Gov. Newsom Vetoes Two Nonprofit Bills
Over the past year, the federal government has established major reforms to OMB Guidance for Grants and Agreements, which addresses the policies and procedures that govern federal contracts and grants available to charities. The revised OMB Uniform Guidance went into effect on October 1, 2024. Charitable organizations had hoped for a similar outcome at the state level, but unfortunately, that did not occur.
Nonprofit Bills Passed by State Legislature
California Governor Gavin Newsom recently vetoed Senate Bills 1246 and 336, which both chambers of the state legislature passed unanimously. The bills addressed certain aspects of the current burdens for charitable organizations when they contract with the state.
SB 1246 would have removed an exemption to the state’s Prompt Payment Act, which requires timely payments for charitable organizations’ services. Despite the support of the legislature and hundreds of charitable organizations statewide, Gov. Newsom vetoed this legislation for the second year in a row, even though the bill was reconfigured to address the Governor’s 2023 veto message involving a similar bill.
SB 336 would have modified the coverage of indirect costs for charities to be more consistent with how the federal government covers those costs. The bill closely tracked the policies and procedures recently established in the revised OMB Uniform Guidance. SB 336, like SB 1246, was the product of an intensive collaborative process, which included input from the Newsom administration. Governor Newsom’s veto messages focused on cost pressures due to a strained budget period for the state, as they did for about 40 percent of the bills vetoed. However, the bills passed by the legislature were designed to streamline procedures and cut costs.
Gov. Newsom’s Vetoes
Governor Newsom’s veto messages emphasize the role of charitable organizations to provide core public services. Although the state acknowledges the valuable contributions of charitable organizations in filling basic support and needs for California residents, the Governor’s veto of these bills makes it more difficult for organizations to operate. A lack of timely payments for government contracts and an inability to cover indirect costs adversely affect charities’ ability to perform services as needed.
Governor Newsom vetoed about 18 percent of the bills on his desk after the legislature adjourned its session on August 31, 2024. In 2024, the Governor vetoed about 16 percent of bills passed by the legislature overall, which is a veto percentage rate similar to his rates in 2023 and 2022. In 2021, the Governor vetoed less than 8 percent of the bills that the legislature passed.
Although the state legislature can override vetoes by a two-thirds vote in both the Assembly and Senate, a veto override has not occurred since 1979. The failure to override vetoes is typically attributable to legislators’ loyalty to the Governor and self-protection. As Democrats hold a supermajority in the legislature, any legislator seen as not supportive of the Governor is easily replaceable with candidates perceived as more loyal. A bill can also become law without the Governor’s signature if he fails to act on the bill, but that is also a rare occurrence.
Call the California Center for Nonprofit Law Today
The laws that govern charitable organizations are complex and ever-changing. We aim to inform you of legal changes that affect your charitable organization. If you need legal advice or assistance, we are here to help. Contact an experienced nonprofit lawyer today. Call the California Center for Nonprofit Law offices at (949) 892-1221, email us at info@NPOlawyers.com, or contact us online for more information today. We offer a wealth of experience handling the unique legal issues that charitable organizations routinely face.