This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2019.

ASSEMBLY THIRD READING

ATR Bill Id:AB 74

Author:(Ting)

As Introduced Ver:December 3, 2018

Majority vote. Budget Bill Appropriation Takes Effect Immediately

SUMMARY:

This bill expresses the intent of the Legislature to enact statutory changes relating to the Budget Act of 2019.

Major Provisions

COMMENTS:

According to the Author:

Arguments in Support:

Arguments in Opposition:

FISCAL COMMENTS:

VOTES:

UPDATED:

VERSION: December 3, 2018

CONSULTANT: Christian Griffith / BUDGET / (916) 319-2099 FN: 0000117

  CONFERENCE REPORT NO. 1 

Bill No: AB 74

Author: Ting (D)

Proposed: 6/10/19

Vote: 21

CONFERENCE COMMITTEE: 6-4, 6/10/19

AYES: Senator Mitchell, Senator Roth, Senator Skinner, Assemblymember Ting, Assemblymember McCarty, and Assemblymember Weber

NOES: Senator Moorlach, Senator Nielsen, Assemblymember Mayes, and Assemblymember Obernolte

SUBJECT: Budget Act of 2019

SOURCE: Author

DIGEST:

This bill contains the 2019 Budget Act, as it was reported out by the Conference Committee on the Budget. This bill authorizes General Fund expenditures of $147.8 billion and assumes $150.7 billion in total General Fund resources. Under the budget act, there are combined total reserves in the Budget Stabilization Account (BSA), the Special Fund for Economic Uncertainties (SFEU), the Safety Net Reserve, and the Public School System Stabilization Account of $19.4 billion.

Conference Committee Amendments delete the prior version of this bill, which expressed legislative intent to enact the Budget Act of 2019, and instead add the current language.

ANALYSIS: On June 9, 2019, the Budget Conference Committee completed its work to reconcile the Senate and Assembly versions of the 2019-20 Budget. The Conference Committee built upon the extensive frameworks of both the Senate Committee on Budget and Fiscal Review and the Assembly Committee on Budget in establishing the Legislature’s version of the Budget. Working from the general framework of the Governor’s Budget and May Revision, the Legislature incorporated significant and important budgetary and policy changes to the state expenditure plan. The Conference Committee approved various actions on that date that, when combined with the actions taken in both houses throughout the budget process, comprise the Legislature’s 2019-20 State Budget plan. The Budget carefully balances the need for additional public investment in K-12 education, higher education, human services, housing and homelessness, and other state programs, with the necessity of maintaining the state’s fiscal stability through increasing reserves to historic levels and continuing to make debt and liability payments. Overall, this Budget is structured such that it:

• Continues to fully fund existing programs and commitments.
• Targets new spending to the most beneficial investments.
• Highlights investments in education, combating homelessness, and investments in social services.
• Builds up reserves, pays down debt, and retains the state’s fiscal strength.
  • Contains the largest reserves in history – over $19 billion.
  • Finally pays off remaining Wall of Debt obligations from the Great Recession, and makes supplemental pension payments.

The Budget package will continue the Legislature’s ongoing commitment to California’s residents by strengthening the state’s investments in public programs and services. With this budget package, the Legislature commits additional funding to the social infrastructure of our state – with much needed additional resources for continued investment in K-12, child care and early education, targeted resources for higher education and financial aid, public safety rehabilitative programs, and continuing the effort began in 2018-19 to increase CalWORKs grants to ensure that no child lives in deep poverty. While making such valuable investments, the Budget plan continues to responsibly build resiliency by increasing reserves and making payments toward debts and liabilities.

Budget Framework

The conference version adopts the Administration’s revenue estimates for the General Fund. It retains the Administration’s approach to building up reserves in anticipation of future economic downturns, but also provides one-time and ongoing funding for increased investments in education, social services, and infrastructure, among other priorities. The General Fund budget summary is as follows:

The conference version of the Budget includes total General Fund expenditures of $147.8 billion for 2019-20, an expenditure level which is approximately $770 million above that of the May Revision. The BSA is projected to have a year-end reserve of $19.4 billion, the SFEU $1.5 billion, the Safety Net Reserve $900 million, and the Public School System Stabilization Account $504.9 million for a total reserve of approximately $19.4 billion in 2019-20. The Safety Net Reserve was created in the 2018-19 Budget and will provide for another layer of protection for programs that often are in greatest demand during difficult budget times. This will be the first deposit into the Public School System Stabilization Account, which was created by Proposition 2 in 2014.

The conference version of the Budget incorporates priorities of the Legislature and the Administration and includes funding for the following highlighted initiatives and programs:

Economic Development and Taxes. The Budget includes a significant expansion to the California Earned Income Tax Credit (EITC), subject to the adoption of a tax conformity package. The total EITC program will grow from approximately $400 million to approximately $1.2 billion, which includes a new supplemental payment of $1,000 to qualified filers with a child or children under the age of six.

Resources and Environmental Protection. The Budget includes a total of $1.4 billion in Greenhouse Gas Reduction Fund (GGRF) (also known as Cap-and-Trade) discretionary spending. Investments include: (1) $275 million for toxic air and criteria air pollutants, (2) $485 million for low carbon transportation, (3) $127 million for climate smart agriculture, (4) $220 million for healthy forests, (5) $26 million for short-lived climate pollutants, (6) $109 million for integrated climate action: mitigation and resilience, (7) $10 million for climate and clean energy research and technical assistance to disadvantaged communities, (8) $35 million for workforce training, and (9) $100 million for safe drinking water. The Budget also includes $30 million General Fund for safe drinking water and provides a $130 million continuous appropriation ongoing from the GGRF for this purpose, with a General Fund backstop beginning in 2023-24.

K-12 and Early Education. The Budget plan includes a significant increase in funding for K-12 education, with $2 billion in additional funding for the Local Control Funding Formula, $645.8 million for special education base rate increases and funding for three- and four-year-olds with exceptional needs, a $50 million ongoing increase for after-school programs, and $50 million for mental health partnerships to provide services for K-12 students. For early education and child care, the Budget includes $125 million for 10,000 new preschool slots, $50 million for child care slots (in addition to $80.5 million in Proposition 64 for child care slots), $70 million for CalWORKs Stage 1 child care 12-month eligibility, and $440 million in one-time child care workforce and infrastructure investments.

Higher Education. The Budget includes significant investments in higher education, with a total of $52.5 million to address student hunger and homelessness across the systems, $49 million to increase resident undergraduate enrollment at the University of California by 4,860 students, $85 million to increase undergraduate enrollment at the California State University (CSU) by 10,000 students, $75 million to increase graduation rates at CSU, $97 million to provide additional financial aid to students with dependent children, $42 million to increase Competitive Cal Grant awards by 15,250 awards, $15 million to provide student mental health services, and $45 million to allow community colleges to waive tuition and fees for first-time, full-time students.

Health. The Budget plan includes a significant investment in reducing health insurance premiums for middle class families, with funding for premium assistance subsidies of $428.7 million in 2019-20, $479.8 million in 2020-21, and $547.2 million in 2021-22, primarily targeted at reducing premiums for individuals between 400 and 600 percent of the federal poverty level (FPL). These funds would also reduce out-of-pocket premiums to zero for exchange-eligible individuals with incomes under 138 percent of the FPL. This funding is partially offset by revenues received from implementation of an individual mandate penalty for individuals who do not enroll in minimum essential health coverage. In addition, the Budget plan provides $98 million ($74.3 million General Fund) to expand full-scope Medi-Cal to individuals aged 19-25 regardless of immigration status, $58.9 million ($17.4 million General Fund) to restore several optional Medi-Cal benefits eliminated during the last recession, $100 million General Fund to provide funding for supportive housing services in Whole Person Care pilot counties, $62.5 million ($31.5 million General Fund) to expand Medi-Cal eligibility up to 138 percent of the FPL for the aged and disabled, $20 million General Fund for behavioral health counselors in hospital emergency departments, $30.2 million General Fund over two years for health enrollment navigators, $30 million General Fund over three years to support caregiver resource centers, $20 million Mental Health Services Fund for an early psychosis intervention grant program, $40 million General Fund for local communicable disease prevention activities, and $15 million General Fund for grants to local health jurisdictions and community-based organizations for prevention of sexually transmitted diseases, HIV/AIDS, and hepatitis C.

Human Services. The Budget plan includes an Aging Package of $113 million ($117 million ongoing), makes changes to the CalWORKs asset test that will grow to a cost of approximately $30 million upon full implementation, increases the CalWORKs Earned Income Disregard, which will grow to a cost of $99 million upon full implementation, and invests $250 million for Department of Developmental Services provider rate increases.

Additionally, the Budget plan includes CalWORKs grant increases to continue combatting child poverty, as follows: modified the Governor’s proposal to increase CalWORKs grants to no less than 50 percent of the FPL for assistance units (AUs) of one, effective October 1, 2019. Grant amounts for all other AU sizes will be increased to no less than 47 percent of the FPL.

Finally, the Budget plan makes the Supplemental Nutrition Benefit (SNB) and Transitional Nutrition Benefit (TNB) Programs permanent and available without regard to an appropriation. The SNB and TNB programs were created to hold harmless families that would have been negatively affected by the expansion of CalFresh benefits to SSI/SSP recipients.

Housing and Homelessness. The Budget includes $2.4 billion to address affordable housing and homelessness. This includes: (1) $250 million to assist local jurisdictions as they work through the 6th cycle of the Regional Housing Needs Assessment process, (2) $500 million for housing-related infrastructure, (3) $650 million to assist local governments in their efforts to address homelessness, (4) $500 million for a mixed-income loan program through the California Housing Finance Agency, and (5) $500 million for an expanded state Low Income Housing Tax Credit program.

Transportation. The Budget plan includes $242 million to fund efforts to improve Department of Motor Vehicles operations and comply with the requirements of the Federal REAL ID Act.

Public Safety. The Budget plan includes a plan to implement an Integrated Substance Use Disorder Treatment program that would be provided at all Department of Corrections and Rehabilitation (CDCR) facilities. The goals of this program are to treat substance use disorder as a chronic illness, reduce fatalities associated with it, and improve CDCR’s rehabilitative environment. Additionally, the Budget provides funding for initiatives to establish and bolster the prison-to-community pipeline. The Budget includes $50 million ongoing for community based organization-based reentry and housing support for formerly incarcerated individuals, increased rehabilitative programming in correctional settings, as well as therapeutic communities at the Division of Juvenile Justice (DJJ).

The Budget plan also moves the DJJ from the CDCR to a new department under the California Health and Human Services Agency. The new department will be called the Department of Youth and Community Restoration. Moreover, the plan includes the convening, no later than October 1, 2019, of a committee of the Child Welfare Council to provide input and recommendations related to the Department of Youth and Community Restoration’s policies and programs that promote a commitment to improving youth outcomes, reducing youth detention, and reducing recidivism.

Courts. The Budget plan includes increased funding for a variety of courts-related priorities. First, the Budget invests a combination of federal reimbursements, which are estimated to be $34 million, and $20 million ongoing General Fund, totaling $54 million, for dependency counsel. The total dependency counsel funding due to these augmentations will therefore be brought up to $190.7 million annually beginning in 2019-20. Second, this Budget plan provides $30.4 million General Fund in 2019-20, and $36.5 million General Fund in 2020-21 and ongoing, to allocate 25 of the 48 remaining trial court judgeships.

Moreover, the Budget plan provides $75 million for a two-year pretrial services pilot to fund the implementation, operation, and evaluation of programs or efforts in at least 10 courts related to pretrial decision making. Additionally, it provides another $20 million one-time General Fund for the Equal Access Fund. This funding would provide grants to nonprofit service organizations to assist specifically with landlord-tenant disputes, including legal assistance to prevent evictions, counseling, and renter education programs. These services include, but are not limited to: legal technical assistance, training, advice and consultation, and representation. Finally, the Budget also includes $41.9 million General Fund to improve access to justice and modernize court operations.

Emergency Response. The Budget plan includes approximately $184 million for emergency response. This includes: (1) $75 million for public safety power shutdowns; (2) $25 million ongoing for the state’s mutual aid system; (3) approximately $60 million to build a statewide public safety radio system; (4) $16.3 million for the final phase of the build-out for the California Earthquake Early Warning System; and (5) $7.5 million to support disaster preparedness efforts.

Other Issues. The Budget plan includes more than $80 million for a critical and robust Census 2020 outreach. The decennial census is one of the main factors that determine how hundreds of billions of dollars of federal assistance are distributed, including highway funding, Section 8 housing vouchers, and special education grants. The funding will be used to reach California's hard-to-count populations to ensure that they will be counted.

The Budget plan also includes approximately $51 million for relief in local governments impacted by recent disasters. This includes: (1) $518,000 to backfill property taxes for certain counties (this is in addition to $31.3 million provided in AB 72 (Committee on Budget, Chapter 1, Statutes of 2019); (2) $10 million to support communities impacted by the Camp Fire; (3) $15 million to support disaster-impacted counties; (4) $1.5 million for flood relief in the city of Sebastopol; (5) $800,000 for the town of Paradise for environmental documentation preparation; and (6) $2 million for the Butte County Fire Department. Additionally, the Budget plan provides $21 million in local disaster and emergency preparedness efforts.

The Budget plan includes $100 million to address the state’s deferred maintenance projects.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No

SUPPORT: (Verified 6/11/19)

None received

OPPOSITION: (Verified 6/11/19)

None received

Prepared by: Joe Stephenshaw / B. & F.R. / 916-651-4103

6/12/19 15:08:51

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CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 74

Author:(Ting)

As Amended Ver:May 9, 2019

Majority vote

SUMMARY:

This bill will become the 2019 budget act after the conclusion of the 2019 Budget Conference Committee.

The Senate Amendments:

Makes a technical change to facilitate the creation of a conference committee once the Assembly fails to conform to the Senate amendment.

COMMENTS:

This bill will become the Budget Act of 2019. However, this bill has placeholder content as the final budget agreement is adopted in a conference committee process. The Assembly would create this conference committee under existing legislative rules by non-concurring with Senate amendments on this bill.

Both the Assembly and the Senate have adopted budget plans for their respected houses. The Assembly plan will be amended into AB 190 and the Senate plan will be amended into SB 73. However, because the budget bill itself is over 700 pages long, the Legislature has chosen in recent years to use a separate bill to establish the budget conference process to allow the process to begin as early as possible.

Once the Conference process is established, the contents of AB 190, as amended, will become the basis for this Conference Budget action and all actions of the conference process will be an amendment to that language.

According to the Author:

Arguments in Support:

Arguments in Opposition:

FISCAL COMMENTS:

VOTES:

ASSEMBLY FLOOR: 54-13-13

YES: Aguiar-Curry, Bauer-Kahan, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chu, Cooper, Daly, Eggman, Frazier, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Limón, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NO: Bigelow, Brough, Dahle, Flora, Fong, Gallagher, Kiley, Mathis, Melendez, Obernolte, Patterson, Voepel, Waldron

ABS, ABST OR NV: Arambula, Berman, Chen, Chiu, Choi, Cooley, Cunningham, Diep, Eduardo Garcia, Lackey, Levine, Low, Mayes

SENATE FLOOR: 28-10-0

YES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Dodd, Durazo, Galgiani, Glazer, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener

NO: Bates, Borgeas, Chang, Grove, Jones, Moorlach, Morrell, Nielsen, Stone, Wilk

UPDATED:

VERSION: May 9, 2019

CONSULTANT: Christian Griffith / BUDGET / (916) 319-2099 FN: 0000498

 THIRD READING 

Bill No: AB 74

Author: Ting (D)

Amended: 5/9/19 in Senate

Vote: 21

ASSEMBLY FLOOR: 54-13, 4/11/19 – See last page for vote

SUBJECT: Budget Act of 2019

SOURCE: Author

DIGEST:

This bill expresses the intent of the Legislature to enact statutory changes, relating to the Budget Act of 2019.

ANALYSIS: AB 74 is the bill that will contain the budget for 2019-20. After reconciliation of Senate and Assembly versions of the budget in Conference Committee, this bill will contain the Budget Act of 2019.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 5/14/19)

None received

OPPOSITION: (Verified 5/14/19)

None received

ASSEMBLY FLOOR: 54-13, 4/11/19

AYES: Aguiar-Curry, Bauer-Kahan, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chu, Cooper, Daly, Eggman, Frazier, Friedman, Gabriel, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Limón, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Dahle, Flora, Fong, Gallagher, Kiley, Mathis, Melendez, Obernolte, Patterson, Voepel, Waldron

NO VOTE RECORDED: Arambula, Berman, Chen, Chiu, Choi, Cooley, Cunningham, Diep, Eduardo Garcia, Lackey, Levine, Low, Mayes

Prepared by: Jonas Austin / SFA / (916) 651-1520

5/15/19 14:56:24

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