activity ramps up heading into the fall and engage as appropriate. At this time, the ACHD Board of Directors in consultation with the ACHD Advocacy Committee has adopted an oppose position on the Clinic Funding Accountability and Transparency Act and a watch position on the Billionaire Tax.
Budget:
Governor Newsom signed the 2026–27 Budget Act (SB 111, Laird) on June 29, 2026, along with a package of trailer bills. The Administration and Legislature describe the budget as balanced, with no deficit projected this year or next, while preserving nearly $30 billion in reserves (over $35 billion including additional holding accounts). Compared to the Governor's January proposal, the final deal reduces the state's projected 2029-30 structural deficit to roughly $8.4 billion, down from an estimated $23 billion, aided in part by new revenue from SB 122 (below).
Major Health-Related Deal Points (SB 111)
• MCO Tax Reauthorization: The budget continues the state's Managed Care Organization (MCO) provider tax on health plans, a critical funding source for Medi-Cal and for Proposition 35 provider rate increases, in light of new federal requirements affecting the tax's structure.
• allcove Youth Mental Health Centers – $7 Million: The budget includes $5 million for allcove youth mental health centers statewide and an additional $2 million dedicated to tribal allcove centers, for a combined $7 million investment in the allcove model — a proven, community-anchored, no-cost drop-in center that pairs mental health, physical health, substance use, and peer support services for young people ages 12-25. This funding, which ACHD supported, helps preserve the program through its pilot, which several member communities had feared losing amid broader behavioral health funding pressures.
• Rural Health Clinics and Community Health Centers: The budget delays roughly $1.1 billion in previously proposed ongoing cuts to health centers and rural health clinics.
• Family Planning and Public Health: The budget rejects proposed cuts to Proposition 56 family planning/women's health supplemental payments and to public health funding for programs such as the California Reducing Disparities Project and reproductive health justice grants.
• Other Investments: The final budget also protects funding for reproductive health, gender-affirming care, security for nonprofit institutions, Covered California premium subsidies, diaper banks, restorative justice programs, and backfilling of federal cuts to crime-victim services.
Medi-Cal Asset Test: Governor's Further Cut Rejected
Some background: after several years without any asset test, California already reinstated a Medi-Cal asset limit effective January 1, 2026 — a decision made in last year's budget — set at $130,000 for an individual, plus $65,000 for each additional household member (i.e., $195,000 for a couple), applicable to non-MAGI Medi-Cal programs that serve seniors, people with disabilities, and those needing long-term care. Current enrollees only need to report assets at their first renewal after January 1, 2026; younger adults and children in Medi-Cal expansion categories are not subject to any asset test.
The Governor's January and May Revision budget proposals sought to go much further, proposing to slash that $130,000 limit down to just $2,000 for an individual ($3,000 for a couple) — the decades-old, pre-2022 federal minimum — beginning January 1, 2027, as a General Fund cost-saving measure. Advocates warned this roughly 98% reduction would force seniors and people with disabilities to spend down modest savings, jeopardizing housing stability and eligibility for linked programs like In-Home Supportive Services (IHSS). The final signed budget rejects this proposed cut, keeping the current $130,000/$65,000 asset limit in place for 2026-27 with no further reduction scheduled.
Medi-Cal Coverage for Immigrants with Unsatisfactory Immigration Status (UIS): Managed Care to Fee-for-Service
Under new federal guidance issued by the Centers for Medicare & Medicaid Services (CMS) under the Trump Administration, states are barred from using risk-based managed care to cover Medicaid-eligible emergency services for individuals with "unsatisfactory immigration status" (UIS). To comply, the budget transitions roughly 2 million UIS Medi-Cal enrollees out of managed care plans and into the fee-for-service (FFS) delivery system, effective January 1, 2027.
Key details:
• The budget includes $39 million for care coordination and patient navigators to help UIS enrollees navigate the transition from managed care to FFS and connect with providers.
• The budget holds the UIS monthly premium at $30 for full-scope coverage for adults ages 19-59 (rather than allowing it to increase to $50 as the Governor's May Revision had proposed); any further increase, up to $50, would have to be considered by the next Governor's May 2027 budget revision rather than being locked in now.
• The budget delays, by 12 months, most of the previously scheduled UIS-related benefit cuts — including the elimination of dental coverage and prospective-payment reimbursement for community clinics serving UIS patients, pushing those changes to July 1, 2027.
Distressed Hospital Loan Program: New Funding
Financial distress among California hospitals — particularly rural and safety-net facilities — was a major theme of this year's budget cycle. Earlier this spring, the Legislature and Governor moved quickly to enact AB 108, a $25 million one-time grant program for nonprofit and public hospitals in immediate financial distress (fewer than 10 days cash on hand), administered by HCAI as the Distressed Hospital Small Grant Program, with unencumbered funds reverting to the General Fund after June 30, 2026.
The final 2026-27 budget goes further, building on the original Distressed Hospital Loan Program (DHLP) created by AB 112 in 2023 (which awarded $292.5 million in interest-free loans to 16 hospitals, including funds that helped reopen Madera Community Hospital). The signed budget includes:
• Up to $190 million in additional General Fund dollars for new rounds of forgivable loans through the DHLP; and
• $10 million in General Fund dollars to establish a new Healthcare Access Stability Unit at HCAI, which will provide planning support and technical assistance to help hospitals and health systems maintain critical services during periods of financial distress.
This budget augmentation is separate from the ongoing discussion for those that received the initial DHLP funding, a legislative solution that is currently being sought by AB 1923 (see Bill Update, above), which is still moving through the Legislature.
SB 122 – Taxation (Signed) & ACHD/CSDA Clean-Up Effort
As part of the budget package, Governor Newsom signed SB 122 on June 29, 2026. SB 122 is a budget trailer bill that expands California's sales and use tax base, for the first time, to "digital products," meaning prewritten computer software, including Software-as-a-Service (SaaS) products, however delivered (physical media, electronic download, or remote access), effective January 1, 2027. Custom software built to order remains exempt, but off-the-shelf and subscription-based software purchases, the kind commonly used by public agencies, including healthcare districts, for administrative, clinical, and IT systems, will newly be subject to the state's 7.25% sales and use tax plus applicable local district taxes.
Because SB 122 does not exempt public agencies, it would significantly increase healthcare districts' costs for software and technology purchases. ACHD and the California Special Districts Association (CSDA) are co-leading a clean-up effort to secure an exemption for special districts (including healthcare districts) from this new tax on software and SaaS purchases. ACHD will keep members informed as this clean-up language is drafted and moves through the Legislature and will alert members to opportunities to weigh in with legislators.
Reminder: Rural Health Transformation
California has been awarded $233.6 million in federal Fiscal Year 2026 funding through the federal Rural Health Transformation Program (RHTP), administered in California as "CalRHT" by the Department of Health Care Access and Information (HCAI). CalRHT funding is organized around three initiatives: the Transformative Care Model, Rural Health Workforce Development, and Rural Health Technology and Tools.
The first grant opportunity under the program — the Accelerator Partner Program (part of the Transformative Care Model initiative), supporting hospitals and other rural organizations implementing regional hub-and-spoke care collaboratives — is now open for applications. The application portal is expected to open shortly; in the meantime, districts are encouraged to review the Grant Guide and Request for Application to prepare.
• Accelerator Partner Grant Guide: hcai.ca.gov – CalRHT Accelerator Partner Grant Guide
• Accelerator Partner Request for Application (reference copy): hcai.ca.gov – CalRHT
Accelerator Partner RFA
• CalRHT Grant Funding Opportunities page (all initiatives): hcai.ca.gov/rural-health/calrht/funding
Additional funding opportunities — including the Workforce Development Recruitment, Retention, and Relocation (WDRRR) Program (expected to launch in July) and EHR Modernization Grants — are anticipated in the coming weeks. Districts should sign up for HCAI's Rural Health News and Updates mailing list to be notified as each opportunity opens and can direct questions to info@calruralhealth.org or 1-888-CAL-RHTP.
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