Senate Budget and Fiscal Review Subcommittee No. 2 on Resources, Environmental Protection and Energy

Senate Budget Subcommitee Number 2 on Resources, Environmental Protection, and Energy will come to order. Good morning. The Senate continues to welcome the public in person and via the teleconference service. For individuals wishing to provide public comment, today's number is 877-226-8163 and the access code is 6948930. So before we begin discussion of the May Revision, just want to make a few introductory remarks and looking forward to the discussion today of the May Revision and our progress and shared commitment with governor and administration to our common goals. To open with again, this bit of a sense of urgency that we repeated a few times here is that overall global emissions actually increased last year 1.3%. And in California, while we're reducing emissions around 1% a year, we need to be reducing emissions four to 5% a year to just achieve our current 2030 goal of 40% below 1990 levels.

That's why in the Senate plan we put together a number of revenue-raising measures and in addition to the housing infrastructure bond, so that we can really accelerate and that we don't have to dip into, say, future greenhouse gas fund revenues. We could use those for other priorities while continuing to do the commitments from the previous years around electric vehicles and such.

So there was several billion dollars more of spending in the Senate plan and also areas like coastal resilience that we felt were priorities, as well as a whole very detailed GGRF fund plan where we didn't have to be dipping into those revenues to backfill other priorities. So I do hope that we will continue that discussion and hope we will be creative going forward in having sufficient revenues to really fit the task at hand. But today, let's go forward and hear from various folks in the administration about the May Revision and the pieces of it, and we'll start with the Department of Finance. If we want to invite folks up to come and present. You can go ahead and start when ready.

Good morning, Chairmember. Sergio Aguilar, Department of Finance. So I'm going to start off with providing a high-level overview of the May Revision framework, including the general fund solutions to help address the budget deficit restorations, and then also turn over to my colleagues to talk a little bit about some specific proposals within departments budgets.

And then we also have various colleagues from the departments here with us today who will be able to also answer questions after we go through the overview of what's in the May Revision. So since the release of the governor's budget, the monthly revenue shortfalls have continued and the additional budget shortfall at May Revision after accounting for transfers and adjustments is about $9.3 billion.

So at governor's budget, we had projected a $22.5 billion deficit, and now we are projecting a 31.5 when accounting for the additional May Revision analysis. Now, while the May Revision does not project a recession at this point in time, it does recognize that there are some increased risks since the governor's budget, which those risks could definitely significantly change a state's fiscal trajectory in the near term.

And these risks do underscore the reason why the May Revision does not reflect withdrawals from the reserves to close a projected shortfall. However, if there's additional downward economic and fiscal conditions, additional risk may be realized. And that's when we would potentially look into using the reserve and or looking at some additional reductions. But ultimately, the May Revision does incorporate what we feel is a balanced approach to address the $9.3 billion budget shortfall that includes additional spending reductions and pullbacks, delayed spending, fund shifts, and revenue borrowing.

So I'm going to highlight some of those within the resources, environmental protection, and energy areas. In terms of fund shifts, the May Revision proposes about $1.75 billion of additional fund shifts. 1.1 billion are fund shifts to the climate bond, and there's various programs that are included among that 1.1 billion looking at water recycling, salt and sea restoration, community resilience centers, transformative climate communities, regional resilience programs, urban greening, statewide parks, sigma, dam safety and flood management, and also multi-benefit land repurposing.

And these programs do remain a high priority for the administration, and that is why they will be included as part of a future climate bond proposal. And the administration is committed to working with the Legislature to pursue a climate bond over the next coming months. There's also a 635,000,000 in shift of ZEV investments to cap and trade, consistent with the framework that we had at the governor's budget.

So over the last several months, we have completed a reconciliation of the fund balance to account for previous expenditures and also updated the revenue estimates to account for the most recent auction. And as a result of that, there is more room within the Greenhouse Gas Reduction Fund to be able to support additional programs. And so there's a $635,000,000 of shift for the existing ZEV programs that are alignment with the past two budget agreements that we had with the Legislature.

So if you look at budget year and the out years for the totality of the ZEV investments, there's only now like 30 million general fund. The rest of it is all put towards cap and trade. In terms of reductions, there's a total of $324,000,000 of reductions within this area. There's a reduction of 125 one-time general fund that we had set aside at governor's budget for drought.

And as a result of some of the improved conditions and the significant amount of funding that we have supported for immediate drought programs over the past couple of years, including our release of the current year contingency that we just submitted last week to the Legislature. These funds are being shifted to the flood contingency, which we will speak to in a little bit more detail later.

There's also a decrease of 25 million for the Agriculture and Delta Drought Response Program, which is a pilot program that the department had already released first round of grants. And so just the difference of that is being reduced. A reduction of 24.5 million one-time for salinity barriers and now just given the current water conditions, there is no need to install the salinity barriers and so that funding is coming out.

And then also we're reverting an additional about 150,000,000 for the California Arrearage Payment Program that supports utility arrearages. And this is just an updated savings figure due to the actual applications received and approved for this program. And so that's 150,000,000. Now there's an additional 100 million in special fund borrowing that is part of our overall budget framework to support the budget deficit. And there's 100 million is from the Beverage Container Recycling Fund and that loan is anticipated to be repaid over a three-year period.

However, there's specific language within the loan provisions that identify that the funding could be repaid, the loan could be repaid sooner to extent there is a true programmatic need in the fund. So to make sure that there aren't any adverse impacts on the actual program itself. And then moving on to restorations, there's three restorations of solutions that we had proposed at the governor's budget, the Climate Catalyst Fund for Wildfire, we're proposing to restore $25 million there.

And one of the core tenets that we had looked at before at the governor's budget solutions is making sure that we're not adversely impacting certain programs that already very far along in the process. And after kind of looking at that program, they actually were far along with some of the loans that they were very close to finalizing. So want to make sure that the department could implement those loans that were very kind of far along in the final stages.

So restoring 25 million, but the partial restoration, there is still a reduction in that program. For Explore the Coast, it's 1.6 million just to account for amounts that were encumbered that we didn't account for at the governor's budget and then also restoring 40 million for the San Joaquin floodplain restoration, which is part of our larger flood package proposals that I will now turn over to my colleague Ms. Acierto to recover.

Good morning. Krystal Acierto with Department of Finance. So building on the $202,000,000 that was included at governor's budget for flood investments, the May Revision includes an additional $290,000,000 to support flood-related activities, which includes the $40 million restoration for the San Joaquin Valley floodplain restoration projects that my colleague just mentioned.

So in terms of the 290,000,000, this includes $125,000,000 flood contingency that would support preparedness, response, recovery, and other related activities related to both the storms over the last several months, snow melt, and also a potential future flood-related costs. As my colleague mentioned, this is essentially a shift of the drought contingency from the governor's budget. So this is a net zero in terms of overall impact on the general fund.

In addition, the 290,000,000 includes $75 million for the Department of Water Resources' Flood Control Subventions Program to support local flood control projects and communities recently impacted by storms. So that would include, for example, the Pajaro River Flood Risk Management Project. In addition, there's $25 million for the Small AG Business Relief Grant Program to expand the current program to include direct assistance for eligible AG-related businesses that have been affected by recent storms. And then there's a $25 million set aside for DREOA.

So Disaster Response Emergency Operations Account to support additional costs that we anticipate related to, again the storms and snow melt. In addition, the May Revision includes trailer bill language, a drought, and flood streamlining trailer bill. This trailer bill codifies provisions from recent executive orders that allow for diversion of flood flows for groundwater recharge purposes, subject to various restrictions.

In addition, this trailer bill extends the existing drought provisions that were part of trailer bill from 2021 that basically allow for statutory exemptions from CEQA and other streamlining provisions related to drought-related projects in order to expedite action. In addition, recognizing the extreme drought gripping the Colorado River in particular, the legislation also extends some of those streamlining efforts, particularly related to CEQA, to water conservation in that basin. The May Revision also includes funding for supporting implementation of the Sustainable Groundwater Management Act.

It includes $4.8 million general fund over the next two years and 19 positions at the State Water Board. As you know, the Department of Water Resources formally found some of the management efforts inadequate in six of the basins. And so this proposal would support the Water Board's role in oversight activities related to that basin. With that, I will turn it to my colleague.

Good morning. I get the opportunity to talk to you a little about CAL FIRE. So, as we've done in the last couple of years, we have a proposed May Revision fire protection augmentation. The purpose of that is to well, so 118.8 million this year, one-time funding, most of that general fund. This investment would cover a flexible pool of firefighters that's 432 additional seasonal firefighters. It would include six firefighter hand crews as well as sawyers or the firefighters that use the chainsaws and whatnot for military hand crews. And then it also includes the proportional funding that goes to contract counties. We'll note that there's two sort of significant differences between this year's proposal and last year's.

Last year's proposal did not include the flexible pool of firefighters because that resource pool was already in CAL FIRE's base budget. When we did the full relief staffing proposal last year, there was a partial relief staffing proposal from a few years before that was backed out as an offset to the full relief staffing proposal. And so that flexible pool was part of that old partial relief staffing proposal and so it's no longer in CAL FIRE's based budget. So that's why that major resource is included this year in the one-time augmentation. And then this year's proposal includes, I mentioned six hand crews, firefighter hand crews. Last year's was 17. The reason the number is smaller this year is that while they were approved on a one-time limited term basis for a few months last year, they were also in a separate proposal established as 17 permanent hand crews going forward so that 17 is maintained. And then there's a six hand crew augmentation this year. So those are the two major differences this year between last year. I'll turn the time over to Christian.

Good morning. Christian Beltran with the Department of Finance. To continue, there are two proposals for the Department of Toxic Substance Control that the May Revision includes. First is the cleanup of the excite parkways proposal, which includes $67.3 million, which is 40.4 million in 2324 and 26.9 million in 2425. The proposal is from resources from the Lead-Acid Battery Fund to support cleanup activities specifically for lead-contaminated soil and parkways surrounding the former XI Technologies facilities in Vernon, California.

Second, is a proposal to have loans from the BCRF or the Beverage Container Recycling Fund and the Toxic Substances Control account 40 million and $15 million respectively, to help address a shortfall that is stemming from the administration of the generation and handling fee that is fairly new to the department.

Additionally, the May Revision includes $1.2 million for five new permanent positions and contract costs to support an in-depth analysis of the current shortfall in the generation and handling fee revenues, as well as to increase various fee administration activities to better ensure that generators are paying the amounts owed to the state. Next is a proposal for the Department of Pesticide Regulation. This proposal is to accelerate the transition to sustainable pest management. The proposal specifically allocates $1.9 million for 7 per minute positions to support the registration workload and a study to accelerate the transition to sustainable pest management.

Specifically, this funding will support the state's shift from the use of high-risk pesticides to sustainable pest management to managing pests by adding resources to improve the department's registration process and prioritize safer alternative products, prioritize the evaluation of high-risk legacy pesticide products, and lead strategic agency and stakeholder engagement, collaboration and the development of plans and programs to support system-wide implementation of safer, sustainable pest management in agricultural and urban environments. With that, I'll turn it over to my other colleague.

Good morning. Mike McGinness with the Department of Finance. The May Revision also includes the Fiscal Stability for Boating Proposal. This proposal would increase vessel registration fees from $40 biannually to 80. Additionally, this would reduce expenditures on aquatic invasive species by 5.3 million annually and 6 million from the vessel launching facility grants. The fee for this program was last raised in 2005, which was the first raise in over 40 years. In addition, this proposal would protect public safety grants that are funded from the Harbors Watercraft Revolving Fund.

Good morning. Amin Albin, Department of Finance. Similar to the Governor's Budget in January, the May Revision retains key funding for important investments in the 2022 budget to support clean, reliable and affordable energy and accelerate the state's transition to net zero with a focus on communities that are most impacted by air pollution.

The May Revision preserves nearly all funding from the Governor's Budget, about 6.9 billion, including retaining about 2.8 billion for the state's new clean energy investments and programs and retaining 3.4 billion for the Administration's energy reliability efforts, including funding for the Strategic Reliability Reserve. The May Revision also requests $1 billion to implement the SB 846 Clean Energy Reliability Investment Plan for reliability and enabling investments that will accelerate the clean energy transition.

The Governor and Legislature sought to dedicate 1 billion over three years through SB 846 to support the Clean Energy Reliability Plan developed by CEC in consultation with the PUC and the Air Resource Board. The plan proposes four categories of investments: enabling investments, which will primarily focus on planning and setting up initiatives to make resource scaling possible, scaling demand side and scaling supply side resources using different approaches. For demand side, we see priorities in improving demand flexibility in general to take greater advantage of technologies already being deployed and specifically expanding the ability of the state to return, state to benefit from vehicle grid integration and vehicle to building capabilities. For supply side, the resources will support diversifying, utility scale technologies and long duration storage, both of which will support the net peak.

Lastly, the plan will support expanding resources available during extreme events in the state by providing additional resources to the demand side grid support account and the Distributed Energy Backup Assets Program initiated last summer as part of the Strategic Reliability Reserve. Additionally, the May Revision includes resources for CEC, ARB and the Department of Industrial Relations to implement the Special Session Bill SB 2 by requesting 7.1 million across the three departments, with a bulk of which 5.9 million is at the CEC and ongoing.

From August to October 2022, Californians experienced some of the highest gasoline prices ever recorded in the state, reaching a record $6.42 per gallon, and this took place even though the price of crude is declining.

SB 2 gives CEC the authority to establish a maximum margin for refiners, set a price gouging penalty backed by experts and information following threshold determinations, collect information needed to effectively monitor and deter harmful conduct by the fuels industry and leverage information collected to assess, plan and make recommendations on ways to reduce oil prices.

The resources will provide greater visibility into the pricing, contracting and marketing practices of the transportation fuels industry participants, including a new independent division within the CEC to oversee the adequate and affordable reliable supply of this resource. The May Revision also includes technical changes to SB 2, including for the Transportation Fuels assessment, requiring clarity on the work group composition.

This involves membership from, but not limited to: environmental justice labor, environmental issues, public health and land use interests, the state's fuel producers and refiners, as well as relevant state, regional and local agencies. Additionally, it includes enhanced private data protection for disclosure to the Independent Advisory Committee to ensure that there's not a resulting negative impact on market competition. Additionally, the May Revision proposes trailer bill language to help support California Energy Commission's main operating account, the Energy Resources Program account, which has been in a structural deficit.

Urban revenues are linked to the sale of metered electricity or front-of-the-meter generation or consumption. As building and appliance standards have become increasingly more energy efficient through utilization of behind-the-meter generation, ERPA's revenues have decreased steadily. In '23/'24, revenues are estimated to be about 71 million, while expenditures are estimated to be around 92 million. This has led to a structural imbalance within the fund.

The proposal consists of three elements: raising the statutory cap on the ERPA surcharge, tying the surcharge to the Consumer Price Index, and extending the ERPA surcharge to behind-the-meter generation. Additionally, for the CEC, the May Revision includes two positions and $373,000 to implement the recently adopted Load Management Standards, which will help California reach increasing demand flexibility within the state.

At the CPUC, the May Revision includes $1 million in '23/'24 and 200,000 ongoing for a new digital divide grant program created to fund pilot projects that address disparities in Internet access across and access to other technologies in the state. The projects provide grants that benefit low-income, urban and rural school districts.

And lastly, the May Revision also proposes minor cleanup to the CPUC's user fee to eliminate ambiguity with respect to the obligations of interconnected Voice over Internet Protocol providers that contribute to universal service funds to pay the user fee mandated by statute. The modifications are necessary because existing law imposes the same universal service and user fee obligations on VoIP service providers as all other telephone corporations.

The trailer bill eliminates a section which would clarify existing statutory obligations and ensure a stable funding source for the CPUC user fee, which funds CPUC's operating budget and will help achieve administrative efficiency for carriers and the CPUC by enabling the use of a single method for assessing surcharges on the user fee. And I think with that we have a lot of folks here from departments to help answer your questions.

All right, thank you. That was excellent overview and we'll move now to the LAO to hear their take on this.

Good morning, Rachel Ehlers with the Legislative Analyst's Office. I will keep my comments very high level and brief in the interest of time and then we have our great LAO team here ready to hop up with any specific questions on specific proposals. And our comments are also summarized in your agenda as well. So really our main comments are kind of structural and our concerns are that we think that the Governor's revenue estimates upon which the May Revision and budget framework are built are overly optimistic.

Our revenue estimates suggest that revenues may be roughly $11 billion below the governor's estimates. Certainly there is uncertainty. None of us are going to get it right. But based on all of the indications we see, we do have concerns that if you adopt the Governor's overall framework, it's really setting you up for some very difficult decisions, potentially in the coming year, meaning next year's budget.

Or even in the middle of this year's budget, potentially having to come back and make some deeper solutions and having lost some of the opportunities that you have right now. It's always easier to reduce one-time spending than ongoing spending or reduce funding before it goes out the door than try and claw it back.

So I think our overarching message is pretty similar that it was in January, which is we think you should identify additional solutions and be more cautious to avoid having to make some of those more difficult decisions. That doesn't mean it's going to be easy right now, of course. These are important programs, important efforts that have a lot of support behind them, including not only constituencies, but you all who put this budget together last year.

But again, just looking at what the choices are before you, we think that while not easy, they may be easier now to make than as time continues to progress if the budget condition worsens. We do think, as we put together in our report for you in February, there are a lot of options before you you still can make, we think, significant progress on your climate and environmental goals, even at moderately reduced spending levels, and there are opportunities to kind of prioritize.

We also continue to recommend that as you build your budget, you focus on your priorities. There are a lot of options before you. You don't have to take the governor's package of solutions either from this May proposal or the January proposals. There are other ways to craft this that continue to focus on your goals and priorities, but also reflect the budget situation that is before you.

As part of that, part of our overarching office recommendation, office-wide across the budget is really to reject most of the new spending proposals. Again, from this, which is easier, which is harder, avoiding making the problem worse and spending on new activities likely is easier than going back and making reductions to existing commitments. Now there could be some exceptions, specifically around health and safety or some that we identify where some new spending really may be merited.

And you have some of that in your area, particularly around some of these new flood proposals. We think some of that could be certainly justified from a health and safety perspective. Regarding just a few specific comments on the proposal to shift funding to a potential bond, bonds can offer a lot of benefits. They can offer funding upfront and then spread the costs over a longer period of time. The money is not free. However, it does come with long-term commitments and debt service.

And I think one of the points we'd like to highlight for you is just this proposal to shift to a bond is not a particularly well aligned with your budget solution goals. Even if you did shift some programs to a bond, not only would the funding not be available immediately, it also is still pretty uncertain whether the Legislature will ultimately put a bond on the ballot and whether voters will ultimately approve that. So it's certainly a tool you have in your toolbox.

But I think we would recommend thinking about any programs you shift to a bond to be reductions for now, with a potential for funding to be restored, but certainly not certain. So if there are priorities or programs which you really want to be sure are funded, we would probably say prioritize those for the General Fund you're leaving in because that's the most certain at this point.

Again, certainly a bond is a tool you have available to you, but the timing and the certainty of that funding being available is a little bit less than leaving the General Fund. And then finally, as you all know better than any of us, the May Revision is a very difficult time to make big decisions on new proposals. You really just don't have that much time before you have your constitutional deadline to pass a balanced budget.

So we would suggest that for some of the brand new proposals that are coming before you, there are several that have some pretty significant policy implications, including trailer bill around streamlining for permitting. Also, there are four different proposals dealing with structural shortfalls for individual funds, some of which have kind of permanent fee increases associated with them. There may be merit in a lot of these, but it just is not very much time for you to assess the trade offs and the potential long term implications.

So while some of these may need some immediate near-term action, particularly to address funding shortfalls, I think we would just caution you that when you can defer action for a little bit more time to have a little bit more policy deliberation, that might be worth considering rather than taking action now, if that urgent action isn't needed. And with that, Mr. Chair, our team is here. Happy to answer any questions.

Thank you. Let's maybe dive into it then we'll start with the bond proposal and certainly we're willing to and I'm personally very willing to consider a bond. Many of these programs are already included in a bond that I'm authoring along with some of my colleagues. So I look forward with my joint authors to look at these proposals. And some of these I do agree, can be shifted into a bond as we look to be creative and figure this out.

I guess my first question would be, is Administration shooting for this proposal be on the ballot in March or November of 2024? And, well, let's just start with that.

Thanks for that question. Krystal Acierto, Department of Finance. So at this point, we don't have any details on the bond and are looking to engage with the Legislature in development of that, but don't have any details in terms of that timing.

How about in terms of how large a bond is these proposals considered part of a larger bond and how large of a bond is the Administration considering?

Yeah, so again, we don't have an actual bond proposal to discuss at this point. And those details will need to be worked out as we engage in conversations with you over the coming months.

Okay, well, then the other questions on there might not might also not be fruitful, but yeah, just wonder if there's other things are you open to consider thinking about adding other things to the bond as well?

Absolutely. So the May Revision, as my colleague went over, has several investments of $1.1 billion that we would like to prioritize as part of those bond conversations, but would also note that there were several broader climate investments that were included. For example, at the Governor's Budget that were included in the trigger. And so we're definitely open to considering those ones in particular as well as part of the bond conversations.

Okay. Senator Dahle, any questions specifically on the bond itself? And then we'll get to other stuff.

Yeah, well, I'm trying to keep up with you because my packet has the bond way back. But first of all, that's fine. I'm more happy to talk about. Thank you, Mr. Chairman. First off, I'd like to ask the LAO, again, I want to just set the stage here that basically our side of the aisle doesn't get an opportunity to sit in the meetings where the budget is being developed. Let's just be honest about that. So we're kind of at a disadvantage.

But I wanted to ask the LAO's office, when you try to estimate, so we're going off of which is very difficult to understand that on future revenues when it comes to taxes, and in the past, when the Governor proposes something it doesn't matter if this Administration many other basically, who comes out closer over history?

All of us are always wrong. To some degree.

Who's closer to right?

You know, Senator, I don't have the data going back for many years. I think in recent years we maybe have been a little bit closer. Probably if you go further back, it goes up and down. I think that it's always looking ahead. There is additional uncertainty this year because of the tax filing deadline being moved, although we do have tax, personal income tax withholding data to help guide us.

So I think the key question before you always is kind of how cautious do you want to be in terms of your risk tolerance? And I think part of why we are raising some alarms now is because we do think the downside risk seems pretty strong.

Thank you for that. So I have been here 11 years and before that I was a county supervisor for 16 years and I went through the .com boom, if you remember that back in the day when we were all our investments were making 40% and the crash, and then through the housing boom and the crash, and here we are now where we are seeing it come down and it typically comes down faster than it goes up, a lot faster it goes down.

So I just want to set the stage. I think we're setting ourselves up here in the bond side of it. The Governor came out. I actually took the time to watch his May Revision for the most part, most of it last Friday to see where he was headed. And bonds are a tax. At the end of the day it's still borrowing money from the taxpayers to do services that they're going to pay out later and it comes off the top of the General Fund.

So we pay our bond debt first before we do anything else. So that's a limiting amount of money later. So I want to just preface that. The Legislature is putting forth a bond as the Chairman talked about. And I know that Senator Eggman I think was asking me to get on the Bill and I actually voted for some sort of a bond for water because I think we do need to do something in that area. But to the bond issue itself, what is the number?

What is the number that we're going to have? There's going to be, a budget will be signed by the deadline so that every Legislator gets their paycheck. But there's trailer bills that go all the way through until we leave in September and those really set the stage for so there's going to be a trailer bill that has a language in it. So what is the number? So that we're trying to budget right now but we have no number.

So I guess that's for the Administration, somebody has to give us a number so we can actually project.

Thank you. I appreciate that question. Again, we don't have a specific number that we can provide you in terms of the magnitude of the bond at this point and we're looking forward to those conversations. But on your point in terms of debt service, it's very well taken and that's generally why there's kind of a higher threshold for the types of programs that are included in the bond and these tend to be programs that have a 10 to 15 plus year lifespan.

For example, just given your point that you're making about the debt service and the fact that there's kind of a longer time in terms of paying that, but at this point there's no magnitude of the bond. But we're certainly considering all of those factors as we're thinking about the bond, and again, look forward to engaging with you all in conversations over the coming months to try and land some of those details.

So in my information I have here we have 270,000,000 for water recycling, 169,000,000 salt and sea restoration, 160,000,000 for community reliance centers, 100 million for transformative climate communities, 100 million for regional resilience programs, 100 million for urban greening, 86 million for state parks programs, 60 million sustainable groundwater management implement, and 50 million for dam safety. And 20 million for multiple benefit land for repurposing. Is that what's proposed to be looked at in the bond?

That's correct. In terms of what is included as a shift in May Revision, that doesn't necessarily limit us to just those investments as part of the bond, but that's included as part of the May revision as just acknowledging kind of the additional revenue declines. This is one of the mechanisms that we took to really try and protect some of the administration's priority programs that you have listed.

So it'd be safe to say that there would be these plus more actually. So all the community out there that's working on water recycling is going to be out two years if this was the case, because we have to pass it to set the bonds and then we have to issue the bonds. So you're looking at two and a half years at the minimum.

Yeah. So the first thing I'll say is that several of these programs also have funding that has been maintained. So this doesn't necessarily reduce all of the, or shift all of the funding that was included from prior investments. The other thing I will mention is that some of these programs also have federal funding that we're anticipating coming in. So there are other existing funding that will be able to support some of that gap that you're talking about.

Our hope is that funding would be available through the bond as early as '25/'26 and these programs would be prioritized for receiving the funding that's been listed here as a shift as part of the first appropriations that are made from that bond.

All right, well, I just want to go, thank you for those answers. I just want to say for the record that legislators are here for an opportunity of 12 years. Governors have an estimated time of eight years and many times we see shift the burden to the next generation and bonds do that and we went from 100 and basically $8 billion to a $31 billion deficit in one year. That's huge. It's a huge swing and we need to look at for the long term here.

I think we're going to see a massive reduction in revenue. If we look at the stock market and we know that our revenues come from capital gains, as the 40% of our revenue comes from capital gains, we have some serious budget shortfalls, not only for the near term, as we saw the swing from a massive amount of surplus to 31 billion, which is probably growing every minute. So I think it would be prudent to really look at some of the short term stuff we're doing and how it's going to affect the long term. So thank you.

Thank you. I will mention for the next section, that next section will be the Energy and ZEV packages. And before we get there, while you find your place there. Yeah.

I'm appreciative of several things being added back to Climate Catalyst Fund that we had discussed, and with loans in progress, as you mentioned, Explore the Coast. A small amount of money, but we heard a lot of calls on it during public comment in one of our earlier hearings. The floodplain restoration that you mentioned, so grateful for those.

And some of the programs that are in the bond mentioned, well, they're all important programs, but Urban Greening we heard a lot about, as well as, of course, the Transformative Climate Communities Act and water recycling, very important in our area, something I've been pushing hard on for us to do a lot more water recycling. So we appreciate that. Moving on to the Energy and ZEV packages.

So, as mentioned, the May Revision maintains 8.9 billion of last year's historic ZEV package, which is the same level post in January. It does shift, however, some of the additional dollars over three years to the greenhouse gas funds. So I guess I'll just ask, what is the rationale for using greenhouse gas revenue Fund to just backfill the Zero Emission Vehicle package? Maybe just start there.

Thank you, Mr. Chair. Christian Beltram with the Department of Finance. And really the response is two-pronged. First and foremost, the transportation sector accounts for nearly 50% of all greenhouse gas emissions in the state.

And so it's critical that the state continues to provide critical market incentives to help consumers transition away from vehicles that use internal combustion engines. So that's the first part and that's really the administration's priority there. And then second, the Administration budget really strikes a balance for maintaining investments in both the energy package, which is approximately like 87%, as well as maintaining 89% for the ZEV package. So we really tried to strike a balance between the two by transitioning and shifting the General Fund appropriations to GGRF.

You mentioned the energy package, and my understanding is that May Revision retains about 7 billion of last year's energy package, which was also historic collaboration between Legislature and the Governor. You mentioned some of the cuts to the Energy program. Did the Administration consider restoring any of that through a climate bond as well?

Sergio Aguilar, Department of Finance. So just again, in terms of the climate bond, don't have any additional details to share other than those specific programs that we identified as additional May Revision shifts to the climate bond. There were no additional energy reductions at May Revision other than the kind of true-up of the Aridge program to account for additional savings.

And so what the May Revision does is really just reflect a commitment to shift those and then also commitment to ongoing discussions with the Legislature on what will be the ultimate size, the ultimate scope, the ultimate timing. I think over the next several months we're committed to working with the Legislature, but no specific additional details to share other than those programs that we are identifying as shifts in the May Revision.

All right, well, I'm not going to go into details of ZEV package here. We've gone through those in the past, obviously a lot of critical programs there that I'm very supportive of. And I think since we had our very first hearing, there's been some reports about really highlighting, I think what we all probably know that the uptake for zero emission vehicles is much lower in various parts of the state, particularly in communities with a high Latino population, high African American population.

So we've got a lot of work to do to both get charging infrastructure and target incentives. So certainly I want to support this funding in our ongoing negotiations. I'd like to have that continued through the General Fund and through looking at some of the revenue measures, say, in the Senate package, rather than taking from greenhouse gas Fund money where we could use that money in the future for other priorities, many of which we enumerated in our plan. Senator Dahle, anything specifically on the Energy and ZEV packages?

No.

I'm going to go to the flood related increases next. So you mentioned that the May Revision proposes 290,000,000 one-time General Fund for statewide flood response. And how much of that was new, was new for the May Revision versus previous?

So of the 290,000,000, is all new funding as it's related to flood. Correct.

Okay, so that was my understanding, but it restored the floodplain restoration was one piece of that?

Correct. It's all new funding as compared to the Governor's Budget.

Yeah.

Senator Becker, if I may.

Sure.

Sorry to interrupt. This is Sonja Petek from the Legislative Analyst Office. Yeah, you might want to note that 125 of that for flood contingencies, there was 125 in Governor's Budget for drought contingencies. And so the Administration is proposing a net zero shift. So taking the drought contingency money and using it for flood contingencies. So I don't know if we would consider that new proposal or new amount, rather.

Got it. So that 125 was shifted. And is that 125 meant to help with response to the storms that we just had or is this for future flood contingency?

Yeah, so it's both. So the control section as written is fairly broad. So it's for preparedness response recovery associated with the 2023 storms. It also can be used for the resulting snow melt. So we're already seeing the impacts of that, but also future impacts associated with that in that area. And then other flood risks and projects that can help to better withstand future floods as well.

Okay. Is there a sense of what regions are anticipated that kind of need the most support from the flood contingency?

Yeah, so the control section again is fairly broad, so it doesn't specify any kind of specific regional geographic locations for which the flood funding could be provided. So I wouldn't want to opine necessarily on where the funding could ultimately be used to support. But it's going to be largely in those areas, like I said, that we've seen flood impacts or anticipate potential future impacts.

And so preparedness. Tell us about some of the, when you say preparedness, because the response recovery obviously we won't get, what are some things that that may go towards?

Yeah, so I think maybe it's important to kind of make the distinction too here between what the flood contingency does and kind of what the DREOA funding does because there is some kind of distinction there. There's certain parameters, for example, around what DREOA can fund and that's really going to be around some of those emergency response activities and could potentially be some preparedness, although the DREOA expert has come to the table to save me if I speak out of turn here.

But in terms of the flood contingency, it sort of goes beyond that. It can cover costs, for example, that DREOA wouldn't necessarily, or activities that wouldn't necessarily be eligible for DREOA. So that could include, for example, levee projects or other economic relief associated with flood impacts, that sort of thing, that wouldn't necessarily, again, be eligible for DREOA and wouldn't necessarily be eligible for FEMA reimbursement, for example. So this is really intended for the most part to fill a gap.

That doesn't necessarily mean that it couldn't support activities that could also be eligible for DREOA or FEMA reimbursable, but this is sort of intended to kind of fill that gap.

Okay, do you have further comments on that?

No, I think Krystal did a great job of distinguishing I mean, I think that the relief and some of the permanent restoration-type of projects are the things that typically are not DREOA-eligible. DREOA is more focused on sort of your immediate response type of things like swift water rescue and emergency patches of levees and those types of things to manage with the event as it's happening. And then this $125,000,000 set aside would be for the sort of more longer term economic impacts and things like that. So I think that's a good distinction.

Okay. A couple of programs just I had some questions about that maybe I'm less familiar with and then turn over to Senator Dahle. The Small Agricultural Business Drought Relief Grant Program that is mentioned in here. What types of entities are considered for these grants?

Sergio Aguilar, Department of Finance. So I think we actually have some colleagues from Go-BIZ and CDFA who could probably speak into more detail about this program.

Lauren Greenwood, deputy director for Legislation at GO-Biz. For the flood relief grant component of the Small AG Relief, we are still kind of determining, making that criteria evaluation with our stakeholders as well as want to work with the Legilsature. So we do have some mixed codes in there for like, cattle ranching and those kind of dairies, but we're still open and willing to take feedback on that.

Okay. What is demand for these grants? What kind of demand have you seen?

The program hasn't launched yet for the drought relief program, but we've gotten significant outreach from all types of groups for this relief. So we expect that there will be pretty significant demand for the grants.

But to my understanding, there was $75 million last year in the Emergency Relief Fund for this program that maybe has not been spent yet. Can you comment on that?

Definitely. So one of the criteria for last year's drought relief program was the 2022 tax returns. And so that's why the program wasn't launched last year. Our Office of Small Business Advocate has communicated with stakeholders when the language was negotiated last summer that this program would most likely launch in Q Two of 2023. And since tax returns aren't usually due until April, CalOSBA did not want to launch the program before these returns were due.

Of note, the Federal Government extended the tax deadline for 56 counties to October. While more sophisticated farmers may have their tax returns on standby, CalOSBA is mindful that smaller farmers may not have the accounting resources as others and is concerned about equity and access. If the program was pushed out before the initial April tax deadline. By launching in Q Two or July as CalOSBA is anticipating now, the program would still launch three months before the 2022 tax returns are due.

Got it. I think there was a question we had as well about the California Underserved and Small Producers Program, CUSP, which could also help small farmers with flood issues. And as we understand, it's gotten half the money it was appropriated out to farmers. So I guess why so much more money, additional money going to this drought relief grant program instead of, say, some of it going to the CUSP program?

So if I can maybe clarify first. So the CUSP program, it's the CDFA program that is focused on economic relief specifically for drought. So, as my colleague mentioned last week, we allocated some of the current year drought contingency. The 71 million of that, $5 million was actually provided to the CUSP program on the drought side. So I just want to clarify, though, that the CUSP program is really focused on drought as sort of it was statutorily established and so it would actually require a statutory change in order for that program to support flood-related economic relief.

And just kind of elaborate a little bit as we were thinking about how to provide a similar support on the flood side kind of acknowledging that there are these two programs. The GO-Biz Small AG Drought Relief Program hasn't fully launched yet, but there's been significant amount of work that has been done to get it to where it is today and kind of been looking at kind of where it was the best place to place this AG relief program for flood.

Administration felt it was better to place it under similar structure as the GO-Biz program, given a significant amount of work that has been done there and how it would have a lot of similarities to that program. And so that's why we felt adding the 25 million to that program was a better approach than using the CUSP program. But again, they have similar types of purposes in terms of drought and now it's just expanding it to flood. And if there's any additional comments, my colleague can elaborate.

Okay.

Sorry to interrupt again, Senator Becker. Sonja Petek at the LAO. Just a couple things we would maybe raise for your consideration. We're still looking into this proposal as well. So we haven't finalized our analysis on it. But both the 75 that was allocated last year for drought relief grants because it hasn't gone out the door, we could think about that in a more flexible way in terms of using it for drought or flood. These are both disasters that small agricultural businesses are having to respond to.

So one possible option is thinking about these funds more flexibly as disaster response as opposed to making it specific to drought or flood. And then I guess, just one other point. We'd notice the proposal for the 25 for flood relief grants will also require a statutory change. So if the CUSP program requires a statutory change, that seems like that wouldn't necessarily be out of the question either.

Okay, good. We'll continue to review as well. Turn over to Senator Dahle for any questions on that.

Well, first I want to say I'm happy that the governor and the administration is making the switch from the drought to the great. I think it's appropriate that we do it that way. So I don't have any questions on that and I just have a comment on the agricultural 25 million. And as a farmer, I don't know anybody that used these programs. In California, I'm considered a small farm. We have like 3500 acres, which in California is very small farm.

And so I think the issue is that it's very difficult for these small producers to actually get through the process to actually access the resources. And so we need to look at a way to make it easier for them to actually access them. They're dealing with the issues that are out there, flood or drought, but they just don't have an HR department or someplace that's writing the grant for them or helping them figure it out.

And so they can't access it because they just aren't familiar with that. Now the bigger corporations that do set asides and do bigger operations, actually have people on board to do that. So when we're trying to target those small producers, we have to make it easy for them to be able to access the resources. And I think that's why you don't see the takeup in it.

Any comment from GO-Biz on that on the outreach and response?

Sure. Within the Drought Relief program, there is a three week requirement to do outreach with stakeholders and partners. So certainly that's something we'd carry over to the flood relief. And of course, we've been working with legislative offices to make sure that we're contacting the right people as well as our network with the Office of Small Business Advocate. So happy to continue working with all of you to make sure this information gets to the right people.

Yeah, I'll just observe it's great that this money is geared towards small farmers, but those are probably people who are working day and night and don't have the time or resources necessarily to apply. And so that outreach is critical.

What is the criteria? How do you determine what the size is? What do you consider a small producer?

It's based on revenue levels. And so that's existing with the drought Relief program. And so we haven't outlined what specific revenue levels will be required for the flood relief businesses. So that's something we're still working on.

Okay, great. We'll stay in touch on that. Thank you. When we move over to the wildfire suppression here, and I just want to start out by saying, I think on behalf of all of us, I know Senator McGuire shares this, I spoke to him about this yesterday that we do need to add people we hear all the time.

And I get to personally hear a lot of stories about really just the mental health implications on our firefighters of people who have been working, say six weeks at a time, and being away from their families, strain causes on families and just the hours that people have had to work and the resulting stresses on their lives and mental health. So appreciative of the effort to come forward and put more dollars in here. Just want to ask a couple of questions about what is the outlook from CAL FIRE on the upcoming fire season and do they think know we got off pretty well last year, luckily. What does it believe that we have a higher fire risk compared to past years or how are the weather conditions playing out?

Stephen Benson with Department of Finance. I don't want to speak on behalf of the Department. We do have the director here we can ask CAL FIRE to come up and share their perspective on.

Yeah, probably would be.

I will say in my conversations with them, part of the outlook is that we had a very wet season. And so there's going to be you can kind of drive around and see there is a tall, thick, dense grass crop that has grown in that will probably dry out within four to six weeks. And then as you get the winds and things like that, there'll be a lot of fire risk related to those. And then we still have forests that have a lot of dead and down trees that is really dense, thick fuel as well. And so there is still risk there. But I'm going to defer to the expert to talk about it now that I've bought him some time.

Thank you, sir. Good morning, Chair Becker, Senator Dahle, and staff of the committee. My name is Joe Tyler. I am the director fire chief at CAL FIRE. When we look at 2022 and we think about how that year started off, we started off with 768 acres that burned on the Big Sur coastline in Monterey. By March, we recognized that we had the coastal fire in Laguna that burned multiple homes during that time frame.

And then we set up with an expectation of a significant fire season in 2022. What we were fortunate for and with was many of the efforts of local, state, federal, nonprofit fire-safe councils that were doing a lot of great work out there. There were some large and potentially large fires in 2022, whether it be the Fairview, the Electra, the Yuba, the Mosquito Fire, all very large potential fires. Unfortunately, the Mosquito Fire was the largest of all of those fires in 2022.

Now, Mother Nature set us up for some success in September of 2022 and provided some precipitation. And that is where everybody turned to their attention and were able to really conduct prescribed fire, some fuels reduction for the next 45 days. Then the season began to taper off. We continued to do the prevention efforts, and we came out of the peak of fire season. As we go into 2023, we recognize that we had some historic rain and some historic snowpack. There's no doubt about that.

And as you've heard from speakers here before, it was again historic in nature and is causing other concerns across the state. But I want to make sure that we all recognize that going into 2023, we are not out of the woods. The rain and the snow conditions have created significant grass crops, which is a fine, what we call a fine fuel that will be very receptive to ignitions.

Just two weeks ago, I traveled across the state for Wildfire Preparedness Week, and I recognized that the green grass is beginning to cure already. Those ignitions will hit the green grass that will move into the brush, and later in the months, we will run into timber-related fires. We will be delayed slightly, and that is partly what this proposal is going into the fall months, we recognize that the fuel loads will be significant in 2023. A stark reminder that was three weeks ago in the San Bernardino Mountains where historic snowpack once sat, there was 135 acre timber fire called the Knob Fire. It shows that though we have precipitation and we have snow, the fuels aren't completely recovering. There's been 800 fires in this year alone already. We don't hear about them because they get contained by the individuals, the responders, 97 in the last week, 135 the week before. There is significant fuels to be burned.

We recognize that 2023, if we listen to our predictive services, we listen to our meteorologists, our fire scientists, there is an argument to be said that the 2023 El Nino patterns that could be setting up closely aligned to 2017. 2017 was a significant fire year. Hundreds of thousands of acres burned, over 10,000 structures destroyed, and over 40 lives were lost in 2017. In 2017, setting up in a similar pattern, we had some of the most significant lightning activity across the state in 2017 and 2018.

I hadn't seen personally lightning activity like that since the late 80s, early 90s. So when we look at 2023 and the fuel loading that's available, as well as the dead and down material that is sitting in our foothills related to that snowpack, I truly believe that we are setting ourselves up for another significant fire season.

Got it. Thank you for that.

Mr. Chair, if I may provide just a couple of comments. Helen Kirstie with the Legislative Analyst Office. Thank you so much. So we're still in the process of reviewing this and the other May Revision proposals. Just wanted to note a couple things. So I think one key question, I think to think about is, how unusual is this? Because this is supposed to be a one-time augmentation. So really, how convinced is the Legislature that this is going to be kind of an abnormally severe year?

And also, I think a key point is that really the state is better positioned to address wildfires this year, arguably, than it has been perhaps ever in the past. The Legislature has made really significant investments in CAL FIRE and augmentations to CAL FIRE over the past several years, including the addition, as was mentioned before, of 17 additional crews last year, as well as the release staffing proposal which added significant augmentations, some of which haven't been fully ramped up to address just the issue that you addressed.

The very serious issue of firefighter health and mental health. So I think thinking about how this particular proposal, how that layers on top of really already the augmentations is this. Because last year, for example, the CAL FIRE was very successful in addressing wildfires. And so with those resources, it has even more resources this year. So thinking about does it need these additional one-time resources? Another thing, I think just a couple of little quick things I want to flag. This proposal, while it is just one-time funding, it does request ongoing position authority and some new vehicles and other things that are sort of more long-term in nature. So thinking, I think it is important to think about to the extent to which this is sort of requesting resources that have sort of a longer life.

And then I also just wanted to flag that many of these resources were brought on board, actually starting in March excuse me, starting in March through the department's use of the emergency fund. And this is an issue that we wrote about last month more broadly before this proposal came forward. But I think one of the larger issues, too, for the Legislature to think about is its comfort with the administration augmenting these types of resources through the emergency fund process, which doesn't require notification to the Legislature before those additional resources are brought on board. Because there's a base level of the E fund. We can go into that in more depth if you're interested.

But essentially, the administration was able to bring these resources on board and sort of we just are finding out about it now in May, even though they were, in many cases, actually sort of actually initiated in March. So I think that's another kind of key question. It's related to this proposal because many of these resources are the ones that were already kind of brought on board. So, anyway, happy to answer questions if you have any.

Thank you. Do you have a few more related to this? And I'll turn over to Senator Dahle. This is an effort to get us to the hourly target, right? I mean, the weekly work target, which was extraordinarily high. Can you comment on that, Director Tyler?

Well, I want to go back and address some of those concerns as well, and I'm ever so grateful of the support of the Legislature and the administration and some of the investments that came in the last fiscal year. Last fiscal year, 1634 positions, many of them in a multi-year funding plan, as was noted, that haven't fully come on board. Of the relief staffing proposal, 280 of those positions were hired in the current fiscal year in direct mission support.

Many of those positions that are supporting all the efforts of prevention, resilience, response were all hired in this fiscal year. But we have to remember, and I so appreciate your opening comments what the purpose of a relief staffing was. The purpose of relief staffing in getting there was an opportunity to try to reduce the amount of time that our firefighters and our personnel were on the front lines, being able to at least get a couple of days off.

Our goal is four days off every 21 days to be able to take care of the personal effects. That was the purpose of release staffing, not to increase significantly the augmentation. The other thing that was mentioned earlier was that as the release staffing proposal came forward, it eliminated the flexible firefighter pool or the surge firefighters that were once in relief from 2020. In 2020, 172 positions were authorized as part of relief 30 of those went to our training center to be able to ramp up that training ability. But that was the start of those efforts. In 2020, as we move forward and we look at the 503 positions that are in this proposal today, it is an augmentation entirely of temporary help positions. Entirely of temporary help.

The positions will add six additional hand crews on top of the 17 that were permanently funded last year, as well as provide support, as was said earlier by Mr. Benson, related to being able to surge the potential of military hand crews. Active duty military hand crews. Not to be confused with Task Force Rattlesnake, with our relationship with the National Guard, as well as some of those other efforts. There is a support staff component to that as well.

Those support staff components are also temporary help limited term. There is no funding beyond what is being requested to June 30 to December 31 of 2023, but there is a request to expand the authority of position authority to cover the entire fiscal year. So as of June 30, 2024, none of these positions are being requested for funding past that point.

Got you. So I understand. So these will be positions until then, or will these be permanent positions ongoing?

So if I could just clarify. So the director is spot on that a large number of those are the seasonal firefighter ones, so those are always added as temporary. But there are some positions for fire captains, battalion chiefs, and things like that that are in the proposal as permanent ongoing positions. And the reason why they're being requested that way is, as we mentioned earlier, there are a number of proposals that were phased in last year.

And so if we bring them in using the temporary funding into permanent positions, it's easier to then phase them into other positions that were authorized. So the position authority will go away, they'll be abolished. There's an administrative process to abolish those positions. They'll go away. But by hiring them in, when we bring them on as permanent ongoing positions, it makes it easier to transition them into other permanent ongoing positions that we need to fill as we phase in a number of other proposals. So really, it's an efficiency tool, I guess, if you will, for being able to sort of fill out the other full proposals that were done the last year or two. That's the thinking there. But a large number of them are the are the seasonal temporary pistons as well.

Yeah. And also we lost a lot of that, right, with inmate crews.

Yeah, certainly last year there was a 17 permanent fire or hand crews, I guess, as we call them. I go back and forth between fire crews and hand crews, but I guess it's hand crews. And then the year before, we also did I want to say it was 16 hand crews, but a lot of that is geared towards historically, we've had, well, 192. That went down to 152 when we consolidated some camps. But we've been operating. CAL FIRE has been operating at around 48 to 50 the last couple of years in terms of inmate crews, just because of the number of available inmates.

And so we've been doing those additional crews as a way to backfill some of that. There's also been investments in Conservation Corps hand crews as well as Military Department hand crews in the last few years. We haven't backfilled all of them. There's some different levels of performance and efficiencies you get with the different types of hand crews, too. So that's an ongoing area of work that we're engaged in pretty much constantly with CAL FIRE is the sort of the long term permanent outlook for that situation.

Okay, well, thank you. I do agree, these are important. Just to touch on before I turn her back over on our prevention efforts as well. Do you believe our prevention efforts are sufficiently funded and what we may do a deeper dive into that as well, but are there additional resources being requested around the prevention side?

Thank you. My apologies. The microphone could not get it to turn on. So here is an important aspect that I am continuing to try to drive home as the director of CAL FIRE. Of the 1634 positions, I'll just use that as an example in last fiscal year, if you ask me, were they for prevention, were they for administration, I'm going to tell you that they're for everything. We are a total force organization.

I have an expectation that regardless of their civil service classification related to whether you are a forestry aide, forestry technician, a firefighter, a fire captain, or a forester, when you were not assigned to emergency activities, you were doing wildfire resilience fire prevention efforts. Defensible space. It is a multifaceted approach. And this staff together in the last three fiscal years have exceeded a minimum of 100,000 acres of treatment across the landscape, over 250,000 defensible space inspections.

Our community wildfire preparedness and mitigation division and our communications program relate and educate on defensible space, ember, resistance zones, home hardening, resilience grant opportunities. So the long and short answer to you is, I believe that this investment of the 503 positions, the 17 hand crews last year, the six being requested now, will all go towards meeting and exceeding our prevention efforts.

Yeah. Excellent. Well, that's going to be your next question. Are these people then also doing prevention? You answered that. Were you going to add?

If I could just add one thought. The other thing that I would like to make sure that we don't lose in this conversation about prevention is that as we've looked at the climate investments over the last several years, 2.8 billion was in welfare prevention, and the May Revision protects 98% of that. So we're still sitting at 2.7. So one of the ways that we're hoping it's communicated the importance of this particular area is that while we have identified some places to make reductions and shifts and things like that, in some areas where we feel like we can in the wildfire prevention space, we don't feel like that's something that the state can do. And so we've protected virtually all of it and to communicate that level of importance.

Thank you very much.

Well, first I'd like to just make some, I just have comments. Basically, I don't have many questions, but the comments I have is that in the last 10 years we've actually really done a lot in this space. We've brought in new helicopters, which was desperately needed, we did recognize. And then at the same time we had increased revenues, which made it even better to be able to address some of the issues that we had.

And we've seen wildfire like we've never seen in the state at the same time. So we're at a different spot. I know that the chief can do a really good job of talking about the numbers of fires, but I do have one question. On the average, every year, what's the difference? You have thousands of strikes, lightning strikes, and you respond to thousands of fires across the state, but it only takes that one fire that turns into a Dixie or a Mosquito or whatever fire.

But at the end of the day it's how prepared are we for it? We're going to have thousands of fires in California, and California is very diverse. I mean, what happens in San Bernardino is way different than happens in Modoc. And in between there is several different topographies that require different types of firefighting. So anyway, in this space, I just want to say that the numbers are going to be the numbers, whatever they are, and they're high.

But at the end of the day, we've done quite a bit in this area and I think that I get what you're trying to do here. I think the 432 is going to give you an opportunity to find those folks that maybe can stay on because I know it's hard to fill positions and we talked about that when you came to my office. And this is unique.

This isn't a job where you're sitting in front of a computer or this is a job where you're actually doing physical hard work and we need those type of people that want to do that and are able to sustain that kind of work schedule. And I'm hopeful that you'll find those this next year that will fill those positions that we need for the long haul. So I think I know what you're trying to get to and so I'm supportive of that. And also we just wanted to share that we put a lot of money in it. The initial attack is where really stop major fire from happening when it's small when it's less than an acre. So those are my comments.

Got SB two. Sure.

That's something I want to talk about.

Okay, good. Well, thank you for that. And thank you for that last session of questions around CalFire. So, yeah, let's move to the extraordinary session implementation. And I don't know if there's CC or CARB or whoever would like to answer, but would love an update on what the Administration has currently done to plan and prepare for implementation of SB Two.

My name is Alicia Gutierrez, and I'm the Director for the Energy Assessments at the California Energy Commission. And to date, there's been a lot of work in the planning for SB Two. Today, as we speak, there is an implementation workshop going on at the Energy Commission at our old building that's focused on the requirements of SB Two. We are doing a little bit of a deeper dive on sorry, I can't touch the floor here.

We're doing a little bit of a deeper dive on the data request, which will go into effect at the end of June and the assessment that is due at the end of this calendar year. The workshop is happening today. We've developed an internal work schedule with all of the legislative requirements and are planning for a robust stakeholder engagement process with working groups and workshops to vet some of the thinking that we have in our approaches to the assessment.

There is a forms and instructions package that is currently under review within CEC and a data portal that's being prepared to accept the data submissions. We're planning to start collecting that new data at the end of June, as I mentioned, when the requirements take full effect, and we are in conversations with CARB and CDTFA for the joint products that we'll be developing with them.

With CARB, we are looking at the scenarios to be explored in the fuels assessment that's due January 1 and discussing the tools that we have to mitigate price spikes. We've held initial meetings with CDTFA to discuss the annual report scope data needs to support analysis on tax revenue impacts and data sharing agreements with our agencies, and looking at finalizing the scope of a technical support contract to support the work of Energy Commission staff.

So there are 10 positions. Are they redirected from other places and will that affect CEC's work on other existing programs?

So, upon approval of the request, CEC is reviewing its roster and positions and planning to shift existing vacant positions to support the new division, and we'll manage our position and expenditure authority to minimize impacts to our existing programs.

Okay, well, let me turn to Senator Dahle on this one and then have some other questions on the energy as a whole.

So, first, basically, my questions are for the Administration. At the end of the day, the Legislature passed this special sessions goal, which was to penalize refineries if they're price gouging Californians. So the Legislature did that. I opposed it. I don't think it was necessary.

But now this proposal is $6 million to help fund the positions at the CEC, and it's coming from the Energy Resource Programs Account, which means you're going to charge my bill, my electric bill, to pay for the $6 million to go actually figure out if the oil companies are taking advantage of California.

So my discrepancy here is, why are we paying electricity rates to go after oil producers or to fund the positions when it should come out of the General Fund at the end of the day, why are ratepayers on the hook? That's my question.

Eamon Nalband Department of Finance and Energy Resources Program account is CEC's primary operating account. It funds all of their main activities. And just to be clear, we are not raising fees on electricity consumers with this proposal.

Where does the money come from, then?

Well, the money comes from the available fund balance of the Energy Resources Program.

Where does that money come from?

Which comes from a consumption charge on electricity.

Which is ratepayers.

Yes,

Thank you for answering the question. The ratepayers are paying for these positions to figure out if refineries are charging too much money. Why? Why don't we take it out of the General Fund? That's the question I'm asking, because the ratepayers should not be on the hook for this special session legislation. It should come out of the General Fund if we want to figure out if refiners are gouging Californians, why is the ratepayer paying?

That's the question I'm trying to what's the justification in that? As we've heard many times in this Committee over the last two months, low-income disadvantaged folks are paying those bills. Can anybody answer why the ratepayers are on the hook for the refineries decision? Apparently not. Thank you.

All right, Senator McGuire, we were talking about the SB Two implementation. Any questions on that or you're good on that? All right, we're going to move on to the summer 2023 Important Energy Reimbursement Program. And just so we can we're all clear in 2022 DWR's, I know, but you want to recap reliability reserves, so I'm clear, was authorized to reimburse electrical corporations for the above market costs of imported energy and imported capacity products procured from July to September 22 to support summer electricity service reliability.

And reliability has been a key focus of mine. And then DWR requests the same authority for summer 2023 as critical reliability measure for extreme events. And there's 100 million transfer proposed from the Backup Assets Program to DWR for these activities. So my question is for DWR. Thank you for being here. My understanding is that 47% of the total generation from contracts supported by this reserve program were from zero or very low emitting resources. The remaining 53% of the generation were from unspecified resources.

Could you provide any more information about these unspecified resources?

Thank you, Chair Becker. Good morning. My name is Delphine Hou from the Department of Water Resources. Unfortunately, as the name suggests, the unspecified resources. We don't have any information on what the exact generator is. However, the California Air Resources Board, they've assumed a fairly conservative emissions profile to associate with that generation, and that would be the emissions profile of a natural gas fire generator. So we've adopted that metric which the Air Resources Board has developed and in consultation with them used that in our calculation.

But we don't have any further information on these specific assets that we're generating.

Okay, we had a question. I want to make sure I get this right about the rationale for using funds from this DEBA Program, which is Distributed Electricity Backup Assets Program to reimburse imported energy costs.

Yeah, happy to answer that, Chair. So Department of Water Resources doesn't have available funding within its Electricity Strategic Supply Reliability Reserve to support this additional activity with its current budget. So given the physical condition of the state and that the Distributed Electricity Backup Assets Program is considered part of the overall strategic reliability reserved and has available funding, we looked at suitable and existing funding sources for this critical summer need.

Okay, well, as mentioned, reliability has been a key concern. But along those lines, with this program still concerned we're paying too much resources that are too dirty from a greenhouse gas emissions profile and pollution profile, I just want to be clear, this approach shouldn't be the primary target of our investment and shouldn't be our long term goal. So I am excited to see the central procurement proposal this year.

I think we need to be prioritizing alternative policy approaches in this area such as building out emergency grid integrated demand response. And we talked about in the past hearings to make sure grid integrated programs and reusing existing resources. So as long as we're using the Strategic Reliability Reserve, I'd like to see more guardrails and time limits on these resources.

I know we have talked in the past about supply chain barriers, but we can't blame that over the next X years as a pretext to not moving to more clean energy. So if supply chain continues to be a barrier, we need to hear about it. We need to work on alleviating that and not using that as an excuse, I think, to not be using more zero, low or very low emitting resources, emission resources.

So once again, I think this is a key thing to focus on and we'll be continuing to keep an eye on DWR on these resources. LAO, anything to add there?

Thank you. Sarah Cornett with the LAO. We're still looking into this proposal. I think it's worth noting that the DEBA Program, the Distributed Electricity Backup Assets Program, which is proposed to have the 100 million come from that program, hasn't really gotten off the ground yet. But again, we're still looking into the proposal and to better understand what those reimbursements would go towards.

Okay, maybe I'll just finish my questions here on a couple of issues and turn over to my colleagues here. The Diablo Canyon Loan. The May revision proposes to extend additional 400 million towards the extension of Diablo Canyon operation. Any sense of scope of repair impacts for this loan? This would really be for the PUC, probably.

I was going to say, per the loan agreement, the entire amount is subject to repayment, and that is, per SB 846, all loan repayment amounts would either come from the DOE grant funds or any excess funds remaining in a balancing account. If there are market revenues that exceed costs and expenses by the end of the last year of extended operations.

And as you mentioned, I think beyond that, when it goes down to actual rates and ratepayers, I would defer to the CPUC to opine on their jurisdiction.

Yeah.

Rachel Aylors with LAO. So just to confirm, the goal with the loan was really that the federal funds would help repay. So there may be, I mean, obviously, operating Diablo on an ongoing basis for the next few years, should it be extended, would have ultimately ratepayer costs associated. But for this loan, the goal was that the federal funds would repay eventually.

Okay. There was a concern also with the allowing for costs to exceed approved forecasts up to 15% without additional review of excess spending. And certainly I'm concerned about that. I want to make sure we're not writing PG&E a blank check and that we are ensuring cost review of those 15%. Is that still in the proposal that there's 15% without additional review?

I appreciate the question, Chair, and unfortunately, I wasn't part of the discussion that pegged it at the 15%. But regardless of what the percentage is, we are going through a very detailed review of any costs that PG&E would incur pursuant to the loan agreement.

In addition to that, DWR has engaged with nuclear experts on that, folks that have direct experience and background with license renewal and all the activities it would take to support the application and continued safe and reliable operations of the nuclear power plant.

And so I think between our engagement with our staff, between the nuclear experts, as well as consultation with the CPUC to ensure that none of the costs that are recoverable in the loan are not double counted in rates, I think between these three we're able to get to a fairly detailed review of all of the costs under the loan.

Okay, well, I appreciate that. Maybe if PUC later has another comment, it would be good to hear. On to my last issue under this topic and then a turnover, which is, I think, a big one, which is the ERPA Energy Resources Program Account surcharge.

So my question really here would be for the CEC or Department of Finance on this, which is how much will the average household pay for the surcharge as a result of the rate increase and who are the behind the meter electricity ratepayers that are going to be added to this surcharge.

Good morning. Rob Cook, Admin Director for the Energy Commission. Good questions. Just to put things into context, the Energy Resources Program's Account is fed by a very small surcharge on retail electricity bills. You have it on yours, you have it on yours. The average household pays currently about $2 a year for ERPA, or about 16-17 cents a month. The folks that will be coming added to this or under the proposal. The proposal is three prongs increase the rate cap. You're currently at the cap.

Cap was originally set at a 10th of a mill back in the '70s and it's been raised a couple of times over the decades, but it has never kept pace with inflation. And as Eamon pointed out, the volume of appropriations against the revenue source just don't match up. And that's why we're in a structural deficit. What we're proposing to do are three things, increase the cap, not the rate, but the cap to what it would have been had it been tied to inflation since its inception.

We are then proposing to tie it to a consumer price index going forward, and then to apply the rate to the behind the meter customers. Those customers are about 1.3 million residential consumers that have solar on their homes. One of the things that the Energy Commission has done to promote solar is one of our building efficiency standards placed a mandate that new homes have solar on them.

As a consequence of that and other policies of the state, there is a lot of households that have moved to solar. Who are no longer paying into the ERPA account. This helps bring that so that the ratepayer base doesn't continue to shrink over time.

Well, certainly we need to shore up the ERAP. I mean, on average, for those behind the meter electricity ratepayers. How much are they going to be paying?

They're going to be paying a like amount with other residential ratepayers, which is about 17 cents a month.

Got it. ERPA has consistently faced a deficit last few years. So, I guess. Why now? Under the May revision to sort of address it, and also if the surcharge generates about 70 million, the total appropriation is 86 million for ERPA. Does the rate increase fully address the structural deficit in your opinion?

The three pronged approach that we're proposing gives the Energy Commission the tools it needs in order to resolve the deficit. The Energy Commission has the authority to adjust the rate in November of each year. We're currently up against the cap now so that the Energy Commission can't do anything about it presently. This would give the Energy Commission the tools to monitor the fund and as needed, increase that rate or consider adjustments to the rate in November of each year. Currently, we don't have that option.

If I may, Sarah Cornett with the LAO. I think one other thing to note here is that ERPA, according to the fund balance, is not projected to go insolvent this year, but in 2024-25. So that's something that the Legislature could keep in mind if it feels this timeline is a bit too rushed to consider this change.

Got it. Thank you. But do you believe if the change is made in your mind that would eliminate the deficit? Is that what you're saying?

If we take this three pronged approach, we will be able to resolve our issue.

Okay. Your opinion on the problem is the behind the meter resource, especially rooftop solar, has taken hit with net energy metering change. So how could this sort of not discourage deployment of behind the meter resources?

Yeah, there are two issues there, sir. One, the building efficiency standard that we put in place that mandates new solar on residential. It's a non-issue for those installations.

For new ones? Yeah, yeah.

For new ones. For existing homes. They're evaluating a 10 or 15 or $20,000 installation of a solar system against a $2 annual cost. It's immaterial in that decision making.

All right, well, I appreciate that perspective. I do know that we do need to catch up, that we need to patch the hole in our book for sure. LAO said I'll have to figure out maybe now's the time to do it under this time frame or in the future. But again, those solutions I know it's a relatively small amount, but rooftop solar has been hit from a number of angles now.

So it does appear to be an additional solar tax, even if not not a large one. So that's a concern. But I do appreciate the efforts to patch up ERPA because we do have to do it. Let me see if my colleagues have anything on. Do you have anything else on energy?

Yeah, so I want to, the Chairman actually on DWR's purchase, what's the criteria for making sure that we are meeting our clean goals at the time? They can just go out and purchase gas fired energy or coal . In those situations, what is the guardrails? And I think the Chairman kind of asked it, but it didn't really get answered. I wanted to kind of get a follow up on that for the Reserve.

And sir, can I clarify if you're asking specifically about imports or all?

Either. Yeah. When we're having an energy shortage, there's been a lot of legislation that wants to just shut down all these plants and decommission them. But during the time like last year, the Governor did Executive to make sure that we had power that we turned them on and we didn't have rolling blackouts. So what is the criteria for DWR when they purchase power? Is there a criteria that they can get any kind of power they want or whatever is available or is it clean power? Green.

Appreciate the question. I do want to differentiate. I know we're in a fairly difficult position because we do want our load serving entities in the state to do what they have been doing, which is pursue that clean power to the extent possible. DWR wants to be in the same situation. But we also a want to be mindful that we are not competing against those same load serving entities that are trying their best to meet their traditional resource adequacy requirements.

And at the same time we know that there are assets that are not being picked up because of their less clean profile. So the Reserve, as it stands, we want to have a focus on reliability with a balance. So several things that we've been doing. So as we've discussed here before, the first portfolio of assets do include natural gas heavy resources and in 2022 we even had diesel assets.

We have voluntarily decided to no longer pursue diesel for summer 2023, even though we can up until July 31, 23 per the water code. So that's a decision that DWR has made consciously to try to reduce the emissions impact. Secondarily, in the gas portfolio that we have pursued, we've also tried to push the boundaries of resources that are lower emissions and cleaner.

So we do have a tranche of resources that are coming online this summer that are at the level of a similar model that has been certified by the California Air Resources Board as being fairly low emissions distributed generation. And having that certification on that similar model allows it to get acceptance from local air districts. And we've seen that borne out with the partners that we are working with in order to cite these new assets. And so we're encouraged by that, but we haven't stopped there.

We've also released two additional requests for information for additional information on two types of resources. One are storage based resources. Again, we're loath to compete against load serving entities for the maybe more traditional lithium ion. But if there are other storage resources out there that maybe have less competition that we can pursue, that's something and clean storage, that's something DWR is definitely interested in pursuing. And the other RFI that we've issued is for generating resources that do not use fossil fuels.

And again, we're waiting to hear back what those technologies can be and what the scope can be for DWR to have those assets in their Reserve. But while those RFIs are out there and we don't get responses back until August because we've given folks several months to be able to ask us questions and go back and forth. In the meantime, we are still in the mode of pursuing assets for reliability, which at this stage is much more focused on the natural gas side.

And certainly the next tranche of resources are resources that are potentially slated for or have announced retirements and to bring those assets into the Reserve. Now, the balance of that though is that these assets when they come into the Reserve, especially the fossil fuel emitting resources, sorry, fossil fuel fired resources with emissions they are only limited to run during extreme events.

So there is a balance, there is a balance in having these assets in our portfolio for state reliability, but only to use them when the state really, really needs them on critical days. So I understand that the portfolio is not renewables and clean generation that we also hope to see, but we also hope that reducing the usage to extreme events really balances the need between reliability and emissions. On the import side, again, we have to be fairly balanced as well.

We are in a situation where we are out there buying imports. We do have to look at what the market has to offer. So, yes, we could have a preference there to look at the clean resources, but we also have to be cognizant that those are not always plentiful or available or available in the time frames or in the megawatts, et cetera, that is needed for the California system. So there is a balance there as well.

And as I said, approximately half has been cleaned for 2022. We would love to see that continue or increase, but at the same time we have to look at what the seller's market has to offer as exports from other systems into California in order to determine what is available for purchase. Thank you.

So in managing, I guess time and use is really the biggest issue. Right. We overproduce when there's sun and wind and hydro and the demand is the curve, the duck curve we all talked about, trying to flatten that out, basically.

But I guess my question is that does that include like, pump storage? Are these requests for proposals, are they all types of clean energy or are they just focused on battery and solar and wind? Or is it because we don't count hydro above 30 MW as green? Which is beyond my comprehension, but that's where we're at.

Yes, sir.

Correct.

And then the other thing is that last year, I think, was the perfect storm. We saw the whole West Coast and also the western states in a heat wave where the whole resource in the west was really strained. And I think that's rare occurrence, we're probably not going to see that as much. And we were in a major drought here where we had places like Orville that weren't 600 MW short, which is a lot at that critical time.

So I guess my question is we want to rid ourselves of dirty, but in those scenarios, are we looking at all renewables across the board?

Yes, sir.

Those requests for proposals?

Yes, sir, we are. And I do want to go back to the duck curve because I do find that to be a very interesting point. And the nuance there is that, yes, California is producing a lot of clean energy during the daylight hours for solar, but that energy actually is actively being used by demand in the summer months. So the excess is more of a spring and fall phenomenon. So when we get to summer, all of our clean energy is largely being used within the state.

And so for RFI we do want to look at, we did structure the RFI to be fairly broad, so we do want to be open to different technologies, maybe something that we haven't been familiar with that is still commercial and that we could pursue within the Reserve. So we did want to make that as expansive as possible so that we're not limiting ourselves.

So one last question, because I did have this come up. So you know the folks that are base load using construction or manufacturing that is deferred I don't know what its called demand response I think, anyway, they get shut down when we have a heat event.

I had a lot of those folks come by my office because I saw on the Energy Committee and they've been in the program for 20 years and they get a break on their energy because they will shut down when we need power for residential and for when we need to turn air conditioners on. But it used to be like once every two or three years they got shut down and in the last four or five years it's been 20 days in a row.

These are people that have refrigeration units for food and you can't not turn your refrigerator off for 20 days. It doesn't work. And so they are the folks that are bringing in diesel generators to run their cold storages to keep their food cold.

So has there been any thought process in addressing those issues that are an impact as well to those folks that are getting deferred because they're really looking at other places to locate their facilities because they have to have power and the power needs to be reasonable at the same time. Just a question.

Thank you, sir. For DWR, we've been mostly focused on supply side. And so I think for the specific scenario that you're talking about, which seems like a combination of demand response and behind the meter usage, I would defer to my colleagues at the CPUC if that is part of a CPUC program or otherwise the CEC for similar programs on the distribution side or demand response.

I'm not sure that I, Amin Albin, Department of Finance. I'm not sure we have the right people to speak. Okay.

All right, no problem. I think it's a concern that we should be following. I have one follow up question on the Chairman just went through all the list of things that he and we didn't stop at each one, but so I have to go back here. So I wanted to talk about the 400 million for Diablo. Can you and if I recall, SB 846 requires a written expenditure plan before the loan is executed. Do we have that written plan? Is that correct?

Sorry? Before the loan is executed, I think.

In SB 846, the expenditure plan, there needs to be an expenditure plan for the resources before we give the loan. Is that correct?

I'd have to get back to you on the specific expenditure plan. My understanding is that in order to request additional funds, DWR would be providing a report to the Joint Legislative Budget Committee in order to go beyond the 350,000,000. So that has yet to yet to occur. But we are in the middle of our semiannual true up per SB 846. And when we've completed that assessment, we will be submitting that report and then.

That has to be approved by the JLBC, the Joint Legislative Budget Committee Committee. Sorry, too many acronyms.

Yeah, this is Amin Albin. I think we have to double check the wording, but I believe it's a notification to the.

So who's overseeing it, I mean, I have no confidence that PG E is going to do I don't know what they're going to do, I should say. But I want to make sure that if we're going to expenditure these funds that somebody is approving that. And if they just have to give a plan and take the resources this is General Fund money, who's going to say, we like the plan and we're okay with it?

Thank you for the question. And that was my response before to Chair Becker, which is DWR. With our consultants and the CPUC, we are evaluating all of the costs that PG and E will be incurring pursuant to the loan and making sure that those expenditures are allowable costs pursuant to SB 846. And so that would be part of the report that we would be providing to actually both Department of Finance and JLBC.

And who gets to approve the plan. That's right, I guess because if you just give us a report who says this is justifiable in how they're going to spend the money or use the resources, who has the final say? Is it the CPUC?

I think DWR would be working with our CPUC colleagues pursuant to the requirements of SB 846.

Okay. But there's no legislative body. These are basically appointed positions that are going to prove how these $400 million a lot of money out of the General Fund is going to be done by I'm trying to pin you down here because I don't trust how this is going to work. So it's critical because I'm going to be following this big time because I don't trust these people.

So $400 million is going to be they're going to submit a plan, and that plan is going to go to the Joint Legislative Budget Committee and the PUC and the DWR, and then they're going to spend the money. Who says, yes, I like your plan.

Let me restate. So currently we have a semiannual true up in which PG and E will be providing their expenditures to DWR. DWR, with our consultants and CPUC will be going through each of those items and matching those items to ensure that those are actual allowable costs pursuant to SB 846. At the end of that, we will have a report that is filed. DWR will be providing the report to JLBC and Department of Finance.

So DWR, along with our consultants and CPUC, we're working collaboratively to assess whether the costs are allowable under 846.

Okay, so really there is no guardrail on if it's allowable cost. You're just going to pay the Bill. We took a legislative action and we had to take that legislative action to extend the life, extend basically the shutdown of Diablo Canyon. And I was opposed to shutting it down to start with, but then I was opposed to also just bailing out. So I laid off of this Bill I didn't vote for. I might even vote against it, SB 846.

And I got a lot of criticism because we were in a... I don't trust now going forward. So we're going to draw down federal funds for this as well, correct?

That's correct. The loan is pursuant to repayment from Doe financing for Doe funds.

But they're not on the hook for the General Fund. This is basically allocated resources. They don't have to pay it back, the 400 million, is that correct?

Yeah, Sergio Aguilar Department of finance. But maybe if I could just clarify. So the General Fund is loaning funding for this purpose that then will be repaid back by the federal dollars. So the intent is for these dollars to be repaid back. It's a loan from the General Fund, but they would be repaid back by the Doe federal funding. That would be coming in a little bit later on down the road. But that is the intent, to get fully repaid from the federal dollars.

That's the intent. But is there anything that guarantees we're going to get paid back?

So there was a Doe award announcement that came in earlier this year which identifies, I believe it's about $1.1 billion that was awarded for this purpose. And the intent is that would be part of what would be paying back the totality of what's loaned.

And then who pays for that, the rate payers? Will they be able to go to the PUC and then ask for a rate increase to the PUC to pay that back?

No. So that's why we are working closely with the CPUC and looking at the allowable costs under the loan to ensure that there is no double counting between what the CPUC has authorized through rates and what is recoverable or as allowable costs under the loan agreement. So that's why we have that coordination with the CPUC.

Okay, I'll be watching this, and I don't want the ratepayers to have to take on extra burden. That's my concern with this. So thank you.

Thank you.

Teen, it up. We're good. Well, I raised my concerns too around make sure we're not writing a blank check there. So I appreciate that. We're going to move on to there was they may revision the registration tax on recreational vehicles. The boating program was raised. I'm going to turn this over to Senator Mcguire, I think may have a comment on this question. So we have folks in Parks. Great.

So, just a couple of questions on this. And obviously this was an issue that was advanced, I think in 2021. So originally the budget had appropriate about 9.3 million approximately to support the Fund understand challenges that we're seeing. McGurk, it's always good to see you. How are you doing? So the budget Bill required that Parks present proposal back to the Legislature no later than January 10 of 2023.

So just wondering where we're at on the full report since we're now moving forward with an increase in fees with no report that was mandated to come back and so wanted to be able to get a check in on that issue.

Yes. Good morning. Mike McGinness, Department of Finance. So the proposal that was submitted in the May revision is the response to the inquiries with stakeholders that the Department of Parks and Recreation held through the Commission of Boating and Waterways.

Really? I mean, that's really the answer? But there's supposed to be a report. So can we talk about the report? What happened to the report?

So Senator, Liz McGurk with California State Parks. Our proposal so our report is the proposal that's put forward through the May revision proposal. That is our proposal that came from that stakeholder engagement process.

So then why are all the stakeholders opposed?

So the proposal is informed by the stakeholder engagement process. And we did engage in a year long process that included the Boating and Waterways Commission, and there was a lot of input provided for short term, long term solutions. I think this proposal is reflective of that. It is not everything. And I think there was acknowledgment that a fee increase would be needed. I think some folks would like to see a different size of fee increase.

But this proposal does reflect that year long engagement process and is the Division and Department's way of balancing the different needs while being reflective of those concerns.

And again, I adore Ms. McGuirk, so I think she does amazing work. So I'm not trying to be too pointed, but I think that on the report, this is simply focused on a fee increase. I think we all know there are supposed to be other pieces of that report coming back to the Legislature. So now what I'm hearing is that you've made some type of Executive decision, royal, you right.

Department of Finance in particular, and State Park saying, no, it's now going to be a more targeted report, not what was supposed to be coming back to mean. We all know that there was supposed to be more than just on the fees.

So this proposal does have other solutions. There's a fee increase. In addition, we are committed to some long term studies which were requested through that engagement process, like an economic impact study for boating in California. We are looking at reducing aquatic invasive species program expenditures to be more reflective of those that targeting areas that will be of most benefit to recreational boaters and then working with other entities to support the program and other needs.

And then we are looking at going back to the historic way that boat launch facility grants were funded, which was on a project basis through the annual budget process versus baseline funding. So those are some of the components included in here. We would also like to have a more regular review of the Fund.

And as we're looking at these longer term solutions, like reviewing our public and private marina loan programs, economic impact studies, we'd be able to make further adjustments as needed coming back to the Legislature to discuss those.

Okay, look, again, my comments are not pointed strictly at Deputy Director McGurk, because, again, she goes above and beyond on so many issues and deals with some really challenging details on a daily basis. And I just want to acknowledge you, Ms. McGuirk, because you are always making yourself available and work so incredibly hard.

I think where my frustration is today is that, number one, rather than saying, we know that this is incomplete, we know that there was previous stakeholder feedback that has been taken into account in what we're seeing coming back to the Legislature here today. And now we're acting like this is complete when we all know it's not complete.

And there has not been any reflection in what is coming back to the Legislature in regard to what stakeholders had promised back or what we promised stakeholders back in 2021 of a comprehensive approach. So we'll definitely be following up with Parks again. Also, I know that there are challenges, and Department of Finance has been focused on that. Just sharing my frustration here today, because we're acting like this is complete when we know that there was much more that was promised in the past.

And again, McGuirk, very grateful for your work. Thank you so much, Mr. Chair.

So I too, not personal, obviously. I let the Senator Mcguire kind of lead on this. We worked on it wasn't recreational boats, but we worked on for fishing fleets a few years ago and the Senator and I worked close on that. This is a 300% increase in fees. And actually we went over this last night and I wanted to get some comments from the Department of Finance about logistics. What are we getting for this?

I know that for off highway vehicles we have a green sticker and we get the snowmobile trail groomed in a warming hut and whatever they do out in those areas and maintained. But are we going to get more docks? Are we going to get more or is this salary increases? Where is this resource going to go?

So the Harbors and Watercraft Revolving Fund has been operating at a structural deficit for an extended period of time. And so these additional revenues will serve to protect many of these existing programs which come from the Fund. Obviously there are some reductions included here, but the productions are limited to two programs, one of which has little to no benefit to recreational boaters. And so we are protecting the recreational boating element of the aquatic invasive species funding.

We are protecting the grants for public safety and a number of other programs which have been effectively living outside of their means for the past decade or so as a result of the diminishing revenues that the Fund has been seeing.

Is that because less people are recreating and there's not as many people recreating like we've lost those folks? Or is it because inflation has gone up and the cost for staff and diesel and gas or whatever they use to get wherever they're going has all went up?

So there's an element of both. There the number of registered vessels, recreational vessels specifically, has decreased significantly over the last decade. In about 10 years ago, I want to say around 860,000 registered vessels. Now it's down in the mid to Low 600,000 range. So that has a significant impact on the revenues because the two primary revenue sources to this Fund are the vessel registration fees and then the gas tax.

And the amount of gas tax that goes to the Harbors and Watercraft Revolving Fund is based on the total number of registered vessels. And so anytime there is an increase or decrease in that number, it results in basically a double up impact on the revenues to the Fund.

Well, thank you. That concludes my questions on the rest of the topics. Is there anything else my colleagues want to address here before we move to public comment? Senator Dahle. No.

Okay, we want to thank you all. We're going to move to public comment at this time and we'll start with public comment first here in the room and then we will move to comment via the teleconference line and reminder that the number is 877-226-8163, access code 694-8930.

That we have caucus at noon, so we have some time here, but we will ask people to in the room, keep their comments to one to two minutes and then on the phone to 1 minute and go ahead when ready.

Mr. Chairman, Members, Horacio Gonzalez on behalf of the Salton Sea Authority. We are a joint powers authority consisting of the Coachella Valley Water District, the Imperial Irrigation District, the counties of Riverside and Imperial, and the Torres Martinez Desert Kawea Indians. We are concerned that the governor's proposal to shift the $169,000,000 of Salton sea restoration funding simply does not capture the conditions on the ground and the continuing deterioration of the Salton sea.

In 2017, the State Water Board issued an order that required the state to meet annual acreage milestones of completed projects on exposed playa. As of last year, the state should have completed about 8750 acres, but by its own admission, it's only completed 2600. The state claims that it will be able to catch up by 2025 with 14,600 acres, but there simply isn't enough money in the budget right now to get that done.

On top of that, in November, the state facilitated an agreement with the Federal Government to reduce the overall water usage of the state from the Colorado River. That agreement is going to result in reductions to the salton sea that are larger than the entirety of the QSA. And in securing that agreement, unfortunately, the state, nor the feds bothered to assess the foreseeable impacts that those reductions will have on the surrounding communities. History tells us that the impact is likely to be dramatic.

We ask that the state or that you adopt language that ensures that the state meets its obligations to the Salton sea by keeping the 169,000,000 in the current budget. Thank you.

Thank you very much. Next comment.

Good morning, Mr. Chair and Members. Rico Mastrodonato with the Trust for Public Land. I want to start by reminding the comment you made earlier, Chairman, of our emissions globally are going up. The world is getting hotter, and there's nothing that we can do about it.

And the trust for public land is really concerned about the shifts of a lot of the extreme heat programs to the bond, which means that we're basically saying to disadvantaged communities that do not have tree canopy, do not have open space or parks, that the community resilience centers. The TCC program. The urban greening. Urban forestry was zeroed out in January. The statewide parks program, which is oversubscribed by $7 billion, are not worth funding. And protecting the people that cannot protect themselves, heat is going to harm people.

It kills people more than any other weather related event. And what we're saying is we can wait three years to make any additional funding. And I don't think that that meets the public safety. And with regard to the bond, the amounts that are in here for a statewide park program, for example, $86.9 million, that might do 20 parks at best. And it doesn't reflect a $7 billion over subscription, which addresses the scope of opportunity and the need.

There are great projects ready to go, and there's no money. There is no money in that program right now. So we're really concerned about extreme heat and would like the Senate and your Committee to think about, can we wait to protect communities we know that are going to be harmed probably this year? They certainly know. Definitely. So thank you very much. I appreciate being back.

Mr. Chair and Senators Gregg Cook representing Northern California Power Agency. A couple of the issues follow up on a couple of the issues that you've been discussing. Number one, the potential doubling of the IRPA surcharge is an immediate and ongoing increase in electricity rates. And adding the additional CPI Escalator each year really is going to have a significant impact on electricity ratepayers in the state. The second issue that I want to raise is the utilization of those funds for the implementation of SB Two.

In the guideline produced by the Tax and Fee Administration, it says specifically that the IRPA funds are supposed to be used for energy related services. It seems to me that using those funds and now the Escalation, potential Escalation to pay for SB Two implementation is inappropriate. Thank you very much for your consideration.

Good afternoon, chair and Members. Amara Eger, on behalf of the Building Decarbonization Coalition in strong support of the Senate's comprehensive proposed plan to maintain funding for Equitable Building Decarbonization, as well as use Dgrf to supplement clean energy programs, including for the Equitable Building Decarbonization program, Low income home weatherization program, technical assistance for federal tax credits, and Building Energy benchmarking program. We also urge the Senate to protect the full $160,000,000 for the Strategic Growth Council's Community Resilience Centers program.

All these allocations will be critical to provide clean energy upgrades, energy Bill cost savings, and extreme heat solutions to Low income communities that wouldn't otherwise be able to afford them. Thank you so much.

Thank you very much.

Hello, chair Members. Mikayla Elder, on behalf of Cal Start and the Electric Vehicle Charging Association, While we appreciate the Governor's May revision that proposed no further cuts to Zev funding, we want to take the time to thank the Senate and express support for your proposed budget plan, which keeps the previous Zev package commitments whole. Thank you.

Thank you, Chair and Members. My name is Noah Whitley, speaking on behalf of the Valley Clean Air Now, we appreciate the Governor's May revise does not make additional reductions of Zeb funding. We additionally want to thank the Senate for the proposed budget plan which keeps Zeb investments whole. It is our understanding that the Senate budget plan includes additional funding for the clean cars for all program.

Given the state's substantial budget problem, we look forward to working with the Legislature to ensure that clean cars for all investments continue to prioritize Californians living in air basins with the most air pollutants and who would not otherwise be able to achieve ZEVs. Thank you. Thank you very much.

Hello. Good morning, chair Members. Jamie Fanous on behalf of the community alliance with family farmers. We represent around 8000 small and underserved farmers across the State of California. Thank you for paying attention and bringing attention to the flood impacts and the drought impacts to our farms. Obviously, these extreme weather events have had drastic impacts on our family farmers, destroying homes, farms, equipment and more. I want to specifically highlight the comments that were made earlier around the Cusp program and the GoBiz program.

While we of course appreciate those additional dollars allocated to the GoBiz program, the Cusp program has had a precedent of moving dollars very quickly in the form of relief. It was originally created during the pandemic, so it's allocated funds during COVID pandemic as well as drought, and we think that it can adapt and move funds much quicker considering the GoBiz program is just getting stood up. So just wanting to highlight that difference and really appreciate those additional dollars.

I also wanted to thank you all for including the rejections to the Governor's proposed cuts to the Food Hubs Program as well as the Urban Agriculture Program. These funds are essential in terms of infrastructure for our small scale farmers and really hoping to see those dollars put back into those programs. So really appreciate the time and thank you very much.

Thank you very much.

Rebecca Marcus on behalf of the Union of Concerned Scientists, we're glad to see that despite the additional budget shortfall, the climate budget remained largely intact. We're looking forward to working with the Legislature and Governor on the climate bond to invest in a resilient future. But we encourage you to look for more ways to backfill climate funding, such as ending subsidies and tax credits for polluters and use the savings for climate priorities.

Investments in Sigma implementation, water recycling and the multi benefit land repurposing are too important to be left to chance. We are glad to see the Zev budget has remained intact since January, which is particularly important to ensure that the recently adopted Advanced Clean Fleets Rule can be successfully implemented. It is also critical that AB eight funds are reauthorized and that these funds are not diverted by carveouts for hydrogen.

We support the funding for the creation of the Transportation Fuels Transition Plan, but encourage the Legislature to ensure this plan is developed in a way that is consistent with what was promised to the Environmental Justice Advisory Committee and the Scoping Plan. Also on behalf of American Farmland Trust, the Carbon Cycle Institute, and the California Certified Organic Farmers. I'd first like to echo the comments made by my colleague Jamie Fanous with Caf.

We also request when crafting the climate bond that the Legislature and Administration keep in mind, our food and farming system, AB 408 by Assemblymember Wilson, contains many investments which will help our farmers, ranchers and farm workers successfully continue to feed our state in our changing climate, as well as be an integral component of the solution. Thank you.

Hi, Mr. Chair Members. Beau Biller on behalf of the Marine Recreation Association, in regards to let's see, what item are we here? What's? The DBA proposal. Budget item 37 91st. Thanks to both Senator Mcguire, Senator Dahle, for your comments of concern relating to the proposal.

I'd like to say on maybe a positive note, we've spent a lot of time over the last year and a half with the division working through subcommittees identifying some of the items such as aquatic invasive species, beach erosion and other issues which I think we have met in the middle and we're making some progress on that. Also. In addition to that, I think the Department has agreed that having a proper economic study done is a good idea.

However, this fee increase that showed up yesterday, day before recently, let's just call it that, is a significant concern. We've signed onto a letter with the RBOC and the NMMA in opposition to that. I think you'll hear on the phone from Jerry Desmond and Mark Smith about those specific concerns. I'm sure they will dig into the budget items specifically a little deeper, but for that, I'd like to register MRA's. Concern with that item. Thank you.

Good morning, Mr. Chair and Members of the Committee. Abraham Mendoza with the Community Water Center, and we'd like to express our concern with the drought and flood streamlining trailer Bill Language. This language proposes to codify the Governor's Executive Order on groundwater recharge, which would create a permanent program without conducting more proactive planning on where we should and shouldn't be diverting these floodwaters. This could create long term impacts on water quality for communities that are relying on this groundwater as their primary source of drinking water.

Thank you. We will now move to folks on the line. I've been told, given some other additional constraints here, that we need to keep remarks to 30 seconds or less. So please keep your marks brief and get as many in as we can. Moderator?

And we don't really need to codify this at this point in time without building out additional protections. And thank you for your consideration and we look forward to working with the Legislature on this, moving forward.

Ladies and gentlemen, if you wish to make a public comment, you may press 1 and 0 at this time. Once again, if you wish to make a public comment, you may press 1 and 0. First we go to line 11. Please go ahead.

Thank you. Chair Becker, Members of the Committee, Alex Leumer on behalf of the Environmental Defense Fund, California environmental voters, Civic Wells Self Help Enterprises and Sequoia Riverlands Trust in strong opposition to removing the $20 million for the multi benefit Land repurposing program of the Department of Conservation from the budget. This program continues to be oversubscribed, getting double in applications.

What the budget has provided, there is clearly high demand, and given this demand and the amount of land we need to transition as a result of sigma, it's critical to provide ongoing funding for this program to help our rural communities both in times of flooding and in drought. As the Lao pointed out, a bond is not guaranteed, and even if it passes, that money won't be in hand for two to three more years. We strongly urge you to reject this cut. Thank you.

Thank you. Next caller. Next we'll go to Line 14. Please go ahead.

Yes, good morning. My name is Chris Chavez on behalf of the Coalition for Clean Air as well as the Charge Ahead and Invest in Clean Air campaigns, we appreciate that the May revise has not cut clean transportation further. However, we still need to invest more in clean air.

Our state is home to the dirtiest air in the nation, and nearly every California breathes air that fails national and state air quality standards, putting their life and health and lives at risk. We support the Senate proposal as it relates to clean transportation and urge the Governor and the Assembly not to disregard the goals of the Senate Majority's proposal, which reinstate funding for clean transportation programs. Clean transportation programs. We also support reauthorization of AB 118, specifically AB 241 and SB 84 on the policy side. Thank you very much.

Thank you. Next caller. Next we'll go to Line 22. Please go ahead.

Good morning, Senators. My name is Steven King and I'm the clean energy advocate with Environment California. While we're relieved that the Governor's may budget revision does not include additional cuts beyond what was proposed in January, we remain concerned about significant cuts to clean transportation and clean energy funding in the budget. California still needs to invest in clean air by funding important programs that promote clean transportation and clean energy.

We need a budget that, to the greatest extent possible, supports zero emission vehicles, prioritizes investment in clean mobility and transit cuts programs that subsidize the fossil fuel industry and harm communities, and creates stable funding for clean transportation in the future. We appreciate the Governor's suggestion of a climate bond and look forward to engaging in that process. Thank you.

Thank you very much. Next we'll go to Line 18. Please go ahead.

Thank you. Deirdre des Jardins for California water research and California sport fishing protection alliance. I speak in strong opposition to the drought and flood streamlining trailer bill Language. The proposed new section of the Water Code would return state water rights to the pre 1914 era. It would hand decisions about what constitutes flood flows to local or regional flood districts and would move conflicts between upstream and downstream. Water rights to the courts, it would also be unlikely to be effective. Thank you.

Thank you. Next caller. Next we'll go to line 21. Please go ahead.

Hello. My name is Jan Dorman, representing Friends of the River. We also strongly oppose the flood trailer Bill Language. The very important issues of groundwater recharge and flood risk should be addressed in a policy Committee. The proposed language has many unforeseen consequences to change existing water policy and we would like to see this addressed with more science and depth at a later time.

Thank you. Next caller, please. Next we go to line 13 please go ahead.

Good afternoon, Mr. Chair and Members. Keila Roche on behalf of Western Plant Health Association and various other agricultural associations, we'd like to express opposition to the BCP for the Department of Pestide Regulation, which would provide seven additional permanent positions at the Department and ongoing budget liability. We agree with the Lao's assessment to reconsider discretionary proposals such as this, especially when farmers are paying the Bill.

Additionally, we'd like to remind the Committee that in January of 2024, this coming January, the Legislature and stakeholders should expect a budget change proposal from the Administration for wholesale changes to the Mill assessment, which funds 90% of the Department's budget. We believe that this conversation should be comprehensive rather than piecemealing action this year and then taking larger action next year. Thank you.

Thank you. Go to line 28, please go ahead.

Thank you. This is Olivia Seideman with Leadership Council for justice and Accountability. We strongly urge that the 160,000,000 for community resilience centers and 100 million for transformative climate communities that the May revised shifted to a climate bond maintain in the budget with funding from the General Fund, with the climate bond providing additional funding that augments rather than replaces General Fund allocations.

We also urge against the shift of 169,000,000 in salancy funding to bond and ask that half of all saltency funding goes to multinefit community projects that protect the environment and build community resilience. These are critical programs that provide vulnerable communities with the resources needed to build both short and long term resilience and must be prioritized for funding in both the budget and the bond. Thank you.

Thank you. Next 31. Line 31, please go ahead.

Good morning, Chair and Members. I'm Sandra Nakagawa, policy Director at the California Climate and Agriculture Network, also known as Calcan. We are disappointed to see that the Governor's May Revise continues to propose significant cuts to the state's climate smart agriculture programs that were funded in last year's budget, including a $15 million cut to the Healthy Soils Program, a $40 million cut to the Sweep, and a $25 million cut to the Sustainable Agricultural Land Conservation Program.

Out of those programs, just one has any funding proposed for the upcoming 20232024 fiscal year, the Healthy Soils Program, which is proposed for just $10 million. We are encouraged to hear the Governor's interest in a climate resilience bond and encourage the Legislature to increase its investments in food and farm resilience initiatives through both the budget and bond routes. With intensifying climate impacts being experienced by farmers and ranchers throughout the state, it has never been more urgent to invest in sustainable climate resilient food systems. Thank you.

Thank you. Next caller. Next we go to line 32 please go ahead.

Morning Chair Members Brandon Dawson on behalf of CS in California just calling to express support for the Senate's rejection of the Equitable Building decarbonization cut in the Governor's May revision and in the January proposal also want to express concern about the shifts to climate bond related to solvency restoration, transformative climate communities and community resilience centers. Those monies should be funded through the General Fund. Communities can't wait. Thank you. Thank you very much.

Next caller. Next we go to line 35 please go ahead.

Morning Chair and Members Matt Klopfenstein at California Advisors on behalf of a couple of clients. First, on behalf of the Bioenergy Association of California, we want to support a few of the Governor's items in the May revise, most notably the addition of funding to the Climate Catalyst Fund, as well as maintaining funding in the Climate Smart and Agricultural program and maintenance of the Money for the Circular Economy Program.

So we're in support of all of those items in the May Revise. Additionally, on behalf of SMUD, the Center for Sustainable Energy and the Bioenergy Association of California want to reiterate support for the Governor's reauthorization proposal for the AB 118 fees. And there are also obviously parallel bills in the Legislature and we really strongly support, especially in light of the Lao's very cautionary analysis of what the fiscal future might look like, identifying and securing a long term stable source of funding for our transportation electrification efforts. Thank you very much.

Thank you. Until there's a lot in queue, so we will have to keep to 30 seconds going forward, please. Next caller. Next we'll go to line 30 please go ahead.

Good morning, Senators. Doug Obegi, on behalf of the Natural Resources Defense Council and Defenders of Wildlife urge the Legislature to reject the trailer Bill on flood streamlining.

Agree with the Lao that these are major policy changes that would significantly undermine existing law, including CEQA exemptions, as well as harming downstream communities and the environment. Thank you.

Thank you. Next we go to line 29 please go ahead.

Hello, my name is Barry Nelson with the Golden State Salmon Association, commenting in strong opposition to the drought and Flood trailer Bill. This is a policy Bill, not a budget Bill. We have salmon species on the brink of extinction.

My fishing industry is shut down because of Low numbers of salmon. Thousands are out of work on the causes inadequate flows. This Bill would nearly deregulate additional diversions and makes no effort to protect flows needed by salmon. We have a long range of additional concerns that I won't share. Now, we urge you not to approve the Bill, but rather to send it to the Natural Resources and Water Committee. Thank you.

Thank you. Next caller. Next Bill to line 33, please go ahead.

Mr. Members Mark Murray with the environmental group California's Against Waste. We're opposed to the governor's proposal to loan $140,000,000 from the beverage container recycling Fund. The program has been underfunded with insufficient payments for the recycling infrastructure. We think that has to happen first.

Next we'll go to line 34. Please go ahead.

Good afternoon. My name is Artie Valencia and I am representing Restored Delta. I want to strongly stand in support with the flood revisions that were given to floodplain restoration in the May Bill. I want to encourage the Legislator and the chair to stand in support as well. As floodplain restoration projects from Mercedes to Van Busker are essential to keep environmental justice communities like Stockton and neighboring cities safe from flood, especially in this ever changing climate in which we will eventually experience severe flooding in these areas. Thank you.

Thank you. So we are going to have to hard stop at 1150 so we don't get to you. Please submit your comment in writing. Next caller, go to line 12, please go ahead.

Hi, this is Kam Bezdek, California trout, and we want to go on the record and say that we appreciate the continued investment into the natural resources and water management through our General budget. They're historic and very necessary. CalTrout also would like to flag that we shouldn't be yoyo between drought and flood funding depending on the water year. Both are important, but it doesn't make sense to make money from drought to flood in an unorganized manner depending on the year.

We also wanted to note that we are reviewing the groundwater drop trailer Bill and we would like to say that yes, we agree that the large scale water policy changes should be done within the core communities committees. Excuse me, during the entire legislative cycle, as others have said in their public comment, and that groundwater charge is important and that this dialogue should be daylighted much earlier in the process. Thank you.

Thank you. Next we'll go to line 37. Please go ahead. Line 37, your line is open.

Good morning, chair Members. Alfredo Medina calling on behalf of the Imperial Irrigation District to echo the concerns that were relayed by our colleagues at the Salton Sea Authority and to urge that the Senate version prioritize the $169,000,000 for the Salton Sea restoration funds. Thank you.

Thank you. Next we'll go to line 40. Please go ahead.

Good morning. This is Natalie with Leadership Counsel. We are reviewing the proposed flood trailer Bill Language. We oppose redefining to recharge as a beneficial use without time limitation and we have serious concerns regarding the potential Flushing of contamination from soil to sources of drinking water as a result of unmonitored and or inadequate plant recharge. We'll provide sufficient amends to address these issues.

Additionally, we're grateful to see that 125,000,000 per flood contingency, and we strongly urge 20.3 million from that appropriation to be allocated to Glen Mava. FEMA Relief has not funded recovery for everyone affected and has been inadequate. DC Marsa estimates that 20 million is needed to fill in remaining gaps for home inspections, repairs, emergency rental assistance, locked vehicles and community infrastructure. Thank you.

Thank you. Next we'll go to line 39. Please go ahead.

Hello. Johnny Carlson, water policy coordinator with Planning and Conservation League. And we are speaking in opposition to the Drought streamlining trailer Bill. The proposed language, first and foremost, really should be vetted by the Legislative Committee process. It has a kind of a dubious process with a murky definition that can harm wildlife, downstream water users, and existing efforts.

The state is undertaking to do groundwater recharge, so we urge you to send this Bill back to its Committee process. Thank you.

Thank you. Next caller. Next we'll go to line 41. Please go ahead.

Good morning, Mr. Chair and Member Beth Olhasso on behalf of Water Reuse, California. We're disappointed to see the General Fund funding for water recycling be moved to a proposed climate bond. As you know, we can get that money out very quickly, and any delay in those funds, we are concerned, will delay any drought and resilience efforts that we could be making by creating new water supplies. We urge you to keep those in the General Fund. Thank you very much.

Thank you. Next caller, line 42, please go ahead.

Thank you, Mr. Chair. This is Mark Fenstermaker on behalf of the Sonoma county water agency and the Salinas Valley basin groundwater sustainability agency. We are disappointed to see the $60 million for Sigma implementation funding proposed to be shifted to the bond. We would ask that you restore that funding to the General Fund. DWR's recent solicitation has resulted in over $780,000,000 worth of applications, so the need is there. We would also ask that this final round be available for small GSAs to have financial assistance from the state to manage their processes. Thank you very much.

Thank you. Line number nine, please go ahead.

Chair and Members. Gerry Desmond with Recreational Boaters of California, in opposition to the 300% boat registration fee increase. Agree with the statements earlier that the Legislature should receive the report. Have a chance to evaluate the stakeholder input.

Otherwise will not be aware of the alternatives that are not being considered, such as recapturing fuel tax dollars and spending those for boaters who paid the taxes. We are also worried that the hit of the increase, together with fuel price increases, property tax increases on boats, will detrimentally hurt the Low income and disadvantaged communities and those with fixed incomes. Thank you.

Thanks very much. Line 43, please go ahead.

Good morning, Mr. Chair, Members. My name is Chris Reardon with the California Farm Bureau. We are opposed to the Department of Pesticide Regulation BCP, because we believe it's premature. There'll be a lengthy discussion next year on potential mill assessment increase, which addresses many of the same issues that will come up related to the issues in this BCP. So thank you.

Thank you very much for the quick response. Next on in line 46. Please go ahead.

Good afternoon, Mr. Chair and Members. Sara Noceto on behalf of the National Marine Manufacturers Association, we are disappointed that a nearly two year boating community stakeholder process resulted in the May revised proposal to increase vessel registration fees by 300% without returning any more value to voters. And this completely ignores the substantial $107,000,000 per year contribution voters already pay via the state fuel tax. We urge you to reject these vessel increases. Thank you.

Thank you very much. And Mr. Chair, we have no one else in queue at this time.

All right, well, thank you, everyone, for speeding up those comments so we can get everybody in. Thanks to everyone who's participated in today's hearing. And again, if you would like to put a longer comment or did not get a chance, you can do that via our website or in writing to the Budget and Fiscal Review Committee.

Your comments are important to us, and we want to include your testimony and official hearing records. Thank you. We appreciate your participation. Thanks to the many panelists today and for everyone who called in, we've concluded the agenda for today's hearing. Senate Budget Subcommitee. Number two is Adjourned.