Senate Standing Committee on Budget and Fiscal Review

We're holding our hearing today at 1021 O Street, room 1200. I ask that Members who are available please come to be present so we can establish quorum. We are currently two Members short. Public comment will be heard after all discussion items have been presented, so not after each individual item. Okay, we're one short now.

We'll establish a quorum as soon as we get one more, so I'm trying to summon the other person. Okay, great. Senator Laird is the enforcer today.

Okay, so the bills that we're going to hear today are AB 108, which is a budget Bill G junior for the 2024 Budget Act, AB 109, also a budget Bill junior, revising the 2023 Budget act and then 17 budget Trailer bills, together with AB 107, the Budget Act of 2024 and in addition to Trailer bills SB 154 and SB 167, which passed last week or two weeks ago.

No, last week. The bills before us today represent a budget agreement with the Administration. The budget agreement includes $293 billion in total spending, 211.5 billion of which is General Fund.

The budget is balanced in both 2024 to 25 fiscal year and the 202526 fiscal year and includes over $46.8 billion in solutions for the 2024 - 25 fiscal year. Due to more than a decade of responsible budgeting and despite the challenges of the current budget, the state will maintain $22.2 billion in combined reserves for future years.

Highlights of the final budget package include increased funding for K -14 schools, funding Prop. 98 at nearly $2 billion more than the May revision proposed, and a deposit of 1.1 billion into the public school system stabilization account. The budget restores proposed reductions to core programs, including CalWORKS, foster care and in home support services.

The budget retains more than 11,000 already awarded additional childcare slots and reduces the governor's proposed one year delay of Developmental Services rate increases to a six month delay. So instead of a one year delay and maintains funding for public transportation and active transportation programs, the budget reduces the Department of Corrections and Rehabilitation budget by approximately $750 million.

It protects many climate related priorities such as offshore wind, building, decarbonization and energy reliability programs. The budget rejects the May revision proposal to permanently eliminate more than $2.4 billion in annual new health investments scheduled to take effect January 1, and instead targeted new investments will start January 12025 with others starting the following January 1.

The budget provides $1 billion for the homeless housing and prevention program, hap round six colleagues. This is a budget to be proud of. It includes real and lasting solutions to balance the budget over the next two years while protecting the progress that California has made on core programs that support our residents.

I want to thank everyone who worked so hard all year to prepare this budget, including our colleagues in the Assembly chair Gabriel, in particular the Administration, our budget staff, and the Legislative Analyst's office. So again, after hearing all of the bills, we will have public comment before voting.

And now, Mister Vice Chair, do you have any opening comments?

Thank you, Mister chair. I appreciate that probably will not come as a terrible surprise to you that I don't endorse everything that you just said by way of introduction. There are some pieces of this budget that are supportable, and we'll see that as the hearing moves on.

But much of it is not, as I have said before, without going into a lot of detail, the budget is nominally balanced. Of course, it has to be, but it's not sustainable. I believe firmly that the January proposal of the governors in 2025 will be facing larger deficits than the, I think roughly 10 billion were anticipating.

And of course, we Republicans had very little to do with this final product. And the reality of the legislative process is that, whether required or not, a collaborative approach, taking into account both the majority views as well as the minority views.

Again, whether required or not, a collaborative approach, at least considering the views of all sides, usually ends up with a more sustainable legislative, or in this case, budget product. So I look forward to the conversation and let's get on with it. Okay, thank you very much, Mister Vice Chair.

We may have a quorum. 3456 quorum, I believe, right? Yes. Okay, great. Let's establish a quorum.

[Roll Call]

Okay, we have a quorum. Okay, I'm now going to turn it over to Erika Lee, Chief Deputy Director for the Department of Finance, for an overview of the bills before us today. Today.

Good morning. Chair Wiener, Vice Chair Neilo, Members of the Budget Committee, Erica Lee with the Department of Finance, and I am pleased to be here today to present on the 202425 budget agreement between the Administration, the Senate, and the Assembly.

This agreement importantly puts the state on a more fiscally responsible, long term path that protects core programs, assisting millions of Californians. The agreement maintains the multi year structure that was introduced in the May revision, solves for budget deficits in the budget window. Window and the fiscal year that follows 2025 to 26.

Beyond this multi year structure, the agreement also includes further budget resilience and maintains a healthy Reserve, as was mentioned by the chair.

While it does assume withdrawals from the budget stabilization account or the rainy day Fund over the next two fiscal years, 5.1 billion in budget year and 7.1 billion in 2526 there is over 22 billion in total reserves remaining at the end of the budget fiscal year at the end of the 2425 fiscal year.

Additionally, the agreement includes legislation requiring the state to set aside a portion of anticipated surplus funds to be allocated in a subsequent budget act only after those revenues have actually been received. Some top line numbers the agreement includes total expenditures of 297.9 billion, all funds of which 211.5 billion is a General Fund.

The State Fund for economic uncertainty is balanced over the next two fiscal years with positive balances of 3.5 billion in the budget year and 1.5 billion in the budget year plus one and as mentioned, the reserves remaining after this agreement after this budget year include over $22 billion.

The agreement funds the Prop 98 minimum guarantee at 115.3 billion, of which $82.6 billion is General Fund for the budget year for pre k through 12 schools and community colleges, maintaining education programs, mitigating reductions in the classroom.

The agreement solves a $46.8 billion deficit for the budget year that is higher than the May revision slightly because of what is happening with our Prop 98 and impacts of NoL.

Specifically, we have categories of 2.1 billion in deferrals, 3.1 billion in pauses and delays, 5.9 or 6 billion in Fund shifts, another 6 billion in reserves, 13.6 billion in revenue and borrowing and then lastly the largest number, 16 billion in reductions. Importantly, the agreement does maintain core programs that serve millions of Californians most vulnerable populations.

Again, Prop 98 protects education now and into the future. This budget maintains, or this agreement maintains, funding for the expansion of health care to all income eligible Californians, regardless of immigration status and inclusive of in home supportive services. It maintains the 9.2% state supplement payment, which is part of the SSI SSP based grant.

It maintains a cumulative 31.3% base increase in Calwork's maximum aid payments since 2021. The agreement also identifies continued investments in vital programs. There is 1,000,000,001 time to provide local governments funding to combat the homelessness crisis and this is tied to increased accountability.

As was discussed in a previous hearing here, there's 250 million for encampment grants along with additional accountability requirements and reporting. There is 103,000,001 time for victims assistance grants and 80 million annually for two years for the nonprofit security grants.

Now that was just a high-level overview of the budget agreement and I will briefly review the related budget, Bill. Juniors and Trailer bills associated with the 24-25 budget agreement. And chair Wiener, would you like me to do? Go through each Bill individually and then have questions or read through all 19 bills?

Maybe just briefly go through them? If, unless you think that's.

I'm prepared to do that.

Well, why don't we actually, why don't we, instead of doing that, let's start. Let's do leave it for questions what people are interested in. Thank you so much. Okay, Mister Pettic, anything to the Lao? Would like to add Mister chair, vice. Chair Members, good morning. We are here to answer questions. Yeah, thank you. Great.

Thank you very much. Okay, colleagues, if there are any initial questions or comments, now is a good time. Anyone?

I think having her go through all this stuff.

Okay. You prefer that?

Yeah, I think so. I think we just go through all of their presentation. If there's anything that comes along the way. I think a lot of the questions of already been asked and it's not, I don't think we're going to get anything that is going to be changing anything in the budget.

So I think that would be fine to have them go through the whole thing.

Okay. I mean, why don't we just go for the budget trailer bills, not in excruciating detail. That's all very public already and I.

Not like excruciating detail.

And then to go through at a high level, and then Members can ask specific questions about Trailer bills to dig in. So based on Member interests. So if you want to test at a high level.

Okay, I will condense some of my prepared remarks. The first Bill is ABSB 108, which is a budget Bill junior that amends the 2024 Budget act. And this Bill includes multiple of our solutions, including reductions as well as Fund shifts. There are some delays in here as well.

One highlight that I'd like to point out, because it was the subject of several of the conversations we had in the prior hearing, is the reduction to the Department of Corrections and Rehabilitation their budget.

This includes 750 million General Fund reduction, which is about 392 million is associated with the statewide reductions for vacant position and funding sweep as well as state operations. So I know that that was something that was discussed at length and so I want to point that out.

This also includes some reductions to housing, affordable housing, shifts for transportation, delays in broadband. Okay, moving on to the next Bill, ABSB 109. This is a budget Bill junior that amends the 2023 Budget act, and largely this Bill makes technical and clarifying changes to the 2023 Budget act.

The next Bill is ABSB 153, which is the k through 12 education, and this Bill includes deferral Reserve withdrawals and accruals as part of the Prop 98 agreement. One other thing I would like to mention is this suspends the August 152024 layoff window for teachers, other non administrative certificated staff, as well as classified staff.

Moving on to ABSB 155. This is the higher education Bill. Like the previous Bill, it includes deferral Reserve withdrawals and accruals as part of the Prop 98 agreement and this time for the community colleges and it establishes a student housing lease revenue bond structure to support previously approved community college student housing projects. Moving on to ABS 159.

This is the health trailer Bill and this Bill includes a trigger regarding the implementation of the healthcare worker minimum wage increase. It exempts state facilities and makes other implementation clarifications. This also effectuates the new targeted Medi Cal provider rate increases and investments from the NCO tax, including physician services, emergency Department services, and several others.

It establishes a children's hospital directed payment program and expands eligibility for AIDS drug assistance, or ADAP. Moving on to ABSB 160.

This is the managed care organization, or MCO tax trailer Bill and this Bill includes an increase to the MCO tax state funding to achieve additional net state benefit beyond the benefit that was included in the Governor's Budget or the early action.

This is nearly 1.8 billion additional revenue in 24251.9 billion in 2526 and 1.4 billion in 2627. The next Bill is ABSB 161, the trailer Bill on human services.

This Bill implements the establishes a permanent rate structure for foster care placements that focuses on the child's individual level of need and strength rather than the placement type. It authorizes a 3% maximum aid payment for CalWORKS and it directs the Department of Social Services to apply for federal projects for promoting accountability by measuring work outcomes.

Pilot this is associated with the CalWORKS program. Moving on to ABSB 162, the Developmental Services trailer Bill. This Bill delays the next step in service providers rate reform by six months, but it does maintain the momentum in driving toward an outcomes focused system.

It also repeals the previously suspended family cost participation program and annual family program fee, which has largely been suspended. Moving on to ABSB 163, the early learning and childcare trailer Bill.

This Bill codifies legislative intent to add additional state subsidized child care slots and it establishes new parameters for the development and implementation of the alternative methodology for state subsidized child care provider reimbursement rates.

Moving on to ABSB 164, this Bill moves programs out of the governor's Office of Planning and Research, or OPR, to other departments to realign the Department with its core mission and renames it the governor's Office of Land Use and Climate Innovation.

It also requires the California Department of Technology, with a third party administrator, in developing and constructing a statewide open access, middle mile broadband network to work with last mile grant project awardees.

The next Bill, ABSB 166, is the housing trailer Bill, and this Bill establishes around six of the homeless housing assistance and prevention program, or HAPP, to provide 1 billion to cities, counties, continuums of care, and tribal governments to combat homelessness. And, as I mentioned earlier, it includes additional accountability and reporting requirements.

It also establishes additional reporting requirements for the encampment resolution grants. ABSB 168, the trailer Bill on public safety.

It adjusts allocations to county probation departments by 5.5% on a one time basis to provide an equitable distribution of funds in the budget year and guarantees a minimum level of funding of 200,000 for each county that falls below this amount.

It also makes an appropriation of 160,000,002 county probation departments for the community Corrections performance incentive program pursuant to SB 678.

ABS 169 the trailer Bill on Juvenile justice and effectuates the transfer of Juvenile justice grant Administration functions from the Board of State and Community Corrections to the Office of Youth and Community Restoration, or OICR, and it extends and expands an existing requirement for county probation departments to report juvenile data to OICR as was established in statute. Okay.

Moving on to ABSB 170, the courts.

This Bill extends the sunset dates for remote proceedings for criminal and civil cases through January 1 of 2027, and it allows habeas corpus resource center attorneys to continue to represent their clients who were previously sentenced to death but whose sentences were reduced to life without the possibility of parole until July 1 of 2029.

ABSB 171 is the labor trailer Bill, and this Bill authorizes the Department of Industrial Relations to utilize emergency hiring authority to expedite hiring and fill vacancies to increase the effective and timely enforcement of employee labor claims. It also clarifies the amount of time the Workers Compensation Appeals Board has to make a final decision on an appeal.

It also authorizes the deferral of state employee payroll costs from June 2025 to July 2025 and includes $1.5 billion in Prop. Two debt repayment funding for retirement liabilities including other post employment benefits, or OPEB. The ABSB 173 is a trailer Bill on transportation, and this Bill adds to the High speed Rail Authority Office of Inspector General Provisions.

It clarifies components of the Ebony alert process and makes technical amendments so that the transit accountability provisions put in place as part of this year's budget apply to all years and all Fund sources for the Formula Transit and inner city rail capital program and Xero emissions transit capital program.

And moving on to ABSB 174, which is the trailer Bill in Ceqa. This Bill provides General Fund appropriations totaling 700 million over the next three years to Fund the capital annex projects.

It exempts the capital annex projects from the requirements under the California Environmental Quality act and extends the existing California Environmental Quality act statutory exemption for specified Fish and Wildlife restoration projects by five years to January 12030. And finally, the last trailer Bill, ABSB 175 on taxation.

This Bill establishes a refundability program to ensure taxpayers subject to the business credit limitation proposed by ABSB 167 for tax years 2425 and 26 can fully utilize their credits after the limitation period ends.

It also implements a trigger mechanism for tax years 2025 and 2026 such that credit limitation and NOL suspension will not be in effect for each of those years if revenues are sufficient without the revenue impact from the solution as determined by the Director of finance at the mayor vision, and, of course, pursuant to legislation in the annual Budget Act.

And with that completes my brief notes.

Great. Thank you very much, colleagues. Any questions or comments? Yes, now is the time for questions or comments. Senator Sehardo.

All right. We did already. We're there. Thank you very much, you guys, for all your hard work on trying to make these adjustments and trying to make this balance over the year. We do truly appreciate it. Whenever we do this, people start to think that they take it personally if we don't like some aspects of the budget.

The first question I have on the CDCR reductions, what is the total amount being reduced out of CDCR? What exactly are we losing in terms of service from CDCR?

Sure. The total reductions are 750 million General Fund. And on top of that, there's also 82 million for the deactivation of housing units. So that puts us over 800, about 830 million. And I'm joined by my colleague who can respond as well.

Hi, Kimberly Harbinson, Department of Finance. As Miss Lee said, it's $392 million for the statewide reductions, which includes the position, the vacant position, money that we'll take for those positions and the statewide reductions. And then there's another 358 million for solutions that we've discussed with the Legislature and other things.

And then we'll determine over the summer and into the fall how to achieve the total savings for the statewide reduction.

Because, you know, we've had a lot of talk about CDCR and the need to mold it into what we want it to be, and that's going to take some tremendous investment in the future. And it seems like we keep going backwards based on hoping we don't have as many customers for CDCR.

And yet as we eliminate positions doing this and we're now we're focused on some additional public safety crime prevention measures that include probably people going to to prison. My concern is that we are not working closely enough with CDCR to enable them to do their job the right way.

And we're making cuts that we're going to have to add back later when, and also, you know, those are jobs, and we talk about adding jobs in this state all the time, and yet in this particular respect, we're going to eliminate them. So that's a concern to me.

Second question I have is about the student housing lease revenue bonds. Is this the way we have done student housing in the past, or have we paid for student housing so that we can actually control the cost?

Because what's happening with lease revenue bonds right now is they get those bond payments and whatever else they need from the students. And so in some cases, student housing associated with some of our UC's has gone up $1,000 a month this last year, $1,000 a month. So they are almost at market price.

That's not what we envision for student housing.

So moving it into a lease revenue bond instead of just using money out of the General Fund to pay for those is setting our students up for failure because then they're going to be taking larger loans to pay for their housing, and eventually they're adding on to loan debt that we already are having struggles with.

So is that something that we are thinking we're going to continue to do is take out lease revenue bonds?

Sally Lukenbill, Department of Finance so this is really just covers a certain number of projects that had already been allocated funds through Ed code 17201.

Just as a little bit of background, in 2023, the Legislature amended Ed code 17201 to require community colleges, which had received allocations through the higher Ed student Housing grant program, to return their General Fund allocations as part of a General Fund solution.

And in addition, Ed code was amended to include intent language stating that no later than the 2024 Budget act statewide lease revenue or other financing program would be established to award or to allow those projects to move forward with the use of lease revenue bonds. So it's just a small. It's 13 campuses.

We do not expect this is going to be a long term solution for housing. My colleague on our support budget can answer more questions on that if necessary.

So this is basically taking what we had, cutting that and then replacing it with a loan instead? Yes, that's a way we're balancing. We're borrowing money to balance a cut.

Well, it's not a loan. We would provide interim loans during the construction period, but then bonds would be sold at that.

Right. I understand the bond process. Thank you very much. I appreciate your explanation on that. I think we have talked about the MCO tax ad nauseam and, you know, essentially that was something that I think we need to get back on track as soon as we can.

It was sold as a way of helping offset Medi Cal costs. And those are going up, not down, for providers.

And the more it goes up without us reimbursing or raising that reimbursement, the bigger the struggle is going to be to keep engaging those providers in offering that help or offering the medical care to people that are on Medi Cal. So that's something that concerns me a great deal.

The CEQA, as you can see, we're already getting down the end, so it's not going to be a whole bad process. CEQA on our affecting annex. How is the CEQA process? What's going on with the annex? That CEQA is affecting it.

I'm joined by my colleague Sally, again, for some reason.

Oh, okay. Sorry. I didn't mean to make you change.

That's no problem.

One was a comment. I'm sorry about that.

So your specific question about CEQA.

Yeah. What's holding up, what in CEQA is holding up our annex that we need to make a carve out for us to be able to exempt it from CEQA. What's going on with that?

Well, the CEQA. CEQA has already been completed for the project. In fact, there was an environmental impact report that was completed and certified, and then there was also a revised environmental impact report that was also certified. And those were in response. The second one was in response to a legal challenge.

Now, all of the major milestones have already been reviewed and all the major issues that have come up have been assessed. Right now, there's a loss there. I think at least one lawsuit that is threatening to stop the project for a period of time.

And that's very expensive on a project of that size, probably 5 million a month.

Okay. Thank you. Take that statement you just made and apply that to our entire state and all the people doing work that are affected by CEQA. And that's my point with this, is it's very expensive if we don't fix CEQA. And I think we have to take a bigger approach. I see.

I know you want to get on that button and correct me, but we have to take a better approach with not just our annex building, because it is. It's costing us a fortune because of these lawsuits. That's the part that's costing us a fortune.

So that just points that in the future, we need to work on this so that it doesn't affect not only us, but everybody else in California has to deal with this CEQA law. We have a lot of CEQA exemptions this year. So, anyway, I'm going to stop there. I can see I'm making the Chair nervous.

So I see your hand going up to the button. And so I want to cut myself off.

Thank you. You can say whatever you need to say, Senator. I appreciate it. And, Senator, I would just say that I know there's, you know, there will be a narrative while we're doing this for the annex, which we've done the full EIR for, by the way. And we have.

This is, the situation here is actually, it's one of the things that frustrates all of us about CEQA. That CEQA is being used for reasons that have literally nothing to do with the environment, to stop a project and to escalate costs for taxpayers.

And of course, as you know, I've done a lot of work authoring CEQA exemptions having nothing to do with the annex, and also removing a lot of housing from CEQA entirely. And I fully agree that CEQA needs a broad revision to focus it on environmental protection and climate action.

But for now, we have a situation where CEQA is being abused and we need to take action. Thank you, Senator Laird. I think you add your mic up.

Thank you, Mister Chair. I think I'd like to give a clear explanation about the higher education housing, because I think that was sort of chapter and verse of what's in the budget. But basically, we as a Legislature did $3 billion for higher education housing.

We did it at the time that there was, the budget was much more flush. It was proposed that we cut out about half of that and not do it at all because the budget tanked.

And the compromise was that there would be lease revenue bonds and the people that received the grants are not the ones that paid them. So in essence, this is not a cost that's going to be passed along. But this keeps us from pulling back 13 grants.

And the one thing that was delayed in all this was the actual mechanism for community colleges. That's what's here in the budget is it finally has the mechanism to deal with what the grants are. I think whatever the number was, $3 billion, all of it was out the door in grants except for a couple 100 million.

This budget sweeps the couple of 100 million and then puts the mechanism in to make sure that those 13 grants or 15 grants to community colleges are held in the budget and are actually made. So this is a good thing.

And it has the General Fund pick up the cost of the lease revenue bonds so that it doesn't stop the community colleges from having their housing projects pencil out. So in essence, this is a good thing to preserve for thousands of students the possibility of housing at higher education.

And then let me make a couple of other comments just in general about the education budget. I think the k-14 has been discussed at length and in essence isn't changing substantially except for some extra tranche of revenues from the legislative budget, and given all the options for cuts and bad things, it is a good outcome.

But for higher education, the outlines that we had in the legislative budget are in this budget.

And instead of $125 million cut to UC and a $75 million cut to CSU, which is what was proposed in the May revise, this reverts back to the compacts and does additional funding in this year and next year and defers the cuts to the out year and frankly, in the hope that the budget recovers or we have a way that those cuts will not be realized in the out year.

So this is, after some really difficult recommendations, a great outcome for higher education. And then also we were able to do the nursing support here.

Jobs are mentioned, there's a shortage of nurses, and the program to really try to augment the number of nurses coming out of higher education is here and the restoration of the middle class scholarship is here.

And that's important because as I said in our last hearing, this is right at the time parents and students are making decisions about to go and trying to pencil out their budgets.

And so a piece of this that you will note in the backup of the Trailer Bill is to postpone the deadline for the middle class scholarship till July 1 so that what we're doing in this budget can be understood by the parents and the schools and the students to be able to make the best outcome for them in trying to make their education pencil out and people not have to go into debt.

So just given where we were along the way, this is a very good budget for higher education. And we now have our charge for the next 12 months to try to figure out how we can repeat this again.

But this has been discussed so much that I think some people take it for granted and I want to call it out just to make sure that everybody knows. Thank you, Mister Chair.

Thank you very much, Senator Laird. Any other questions or comments? Senator Smallwood-Cuevas.

Yeah, I just want to say thank you to the Administration for sharing this overview and for all of the hard work of our colleagues on this budget. I wanted to just raise more of a question and comment just on the Middle Mile, if you could say.

I know we've had a number of conversations and I'm feeling optimistic about how we ensure that we continue our progress in getting access to some of our most vulnerable communities.

I wonder if you could share a little bit about, you know, where we landed on ensuring that we make those investments, but that we also pay close attention to where the PUC is going in terms of ensuring that those communities that are now identified in the middle mile priorities are in fact see the infrastructure build out that we want to see in those communities.

I think we've done all that we could do given where we started in this budget. And that was one of the areas where we had to have some pretty intense negotiations. But just to clarify where we landed and you know, how are we going to ensure that the process moves forward?

Thank you for the question. I will turn over to my colleague for details on that.

Good morning, Members. Danielle Brandon with the Department of Finance. So the budget, AB 108 as well as AB 164, both include reporting requirements that point to connecting the Middle Mile to and the Middle Mile Miles to those FFA grants as well as some other funding sources.

Can you say more about how we are monitoring that process reporting in terms of timeline on that?

If you can specify a little more detail on the reporting on that so that, you know, we want to ensure that, you know, the PUC is making progress on this and we're making progress in a way that we don't run into another budget crisis and then still not have those vulnerable communities prioritize.

So just want to, if you could share what that reporting looks like, that would be helpful.

I can give some details a little bit more on that. So current law requires that the PUC you mentioned making sure that there was some oversight there to work in collaboration with a third party administrator to provide CDT locations for the statewide open access middle mile broadband network. And I think that consultation is going to be important.

The Bill also requires that CDT work with a third party administrator, as I mentioned earlier, as they're developing the Middle Mile broadband network to work with last mile grant projects awardees to ensure that the segment support that last mile connection. Also important, we have a middle mile to have a last mile and connections there.

It requires CDT and the third party administrator to minimize disruption due to excavation. And then lastly requires the CPUC to provide CDT and the third party administrator with information again on that last mile grant grantee awards.

So thank you very much for making sure that we had some guard rails in there around how we're going to report and track that. And very excited to see the investment in high road training partnerships as well.

Very important to our efforts to build a representative and fair workforce and to ensure that our communities are getting access to those high road careers. So thank you for your work on this and for the report.

Okay, any other questions or comments? Yes, Senator Menjivar.

Thank you, Mister Chair. I, you know, for, I'm pretty happy for the most part with this budget and I'm really thrilled that the three parties came together.

At the end of the day, we were able to restore a lot, you know, through the leadership of the Chair and leaders of both houses because it was a difficult year this year to get all these proposals for cuts and so forth and having people come up and cry and beg that we wouldn't cut it.

And this body stood very strong. And we got to a place where I think, for the most part, very comfortable, given the $48 billion deficit. So I'm really proud of the outcome. And on MCO, I think the money is going to be used to offset the Low reimbursement rates plus more.

I mean, you are going to be able colleagues who go to your district and say, our senior adult day carers are going to get paid more, reimburse more, be open longer, be able to hire more people. Our pediatric daycare centers are going to be reimbursed more.

People who live, who are non ambulatory, who live in homes are going to get paid more, congregate health living, private duty nurses are going to get paid more. Community health workers are getting almost the same for Medicare rates.

The people that are on the front lines to close that gap for equity, we got huge wins with the MCO Tax and really ensuring that we utilize that for as much as possible. And one of the greatest things that I, one of the things I'm really excited about also is the specialized dental grant capacities.

If you didn't know people who are, who have developmental disabilities, it's very rare to find a dentist to do work because you have to be placed under. And we have, I think about my nieces and nephew who need to go to the dentist and they can't go because there's no people available for them.

And those grants were going to be paused and we were able to claw that back, which is really amazing. But there's three themes that I want to talk about where we could have done more, and I know this is a deficit. You can't get all the wins. But three promises we made.

We made promises to the developmental disability community on rate reform, and we're pushing it out six months. We made promise to the child care community that we were going to hit 200,000 slots and every single year we were going to add. But we have a pause right now, and we made, I forgot the third one.

We made a promise to the foster care community that we were going to have foster rate reforms by next year or 2026, but that was pushed out another year. Three big promises to three really big marginalized communities.

While I know we had to negotiate and find a common ground that we have to compromise as much as possible, those are somewhat losses to these communities who have been tacking down how many days left until they were going to get a rate reform. I hope and I know that we'll continue to see what we can do.

If there's a way to start it suing, there's a way to unpause the childcare slots. These are programs that are really beneficial for our communities to be successful as much as possible. But outside of that, I still think at least we didn't pause them indefinitely.

And I know we had to find a common ground on some of these issues to protect other programs as well.

But I just want to make sure that while this could be a win for us, it could be detrimental to some community Members who, they need that rate reform right now, foster foster care communities who can't wait another year.

But I do want to thank the Administration for working with us on coming to a place where we can at least be, it can be digestible for us. So thank you.

Thank you, Senator. Any other questions or comments? Yes, Mister Vice Chair.

Thank you. Thank you, Mister chair.

With regard to Proposition 98, the maneuver relative to the overfunding of the 22-23 year, understand how and why that happened, but are we continuing to handle that as was proposed in the governor's January budget, or have we seen the wisdom of the, I think, better proposal of the ledge analyst for that particular overpayment?

I'm not exactly sure what the led analyst proposed, but the agreement does include the structure that was proposed in the Governor's Budget. But I will defer to my colleague for his particulars.

Yeah. Chris Ferguson with the Department of Finance. So it's a modified version of what was proposed at the Governor's Budget and may provision. The maneuver would have been around 8.8 billion under those proposals.

The final agreement reflects roughly 6.2 billion of prior year resources for state purposes only at the state level, being accrued and accounted for in future years.

So essentially it's a different number, but conceptually same approach? Conceptually the same approach.

Conceptually the same approach for that prior year. The one core difference is that the amount is included, that 6.2 billion is included when computing the guarantee in 23-24 which is part of the reason that the overall package proposes a suspension in the creation of maintenance factor.

Now, the LAO can correct me if I'm inaccurate in any way, but it just seemed that was such a more simple approach to recognize the overpayment, but reimburse it through available Proposition 98 reserves and we're done with it, as opposed to pushing it into future years.

Is there any correction or addition that you would add to my perhaps inadequate articulation?

Edgar Cabral, with the Legislative Balance Office. I think again, our recommendation had been to use the Proposition 98 Reserve to address the entire shortfall in 22-23.

The budget, before you hear yes.

That's the current budget proposal.

The final package uses the Prop 90 Reserve for a variety of other things, and in particular, it's to cover costs associated with the Local Control Funding Formula, the community college funding formula in the current year and budget year.

Overall, the package includes $1.1 billion remaining in the Prop 98 Reserve. So essentially all of it was withdrawn as part of covering costs associated with programs.

And does that, what does that leave in the Prop 98 Reserve Fund?

But then, as a result, compared to the governor's May revision, the governor's may revision would have exhausted all of the Prop . 90 Reserve amount. This package, which includes the revenue increases that were in the legislative package, results in additional Prop 98 spending, and 1.1 billion of that is set aside into the Reserve. So that's available moving forward.

And Senator Niello, can I just clarify that I believe that the LAOs proposal would have led to cuts in education, and the proposal that you have in front of you, which was a modification of the proposal the Administration proposed, would have mitigated those cuts to education.

So just that was an important factor for us in putting forward this proposal.

Well, that presumes that the only choice of cuts and reimbursements is in that one area. The budget takes into account a wide array of literally thousands of expenditures. So the alternative choices are not quite that narrow. But rather than dive deep into that philosophic approach to budgeting, I'll just move on.

It is amazing to me, and I know this has been done before and when I was in the Assembly also. But how we can articulate with a straight face, transferring payroll from June to July in order to save money is fascinating to me.

All that really means is, by the way, rather than 12 pay periods in the budget year, we're going to have 13 pay periods in the budget year, automatically increasing the problem in the budget year, unless we do the same thing again a year from now, which is obviously not impossible.

With regard to the capital annex and the discussion about CEQA reform, it sounds to me like we might have a bipartisan, a potential bipartisan result to a larger addressing of the abuses of CEQA, and we can carry that discussion on at another time. It makes me somewhat optimistic. Question about the governor's, the OPR Department.

Let's talk about where we've been and where we're going. So can you talk about how big OPR was in 2018, personnel and dollars, what it is now in terms of personnel and dollars. And how much of that is being transferred to the cleverly labeled go serve? I guess it is. Go Cali is what OPR has been.

Not entirely sure why the name changes, but nonetheless. Can you walk us through where we've been, where we are, and maybe even if you dare, where we're going?

Mark Jimenez, Department of Finance so I don't have the specific numbers for 2018 and 19 and the current or the fiscal year 23-24 numbers. And I can certainly follow up with your staff with those specific details since I don't have it in front of me, but I generally want this publicly.

Yeah, it's really important for people to know that, not just me, because I have the numbers in my office and the increase has been like 400% or something fantastical like that, where there had been virtually no increase in many years prior to that.

So it's important that everybody knows what the consequence of this huge growth and increase in spending is and the impact it has on this year's budget.

And I would note that one of the biggest factors that contributed to the growth within OPR are the surge of funding from the greenhouse gas reduction funds. And so a portion of those funds goes to OPR to implement climate mitigation related programs. And so largely, much of their growth is related to those funds.

There were one time General Fund augmentations and also federal funds through the through era, one time funds that will essentially reduce down, I think, by 2025 or this next fiscal year. But some of those programs were primarily California volunteers. Related were, were, I guess, augmented with General Fund so that it can continue.

And so that's why we established go serve or the governor's Office of Service and Community Engagement, which will focus on those aspects of OPR's existing operations. So that OPR, now the governor's Office of Land Use and Climate Innovation, will focus primarily on land use and climate innovation related work.

And so we're not adding any new, any new admin staff within Goserve. Goserve will continue to be supported by OPR's existing administrative operations to avoid having to kind of add that, you know, add that additional administrative overhead. So we're, they'll be sharing those resources.

I think in terms of the number of, of positions shifting over to go serve, I think it's certainly over 100 positions that I'll be moving over to go serve. But I'll have to follow up with you on more specifics on the number of positions moving over to go serve.

I have that number. That's about 137 going to go serve.

And I think in 2018, the number of positions in OPR was somewhere around 50 some.

It was certainly a fraction of what it was today.

And those other, the other spending that you're talking about that I guess you're saying is accounted for the bulk of the gross. What's the source of those funds?

The Greenhouse Gas Reduction Fund. And it's, I'm not familiar with the revenue mechanism, but it's certainly through that fund.

It's not General Fund. Not General. It must be coming from bonds or Federal Government or the GGRF is the.

Cap and trade funds. Cap and Trade Fund.

And we're taking a look at what we do with cap and trade in a couple of years. Right. So this funding could continue on without cap and trade. Then it becomes General Fund. My point is this has a huge impact directly on the budget, potentially on the budget in the future.

The growth in OPR has been absolutely stunning, and we've had some discussions about that Subcommitee four, but I hope we continue to because one of the biggest challenges in government is the allowance of growth in spending and not reduction in spending. Outside of trying to handle a budget disaster, that discipline is not typically there.

That's not a criticism. It's just a reality. And so I think it's important that we keep a spotlight because I just haven't seen the growth of a bureaucracy to the extent that OPR has been in the last six years or so. I just wanted to highlight that.

And Senator Niello, I just want to make a point that this Administration is concerned with efficiencies, and I think we are, this is an example of a Department where we are trying to streamline and to better create a Department that has at its core function the mission for what it was proposed.

And so that is an example of some of the things that we're trying to do. And obviously, there's a lot of efficiencies proposed in this agreement across the board to address the budget problem. But in General, it is something that we are interested in and would like to continue to have conversations with the Legislature.

We introduced some trailer Bill that dealt with this, that we will be continuing to work with Legislature on for the summer.

I would love to help out with that. I have a great deal of experience with regard to private sector budgets, with regard to county budgets, with regard to state budgets. Not to toot my horn, but I'd love to help out with that. It's just that I am excluded, but I offer my services for whatever that's worth.

Thank you.

Okay, Mister Vice Chair. I need to present a few bills, so I'm going to hand the gavel over to you. Brave man. And after we. And after the discussion and questions will be public comment. And then after public comment, we will vote on the bills. Right. Thank you. We'll probably be done before you get back.

The last point that I want to make is with regard to the taxation issues. I appreciate the fact that, especially the net operating loss.

Aspect of that is being potentially not deferred as long as it was. I think that's a good idea, but it's a bad idea to eliminate those allowances in the first place. This isn't a question, unless you want to add something to what I say. I think eliminating the NOL as we've business has become not able to depend upon that tax aspect. So maybe we ought to just repeal it, which would be a huge mistake because, as I've said, when businesses lose money, their capital is being depleted.

When they start making money and beginning to replenish their capital, to immediately begin requiring them to pay taxes to make it more difficult to replenish that capital is just simply unfair and certainly not good for overall economic development. So to do anything with that feature I think is unwise, but especially to give it and take it back and give it and take it back as we continually do, business needs certainty. They need to know what they can depend upon, and they can't depend upon this. And I think it's an equity factor.

The other credit, the same thing. We shouldn't be doing that in the first place. So. And one thing I wanted to add to Senator Menjivar's comments is the areas of the budget that she's talking about are the areas of the budget that affect arguably the most marginal of our citizens, arguably the most. And she highlighted negative consequences of this budget. So those are my comments and questions. Any others? I didn't see anybody else prior to me raising my hand. Senator Becker.

Thank you. A couple quick comments and maybe say a little bit more on the floor today, but just, as Budget Sub 2 Chairs, just want to thank the staff, thank the whole Budget team and my sub-staff. And just a couple, you know, quick, quick notes that this year, for the first time, California was powered by clean energy resources for 32 days straight. And this budget continues to work in the last four years to increase clean energy procurement, increase grid reliability, and shrink the probability of blackouts.

We've increased battery storage tenfold to about 10,000 megawatts, doubled the size, doubled the sale of new zero emission medium and heavy duty vehicles, and we exceeded 100,000 public chargers. In addition to that, we've restored nearly a million acres of natural land and increased urban tree canopy by over 200,000 trees.

That's in addition to many programs that we saved through the work of this committee around small farms, around protection of invasive fruit flies and other climate emergencies, and allowing 500,000 Californians to use their CalFresh at farmers markets because we saved that program as well.

In addition, the wildfire work that we've done, I think is really quite extraordinary because it adds to a comprehensive plan that we've put forward and that we've now built the largest aerial firefighting force in the world, 69 aircraft, strategically located around 25 bases, able to respond to any wildfire within 20 minutes.

That's because of the work that we put forward, and we're continuing in this budget. We made historic investments in CAL FIRE to reduce the work week. And we funded novel both fire suppression technologies, and in this budget, Lidar mapping, which is going to greatly help our firefighters in the future.

So I just want to thank everyone, note some of the investments we've made there. And I was just talking to my colleague from Health and Human Services, and agree with her on the slots, which also just talking about how the real impact in my district of some of the work we've done on pay the last few years.

So when I started childcare workers in my district, starting salary was $17.50 an hour in the most expensive, probably one of the most expensive parts of the state. Because of work we did my very first year, by 2022, that was up to $23 an hour, up 27%. Still difficult for the area, but an improvement.

And now it's up to $28 an hour. And that's with much improved health benefits, a retirement plan for the first year. This is folks in working in state subsidized childcare. And I do want to note that because that was an example of some of the work that we've done here that has had an impact in my district. So just want to note those areas in Sub 2 and one area there around the workforce and how it's playing out, you know, in our districts. And just want, again, thank the Budget team for all its work on this budget today. Thank you.

Thank you very much. Any other questions or comments from Committee Members? Wahab. Senator Wahab.

Thank you. One, I just want to, again, thank you all as well as your staff that's not sitting at this table for working with all of us and coming to a deal. I think that most of us are relatively happy with the budget. I think that we've made significant cuts in areas that have historically been very bloated. I will say that definitely in Budget Sub 5. I am concerned a little bit.

You know, when we're talking about certain institutions that have no access to increase or generate any more revenue, specifically our courts. If you really take a look at it, they're kind of stuck. I think we did save a significant portion of funding for them as well as, you know, really focused on some of the overspending and bloat in other departments. I do just want to highlight a couple of things.

Number one, I think that, from my perspective and I think many other people, we do have a budget in so many of the departments that are bloated and have historically been bloated. I have asked specifically for certain programs, you know, line items and where does the funding go to and so forth. And I was told specifically that we wouldn't be able to really 100% track it. And like, I want to highlight this because it is important. And, you know, we keep throwing money at different problems and yet not seeing necessarily the best return. Right.

And even if funding was secured 20 plus years ago, you know, is that program viable? Is that program even successful? What is the efficacy of these programs and the original intention versus the intention it should serve today as the things evolve? And I don't think that we do enough analysis of that across departments.

So, you know, I chair Budget Sub 5. That's one piece of what we've talked about. Having, you know, what, 12 contractors, 700 subcontractors across the State of California, is that really viable? Is that necessary? Is that needed? You know, how much money are we spending per contractor, right, per subcontractor? What is their success metrics?

What is their goals? You know, are they meeting those goals? And I don't think that that's tracked at all. You know, it's, hey, they service this many people and that's pretty much the gist of it. Right. But when we're talking about rehabilitation and much more, it's like, okay, are these individuals reintegrating in society very well?

What are their challenges? And I'm gonna be honest, one of the challenges that I consistently hear from this population that re-enters society is housing. Right? And I haven't seen any movement in regards to making renting easier for these folks, which should be a metric of these programs as to what is a successful re-entry, right?

Are they trying to rent a unit through their mother and father's name, a boyfriend or girlfriend's name, a sibling's name? That is not success. That is not standing on your own 2 feet, which is what these people want and need and deserve. I highlight this because this is one department and one group and one effort in one core focus of a demographic. But I can expand that same thought process when we're talking about health. People don't want to say it, but it is very, very bloated in regards to the amount of money that we are spending.

And yet if you talk to the average person, a person on Medi-Cal, they still do not receive adequate care across the board. Right. We can talk about how to even be on Medi-Cal, you have to be at 128% of the poverty level. Right. We have a growing senior population that is not at their prime earning years, will not be able to afford some of the care that they need and deserve. We're talking about nursing homes, skilled nursing facilities, retirement centers, much more.

And it's my generation that's impacted of taking care of their aging parents, potentially starting their own families, the housing crisis, the student loan crisis, you name it. And we have the most amount of money going into health, but not necessarily the best return that we see as to real care and solving the real issues. Right.

I would like to take a deeper dive and, you know, I've heard from my colleagues, some of them, as well as the larger public, when we're talking about the budget and how it's not clear. And the budget is been available since January. We know that. Right. The overall, you know, kind of big picture, and it goes into a lot of detail. And I think that what I would like to see is in the coming months is also where are the potentials for removing duplicative services, streamlining efficiencies, and potentially trying to save money from programs that 20-30 years ago made sense but today doesn't.

Because in the last meeting I did state to you all that government, and government, you know, works to support the people, but at the same time they have a mindset of use it or lose it, rather than admitting that this doesn't work anymore. And I think that we have another concern where sometimes we don't want to talk about shifting positions and much more because the honest truth and the elephant in the room is that, you know, the majority of our budget goes to personnel costs, and we need to ensure that we prioritize, again, the programming and the effort for the average person of who we serve first and foremost.

And the reason why I bring up health is because, I'm going to be honest, I'm going to pitch this. Medi-Cal will cover a dental implant removal, like a dental removal, a tooth removal, but not an implant. And I think it's one of the most important things because we have a growing senior population that can't get a tooth implanted but will get 12 teeth removed. Right. Is that really fair? Is that quality of life? Are we serving the community in that regard?

So I would like to see if there is any money on the table to actually push this forward. It's incredibly important that, again, we are seeing our programs and does it serve the population? And this is a growing population that cannot advocate for themselves. So I say all of this because I think that, for me, I would like to see more efficiencies kind of put forward. Right. We have a lot of departments, we heard from the last speaker that there's another department growing to only focus on this one core issue or two core issues.

And we have a lot of programs and things like that that seem duplicative even when I see it. Right. And if we can have that on paper, these are all the programs under this umbrella that cover XYZ. And if there are duplicate of services, they need to be consolidated. They truly need to be consolidated. Because one, it's not clear. Two, does it actually serve the public? And three, what are the goals and are we achieving those goals?

And I have not seen any metrics, any metrics on any of the contracts that we give out, on any of the programming that we give out. And if we have a program just to have a program and say we're doing something, but it's a complete failure, that's a concern for me, that's a concern for the public. That's a concern for one of the wealthiest states in the nation, right, in the world.

So I would like to see more successes versus us throwing money at a problem. For example, we have been talking about homelessness and housing, and we threw billions of dollars at it. But why wasn't it as successful as it should have been? Right. And again, it's because we don't have these metrics.

We think that just throwing money at a problem is going to be, you know, the end all be all. But we should hold the groups and the organizations accountable for what successful looks like, permanent housing, wrap around services. And then again, another metric to say a year from now, how successful was this program? Right.

When we're talking about affordable housing, we keep talking about development, development, development. And we're putting money and streamlining efforts for ADUs and much more. ADUs are not affordable. Half of the time it's not even for renters, for a man cave or a she shed, as they call it. Right. No, seriously. And there's no deed restrictions on it.

There's no nothing. Right. So again, we're throwing money at a problem and not really solving the problem. So I say all that just to, again, really highlight the fact that we need to put some more metrics into it. It should be fully transparent online, available for any average resident in California to be able to look at it and dive in deep into the line items and the cost. Cities do it to some extent. I have not seen the state go as deep as we need to.

We obviously have a bigger budget and it's harder, but this should be one of the efforts when we're talking about the DMV and streamlining the DMV. DMV across the board should already have their electronic system set up into place, rather than making it take three years. In any industry, implementing a new technology should not take three years. It's ridiculous. These are jokes to the average person. Right? So I say that. And again, I do appreciate all the work you guys are doing. I don't need a response, but I wanted to highlight that there is still a lot of work to do. Thank you.

Senator Niello, I do have a response to your question in terms of the positions at OPR initially. So back in 2018 to 19, the total positions were about 48. The total budget at that point was 625 million, of which 548 million was the Greenhouse Gas Reduction Fund, the Cap and Trade Fund that we talked about. In the 23-24 year, which is the current year, total positions are about 149. And the budget is 1.1 billion, of which 712 million is General. Sorry, GGRF. So again, Cap and Trade. So just getting the details for you. I know you wanted to have that.

Yeah. Thank you. I appreciate that. And it's good to highlight that as we move on, depending upon what happens with the cap and trade system, if you will. But that truly is stunning growth. Thanks for the statistics.

And may I also correct something for the record? Earlier, Senator Laird, you mentioned that there was 125 million and 75 million, respectively, in reductions for the UC and the CSU that were forgone. Those are actually still being implemented. They are part of the 8% government efficiencies across the board. But you were correct in terms of the deferral and timing. So I just wanted to...

I'll take the correct part of your statement.

Thank you.

And to that point, you're talking about the 8% unallocated reductions that the separate entities will come up with. I personally have grave doubts that that will truly result in a full 8%. Unless the Administration is going to insist that each department come up with that number. That will be an important part of that. I don't see any part of the oversight on that particular issue in the budget. So it'll take additional work beyond the agency's entities themselves to come up with that.

And I'd add, with regard to Senator Wahab's comments relative to assessing the efficacy, success, or lack thereof, of programs that go on and on and on, there really needs to be separate assessment of that as opposed to self assessment. Because if a department decides that they have programs that are ineffective, that means they eliminate, they need to eliminate the program or suggest modifications. But if it's eliminate, that causes a potential reduction in personnel, which is very difficult for the entities themselves to grapple with. So that is a problematic aspect of the budget. Senator Becker.

Thank you. One last quick comment, and I just appreciate everyone who fought to include affordable housing finance in the affordable housing dollars in the budget. I just happened to see last night a post from the Director of Office of Supportive Housing in Santa Clara County, and she says that, she says she'll say it again, the County of Santa Clara, land use is not a barrier to building affordable housing.

This is in reference to a 90 unit development that's between 30 and 80% of AMI in Los Altos, one of the most expensive, really, cities probably in the state. But she leased, she says, now we need the stars aligned at the state level to secure an allocation of tax credits this year.

Beyond that, we need to rethink how we finance affordable housing. The county put up another 10 million, but now they have to pray they can get tax credits from California at the state level. And we just need to, I think going forward, both the money we put into affordable housing and also the way we finance affordable housing, still things we need to work on better going forward. Thank you.

Thank you, Senator Becker. Any other questions or comments? Well, I have a feeling we probably will have lots of comments from this point on with public comment, and that's what we will do now, is entertain comments from the public. I see the Professor coming forward.

Good morning, Mr. Chairman. On behalf of the Los Angeles County Metropolitan Transportation Authority, we wanted to thank the three parties for maintaining the $5 billion investment in public transportation. Thank you, Mr. Chair.

Good morning. Julia López with Greenberg Traurig on behalf of California Partnership to End Domestic Violence. So on behalf of them and the entire VOCA Advocacy Alliance, I want to express our deep gratitude to the Budget Committee for including 103 million in funding for crime victim services in the final budget agreement with the Governor.

These funds will prevent devastating cuts and ensue that victim service providers in every part of the state can continue to serve survivors reaching out for help. Thank you for ensuring that survivors continue to have access to the life saving services they need and deserve.

Hello, I'm Richard Cowan, Dick Cowan. For about 10 years, I served as your Senate appointee to the Historic State Capitol Commission. I love the Capitol building. I worked on it when I came back from the Navy on my military service. While I was the Chair of the Historic State Capital Commission, the non-disclosure agreements required to be signed by all of the state employees and legislative staff working on the capital annex project and signed by all of the consultants working on the project stopped us at the Commission from getting the information we wanted to give our suggestions on how that project could cost less and be a better project.

So I resigned the Commission. And because of those non-disclosure agreements, the volunteers I teamed up with, little old ladies in tennis shoes, little old guys with their belts up around our shoulders, picked up our money, $50, $25, $10. And we hired a CEQA consultant and a CEQA attorney and graphic artist to draw up our better ideas for the Capitol Annex Project. Because the staff of the Joint Rules Committee told us that's the avenue we had to use. It cost us money. It was hard. It was hard to round up volunteers who could understand that.

But we did it. And so for four years, we followed what the legislative staff told us to do, use CEQA to give our better ideas about how the project could be improved. Saturday, an amendment came up proposing to eliminate CEQA requirement for the Capitol Annex Project. I urge you today to oppose that, to take that requirement out. There need be no delay. Our...

Could you work towards your conclusion?

Yes. Our attorney was working with the Attorney General's attorney on a settlement of the two suits, and she stopped when she saw this amendment dropped into the bill. Please take it out before you pass AB 174. Thank you.

If we could be somewhat economic in our comments, would very much appreciate that.

Yes, Senator Niello. Laurice Detson representing Preservation Society. We too have been involved in this process. I'm wearing two hats today. I'm representing the Preservation Society and also a plaintiff with Save the Capitol, Save the Trees. I know Senator Laird from last year. We started negotiations then on this process to reach a conclusion that was satisfactory to everybody.

And since April 11, the focus has been on an appeal that we won that would shut down construction in July. We don't want to do that. We told the Joint Rules Committee attorney we wanted to start negotiations. And we've been negotiating since April, and we've narrowed it down to only the West Lawn. Preserve the West Lawn.

The Joint Rules Committee says they're not going to build on the West Lawn. Then let's put it into legislation or an agreement. So we were negotiating. We sent a letter, and in our letter we show the attorney's letter to the AG saying, let's get this done by the end of June. All of a sudden this exemption shows up and were confused.

As the previous speaker said, if you could work to your conclusion, please.

So my conclusion is amend AB 174 to include language that protects the west side. If thats done and this bill moves forward, all litigation would be dropped that would stop the Annex construction. It would be a win win for everybody. The garage could go forward. The Annex building would go forward.

Thank you.

And the West Lawn would be preserved. Thank you very much.

Good morning. Rebecca Gonzales with Western Center on Law and Poverty. We'd like to thank this committee for protecting safety net programs in the budget and for including language in the budget to reimagine CalWORKs to be more family centered and less punitive. We also are grateful that the Legislature has not repeated the mistakes from the past.

During the last recession, deep cuts were made to safety net programs and it took over a decade to recover. We appreciate the partnerships and the conversations we've had with both houses of the Legislature and the Administration, and we thank you once again for protecting the most vulnerable Californians.

Thank you.

Good morning. Kim Lewis on behalf of Children Now. I want to thank you for preserving our human safety net, particularly our Home Visiting Program, the Emergency Child Care Bridge, and most especially FURS. On behalf of the California Coalition for Youth, we are greatly appreciative of the HHAP Round 6 funding and four year cleanup in the trailer bill and ensuring that interim housing solutions for our young people experiencing homelessness can be built in future rounds. Thank you.

Thank you.

Justin Garrett with the California State Association of Counties. CSAC is grateful to the Legislature and the Administration for the final budget agreement that protects core safety net programs and appreciates this committee's leadership in making that a reality.

Preserving funding for human services programs and public health, providing a new round of homelessness, funding for HHAP, supplemental funding for victims of crime, and the two actions on the ERAF items will all help counties deliver services to vulnerable Californians. And so we look forward to partnering on implementation of all this in the budget bills, and thank you again.

Thank you.

Good morning. Michelle McKay Underwood on behalf of nearly all of the 60 school districts and County Offices of Education that successfully applied for the local grants under the Inclusive Early Education Expansion Program funds. These are funds for inclusive environments for preschoolers with disabilities so that they can learn and grow and play along their general education peers. So first, gratitude, and secondly, an ask. First, the gratitude is the restoration of $100 million of those funds. Started out at 250, went to zero, and now in the final budget, $100 million.

So we're grateful for that restoration. The request is that all that $100 million be dedicated for those LEAs, the school districts and county offices that successfully applied for those funds. If all the dollars were applied to those grants, they'd get about 85% or so of what they applied for.

We think that they can bridge the gap between what they'd planned and that lowered amount. If it is split between those districts and county offices and state level activities, we're concerned that they won't be able to implement their plans with fidelity. So we ask, without prejudice, the state level activities that all those funds be dedicated to the local grants. Thank you.

Thank you.

Good morning. Alchemy Graham here with two hats on, starting with the California City Transportation Initiative. Just want to express our deep gratitude for restoring funding for the Active Transportation Program and for the commitment to continue that funding in future out years. With my other hat on with the California Transit Association, want to express our deep gratitude as well for restoring, excuse me, maintaining the 5.1 billion in funding for public transit. Thank you.

Hi, Brandon Tate with the Youth Mental Health Equity Coalition. Just want to say thank you to Members and staff for restoring the funding of the Office of Health Equity for the Children and Youth Behavioral Health Initiative, as well as the future of public health funding. Thank you for that. It's going to make a big difference in our local communities and many of the communities that are most disproportionately impacted by mental health services. Thank you.

Morning. Tim Madden representing the California Chapter of the American College of Emergency Physicians. Emergency physicians are very appreciative of being included in the MCO tax for paradox rate increases, specifically for the smaller bucket for the 24-25 year to include emergency physicians will go a long ways to buttressing our emergency departments moving forward. Thank you.

Hi, Katie Hardeman with the California Teachers Association. CTA is in strong support of the Proposition 98 package, and we thank you for your work. Thanks.

Good morning, Senators. Pamela Gibbs representing the Los Angeles County Office of Education. We'd first of all like to align our remarks with Senator Laird, the Chair of the Education Subcommittee, and appreciate and thank the Administration and the Legislature for all of their support this year.

In the interest of time, I'd like to align my remarks with the Coalition for Adequate Funding for Special Education for the Inclusive Early Education Expansion Program. LACOE is one of the applicants as well as some of our delegate agencies and partners in the county. So we urge you to fully fund the money to the local education agencies so that they can provide services to the students with special needs. Thank you very much for your work this year.

Good morning. Johan Cardenas on behalf of the California Pan-Ethnic Health Network. We want to thank the Legislature and the Governor for preserving core Health and Human Services programs. First, we appreciate rate increases for community health workers. We're also thrilled for in home support services will not be eliminated for the undocumented. And lastly, we thank you for preserving the Indian Health Program and a majority of the funding for the Future of Public Health. But more importantly, we appreciate state policymakers for uplifting equity as a value in this budget. Thank you.

Good morning, Senators. Jordan Lindsey with the Arc of California and Arc United Cerebral Palsy California Collaboration, advocating on behalf of Californians with developmental disabilities and their families. We are very disappointed that there is a six month delay in the rate implementation that has been promised and that is desperately needed for Californians with developmental disabilities.

We understand that this body has done a lot of work to improve it from the 12 month delay proposed by the Governor. Nonetheless, that is a half a billion dollars that is being cut and will not come back to Californians with developmental disabilities. We believe that this roller coaster riot of funding for individuals with developmental disabilities needs to come to a stop this year being a perfect example of it.

We believe our work begins now on creating a sustainable funding source, and we hope that you will work with us on that. Thank you, Senator Menjivar, for the comments regarding the disappointment, as well as acknowledging the restoration of the dental grant that is important. Thank you.

Kimberly Rosenberger with SEIU California. I am going to be capturing our appreciation on behalf of 700,000 members, so if I miss something, it doesn't mean we don't appreciate it. We have the long, I believe, technical term was painful letter coming, and that captures all of it. But we really want to emphasize the legislative contribution to a more balanced approach that preserves a safety net and negotiated contracts.

We know that you worked really hard to protect public safety net services, but also you showed consideration to the workforce that does those services, protecting rates and slots in childcare, waiving late layoffs in k-12, and supplementing the crucial summer net Summer Bridge, as well as protecting labor agreements and public universities, funding tied to staffing in IHSS, DIR, and in our courts. And finally, we thank you and the Administration for securing the pathway for healthcare workers to achieve the highest minimum wage in the country. Thank you.

Good morning, Senators. Malik Bynum with UDW AFSCME Local 3930, representing over 180,000 home care and child care providers across the state. Happy to be supporting the budget bill junior ABSB 108 that includes supplemental language to the three party agreement preserving core services including the IHSS program, as well as ABSB 163 that maintains the allocation of over 11,000 childcare slots for our youngest learners.

We do have concerns over language in the child care trailer bill that changes CSPP eligibility to include two year olds, as this may unintentionally impede upon our providers ability to care for these children. And we would urge the committee to look at how we can make this work for both workforces. But acknowledging that California is challenged with a historic deficit, we're thankful to you all for protecting these programs and look forward to improving upon them in the years to come. Thanks.

Good morning, Chair and Members. Janice O'Malley with AFSCME California. I would like to align my comments with SEIU on protection of the workforce as well as our affiliate AFSCME Local 3930 UDW on IHSS and childcare. I also wanted to highlight that, related to Health and Human Services budget, our members that do eligibility determination and maintain cases for CalWORKs have already had many client services halted since the budget came out.

So we're really grateful for your work to preserve what you could to maintain programs which allow our members to serve the community. And also wanted to note that in the future, as we're looking at ensuring that dollars are being spent wisely at CDCR, there's a chronic abuse of contracting out public sector work to overpaid contractors to a tune of hundreds of millions of dollars, with the agency coming back every year to ask for more taxpayer dollars to go to these contractors.

All while there is a monthly running bar tab of fines, which is now up to $150 million, because of the agency's failure to address vacancies. We hope that we can work collaboratively with the Administration and the Legislature in future years to take a holistic approach to addressing these issues in retention and recruitment of the mental health and medical workforce at CDCR. Thank you.

Hi, Tiffany Mok on behalf of CFT, a Union of Educators and Classified Professionals. Wanted to thank all of you for your hard work on Proposition 98, funding the UC Compact, funding the UC Labor Centers, and also ensuring students have office hours at community colleges. Finally, as a note, we would like to see at some point $10 million or more for financial literacy, so that all our students in the state can understand that value, and look forward to further discussions on that moving forward. Thank you so much.

Good morning. Stephanie Goldman on behalf of the Student Senate for California Community Colleges. We appreciate the work on Proposition 98 and the efforts to support California community colleges and its students in a difficult budget year. However, as members of the Cal Grant Reform Coalition, we are deeply disappointed with the exclusion of Cal Grant reform from the budget. This would be a game changer for nontraditional students as well as those with the greatest needs, and we remain committed to college affordability and encourage its inclusion in future budgets.

Good morning. Jack Anderson with the County Health Executives Association of California, representing our local health departments. We want to express our sincere gratitude for the continued level of commitment for state and local public health workforce and infrastructure included in the final Budget Act agreement.

And we'd also like to express our appreciation to budget staff for robust engagement throughout the budget process on items including the CDPH Syndromic Surveillance trailer bill as well as the transfer of the Health Care Program for Children in Foster Care. Thank you.

Good morning. Maria Romo with the Child Care Resource Center. We would like to express our gratitude to the Administration and the Legislature for your firm commitment to ensuring that critical safety net programs, which include childcare, home visiting, the Emergency Foster Care Bridge Program, and CalWORKs programs, have been protected during this very difficult budget year.

We would also like to express how grateful we are for the continued protection of our child care provider pay rates as the Administration works to implement the new cost of care rate. Protecting these investments means that child care providers will stay one step closer to a wage and families can access critical supports that enable them to work, put food on tables, and keep their families whole. Thank you.

Good morning. Molly Robson with Planned Parenthood Affiliates of California. We are extremely grateful that this budget includes investments in sexual and reproductive healthcare from the MCO tax. However, Planned Parenthood is part of a larger health system, and one third of our health centers in California are also primary care providers.

So we are disappointed that this budget does not include the sustainable investments in the larger system to include primary care and community clinics. But we look forward to working with you all on those sustainable long term investments to meet the needs of Medi-Cal patients, and really grateful for the protections to existing safety net programs as well. Thank you.

Good morning, Chair and Members. Derick Lennox on behalf of the 58 county superintendents of schools. First, want to acknowledge and thank you for the work on the Prop 98 package. We think this is a great deal for students, is going to really support the investments that you've made over recent years.

I also want to give special thanks to our Chair of Sub 1 and to the committee as a whole for the work on the emergency school closure language, what happens when a school experiences material decreases in attendance or school closures as a result of a natural disaster.

We think that the final language in the budget was really resonating with the field as a way to encourage schools to better prepare for these inevitable closures and make sure that they can continue to engage with and provide instruction to students. So thank you very much.

Megan Baier with the Association of California School Administrators. I'll echo the comments of my previous colleague. We're very appreciative for the Prop 98 package. This is an excellent deal for schools and this budget deal. And also, again, thank you for the emergency closures proposal and all the work on that, among other things. Thank you.

Good morning. Kimberly Sanchez with Nexon California, also a part of the Cal Grant Coalition. Though we're glad to see funding for financial aid and the final budget deal, we're disappointed that no funding was included to implement the Cal Grant Reform Act of 2022.

We believe that the final investments for financial aid in this year's budget lays the foundation to come back next year to Fund these important reforms for Cal Grant program. We thank the Legislature for your efforts to find solutions for Cal grant reform and look forward to continuing working with you all and the Governor on influencing Cal Grant. Thank you.

Members of the Committee, Brandon Marche with the California Medical Association want to thank you very much for helping to keep some of the MCO money for its intended purposes, which was to increase medical reimbursement rates. We understand that that was a restoration from the Governor's budget, so we greatly appreciate that.

However, we are disappointed that we have once again missed the opportunity to make a once in a generation investment into increasing access to medical recipients within the State of California.

Additionally, we would also like to express our disappointment about the cutting of the GME funding that is in the program or, excuse me, that is in this budget, especially those that was allocated in last year's budget. Those programs are extremely important to address the physician workforce programs within the state and address the workforce shortage.

So we look forward to working on that next year. Thank you.

Good morning. Zong Lore with the California School Employees Association. I want to also align my comments with many of my education colleagues and thank you for the Proposition 98 package. We're really grateful that education funding is protected and our students will be receiving the necessary funding and education that they deserve.

Also want to thank you for the protection protecting our classified employees from summer layoff. Summer is a very, very difficult time for our members. So also want to appreciate the additional funding for the Classified School Employee Summer Assistance Program.

This program is a lifeline in the summertime for our members, so very appreciative of all your work on those. Thank you.

Jackie Gonzalez with Immigrant Defense Advocates. I'm here to express deep appreciation to this Committee for listening compassionately to the issues related to immigrant communities, in particular the legal services programs that were on the chopping block. We're grateful for the preservation of the TPS funds and the CSU legal services funds.

We know that these are more than just legal services programs, their economic stability and mobility. Anytime that the State of California can protect a family or a person from deportation, they also stabilize a family and a community. Anytime we can make a student a lawful permanent resident and citizen of this great state.

They contribute back to our economy. We are disappointed to not see any dollars set aside for unaccompanied children. It's very difficult for that population to come here and advocate for themselves, understandably.

But that issue remains a very big issue in California, and I would urge this Legislature to consider how we might be able to preserve even the scaled back version of that program before this year is over. Thank you again.

Morning. Edson Perez with Advanced Energy United. We wanted to express appreciation for the flexibility language that was put in the budget bill around the Demand Side Grid Support Program to keep the Distributed Electricity Backup Assets Program afloat this year.

Both of these programs are really critical to keep our grid afloat and avoid blackouts during times of emergency using clean, distributed energy instead of what we currently rely on, which are dirty energy, expensive, polluting energy plants.

So we did want to express disappointment about the cuts that end up going through for both of these programs and wanted to express support for increasing funding or allocating further GGRF resources to these two programs to get us through times of emergency again with clean energy. Thank you.

That appears to be all of the public comment. Is there anyone else in the room that has anything to say? Thank you very much. Seeing no one come forward, bring it back once more to the Committee. If anybody has any additional questions or comments.

Seeing none, we will dive into the voting, taking them the items one by one. Do I have a motion on AB 108? Moved by Senator Laird. Please call the roll.

AB 108. The motion is do passed. [Roll Call]

We will hold that open. Motion, please, on AB 109. Who was that? Roth. Roth. Moved by Senator Roth. Please call the roll.

AB 109. The motion is to pass. [Roll Call]

We will hold that open. Motion on AB 153. No. Senator Cortese a moves AB 153. Please call the roll.

AB 153. The motion is do pass. [Roll call]

And we will hold that open. It was just pointed out to me that on each of the motions. That there was more than one person that offered the motion. And there was a woman or two on my left side. And a man or two on my right side. And each time I chose the man.

I assure you I am not a misogynist. I am deaf in my left ear. I apologize. So now, looking for a motion on AB 155.

Look over this way.

Senator Smallwood-Cuevas moves AB 155. Please call the roll.

AB 155. The motion is do pass. [Roll Call]

We will hold that open. Also, notice how generous I'm being to our Chair? Holding these open for our Chair.

Yes.

I will entertain a motion on AB 156.

Move the Bill.

Senator Wahab moves AB 156. Please call the roll.

AB 156. The motion is do pass. [Roll Call]

We will hold that item open. I will entertain a motion.

I heard, Wilk. I thought that was the end of the Alphabet. I apologize. Okay. You've recorded Senator Smallwood-Cuevas? Yes. Okay. Senator Cortes.

[Roll Call]

159. Senator Menjavar moves 159. Call the roll.

AB 159. The motion is do pass. [Roll Call]

We will hold that item open. I will entertain a motion on AB 160. Senator Menjivar moves AB 160. Please call the roll.

AB 160. The motion is do pass. [Rol Call]

We'll hold that open motion AB. I beg your pardon. Move approval AB 161. The motion is by Senator Seyarto. Please call the roll.

AB 161. The motion is do pass. [Roll Call]

We will hold that item open. I'll entertain a motion on AB 162. Moved by Senator. It is moved by Senator Menjivar. Please call the roll.

AB 162. The motion is do pass. [Roll Call]

We'll hold that 162 open. Motion on 163. I will entertain a motion. Senator Corteze moves 163. Please call the roll.

AB 163. The motion is do pass. [Roll Call]

We will hold that item open. I will entertain a motion on AB 164. Who said move somewhere on that side? Padilla. Ah. Senator Padilla moves AB 164. Please call the roll.

AB 164. The motion is do pass. [Roll Call]

We'll hold that item open. I'll entertain a motion on AB 166. Who moved the bill? Senator Padilla. Senator Padilla moves AB 166. Please call the roll.

AB 166. The motion is do pass. [Roll Call]

We'll hold that item open. I will entertain a motion on AB 168. Moved. Senator Cortese moves AB 168. Please call the roll.

AB 168. The motion is do pass. [Roll Call]

We will hold that item open. AB 169. I'll entertain a motion. Senator Cortese moves AB 169. Please call the roll.

AB 169 the motion is do pass. [Roll Call]

I'll hold it open. We'll hold that one open. The next one. Senator Wahab moves. AB 170. Please call the roll.

AB 170. The motion is do pass. [Roll Call]

We will hold that one open. I will entertain a motion now on AB 171. Moved by Senator Corteze for AB 171. Please call the roll.

AB 171. The motion is do pass. [Roll Call]

We will hold that one open. I'll entertain a motion now on AB 173. That was Senator Becker. Senator Becker moves AB 173. Please call the roll.

AB 173. The motion is do pass. [Roll call]

We will hold that one open. And I will entertain a motion now on AB 17. Senator Wahab moves AB 174. Please call the roll.

AB 174 the motion is do passed. [Roll Call]

We will hold that item open. And last but certainly not least, I'll accept a motion on AB 175. Moved by Senator Cortese. Please. AB 175, please call the roll.

AB 175 the motion is do pass. [Roll Call]

Whoever turned my mic off when I started talking. Thank you very much for that. Having a side conversation. We will open the roll for go through the bills for those that haven't been able to vote yet, starting with AB 108.

So calling any Members of the Budget Committee that are not here. We're going to go through the bills again for everybody to have an opportunity to vote. We'll wait a couple of minutes for absent Members to fill seats.

We can go back through the bills again for those who are here that were not able to vote. And once we get through those that are here, we will recess then for any that can't be here right now. So, moving through the bills starting with AB 108.

AB 108 [Roll Call]

Keep that one open. Still now. AB 109.

AB 109 [Roll Call]

Continue to hold that open. AB 153.

AB 153 [Roll Call]

Continue to hold that open. AB 155 now.

AB 155 [Roll Call]

And our Chair has returned.

Thank you, everyone and colleagues. Thank you. I'm back from the Assembly. And thank you to the Vice Chair. Thank you to the Vice Chair for facilitating everything. I appreciate it. We're just going to start back at the top and close out each of these items. Because I think we have everyone here now who needs to vote.

So we'll start with item number one. AB 108, please call the absent Members.

[Roll Call]

That vote is 13 to five and the bill is out. We'll next go to item number two. AB 109, please call the absent Members.

AB 109 [Roll Call]

Okay, the vote is 13 to five. The bill is out. Item number three. AB 153, please call the absent Members.

AB 153 [Roll Call]

Okay, the vote is 13 to five. The bill is out. Item number four. AB 155, please call the absent Members.

[Roll call]

Okay, the vote is 16. I voted on that before. 16 nothing. The bill is out. Item number five. AB 156, please call the absent Members.

AB 156 [Roll Call]

The vote is 13 to five. The bill is out. Item number six. AB 159, please call the absent Members.

[Roll Call]

13 to five. That bill is out. We'll next go to number seven. AB 160, please call the absent Members.

AB 160 [Roll Call]

13 to five. That bill is out. We'll next go to item number eight. AB 161, please call the absent Members.

AB 161 [Rol Call]

18-0 that Bill is out. We'll next go to item number nine. AB 162, please call the absent Members.

AB 162 [Roll Call]

13 to five. That bill is out. Item number 10. AB 163, please call the absent Members.

AB 163 [Roll Call]

13 to five. That bill is out. Next is item number 11, AB 164. Please call the absent Members.

AB 164 [Roll Call]

13-5. That bill is out. Item number 12. AB 166 please call the absent Members.

AB 166 [Roll Call]

13-5. That bill is out. Sorry. 13-4. That bill is out. We'll next go to item 13, AB 168. Please call the absent Members.

AB 168 [Roll Call]

Okay. 13-5. That bill is out. Next is item 14, AB 169. Please call the absent Members.

AB 169 [Roll Call]

Okay. That vote is 15-0. The bill is out. We'll next go to item number 15, AB 170. Please call the absent Members.

AB 170 [Roll Call]

The vote is 13-4. The bill is out. We'll next go to item 16, AB 171. Please call the absent Members.

AB 171 [Roll Call]

13-4. That bill is out. Next is item 17, AB 173. Please call the absent Members.

AB 173 [Roll Call]

13-5. That bill is out. Next is item number 18, AB 174. Please call the opposite Members.

AB 174 [Roll Call]

The vote is 13-4. That bill is out. And then finally, AB. Excuse me. Finally is item number 19. Okay, so on item number 18. The vote is 14-4 and the bill is out. Finally, it's item number 19, AB 175. Please call the absent Members.

AB 175 [Roll Call]

14-3. The vote is 14-3 and that bill is out.

Okay, I want to again thank our amazing budget staff, Department of Finance, the LAO, and everyone for coming out today on all the hard work that's gone into this budget for months by our Members, Budget Subcommittee Chairs, and all the members of the public who have helped us craft this budget with your feedback.

And with that our business is concluded, and the Committee on Budget and Fiscal review is adjourned.