Assembly Budget Subcommittee No. 4 on Climate Crisis, Resources, Energy, and Transportation

Good morning. Now that the secretary's here, Welcome. Appreciate you being here. So, this is the first meeting of Budget Sub 4 for the year. We particularly appreciate the fact that we have two secretaries, Omishakin and Secretary Wade, who are here with us before we begin our weekly hearings.

And so today is the big overview of everything and so I would like to point a few things out. Number one, we're designed to be done here at noon, we have two and a half hours. Potentially, we could have 16 Members who have indicated that they're interested in being here and up on the dais.

So at various times, they may come and go, but if 16 of us all want to go on for any significant period of time, we won't be done at noon. They do have these rooms scheduled for other people after this. And we have, I know we all have, sort of things on our schedule with regard to that.

So I'd like to ask people to have today be the true overview comments. Your comments about our budget situation overall, the budget overall and the details of any aspects of the budget are things we're going to have a weekly meeting on, and they're probably more appropriate at that point in time.

And I think the agencies will be more prepared to answer those specific details. But if we can keep our questions with respect regard to that. So we're going to have two presentations today and one on transportation, the other on natural resources and all the other elements that go in with natural resources.

When we move into a presentation, the panelists will come up, and our normal format will be. The panelists will decide what order they want to go in. The panelists will introduce themselves, mostly so that I don't mispronounce anybody's awkward last name or whatever.

But anyway, the panelists introduce themselves, and our normal pattern is that we go with the governor's Executive office representatives and finance. We end up with LAO. But today, this one time, we're going to start with the LAO. When it comes to the second panel presentation that we have.

After all the items are heard, the public will be able to make comments. Public comments will be limited to one minute. And I have one general - can you guys hear me in the back, back there? Curious. Put your hand up. Yeah. Great. Thank you. Trying to get this guy.

It's just like dealing with putty or play DOH or something. It never goes where you want it to go. And I'll make one overall comment before we get started into that, and that is that there is normal tension between branches of government. Right.

Normal tension between the Assembly and the Senate, normal tension between the Legislature and the Executive branch. There's even sometimes normal tension between the Judicial branch as we try to do things.

And there have been times in the past when I first joined and in some of the committees where that tension, I think, resulted in unhealthy dialogues going on here between various branches of government that didn't help us actually move along.

So I recognize there will be things that we won't agree on, but we have really endeavored here in Budget Sub 4 to try to keep everything in

the kind of dialogue that allows everybody to freely express themselves, explore, and try to have us have these be healthy opportunities for us to try to reach as much agreement as possible, at least acknowledging that we will have something that, hey, we just don't agree on this, and that's perfectly fine.

Also, I'm going to have one of those examples that I will bring up later when, as we move through specifically, but I just want to try to, as we kick this all off, try to remind everybody that for the last three years, we've really tried to emphasize that kind of healthy relationship.

And so we encourage everybody up on the dais, we encourage all the agency people and the people making public comments to try to help us make sure that we continue to have a dialogue that's really healthy for our continued relationships, to try to do the best things for California.

And with that, we'll call up the first panel and have them come on up to the, to the seats here. And we'll start with Secretary. Secretary Omishakin. And I believe we have four people here. There we go. Hello.

Secretary Omishakin, you want to begin for us, please?

Thank you, Chairman Bennett, appreciate those comments that you started off with as well. Good morning, Members. I am Toks Omishakin, California's Transportation Secretary. In this role, I'm pleased to present a brief budget overview of Governor Newsom's 2025-2026 transportation budget.

Before diving into specifics on what is included in the transportation budget, I would like to emphasize that everything we do at CalSTA, the transportation agency, including our eight departments, boards and commissions, is people centric. So when we talk about these specific investments in transportation, we're talking about investments that aim to improve the lives of of all Californians.

These investments are framed by our core four priorities of safety, equity, climate action and economic prosperity. I'm pleased that all of these areas of the transportation budget are being reflected in these priorities. The 2025-2026 Governor's Budget for Transportation maintains the entirety of of the transportation package included in recent budgets.

Specifically, this includes $15.4 billion in funding for the following investments. Number one: $7.7 billion for high priority transit and rail infrastructure projects that will increase equity, improve rail and transit connectivity between state and local regional services and support transit operations.

These rail and transit projects play an important part in providing options to opt out of traffic congestion across our state and reduce greenhouse gas emissions. Number two: $4.2 billion for the High Speed Rail Authority to continue building the 119 mile section from the Central Valley from Madera to just north of Bakersfield.

In January, Governor Newsom joined several other leaders from the region in helping to kick off the track laying phase of this critical project. Number three: $1.2 billion for projects that improve goods movement on rail roadways and at port terminals, including rail yard expansions, new bridges and zero emission modernization projects.

Number four: $1.1 billion for active transportation projects including the Reconnecting Communities, Highways to Boulevard's pilot program, and climate adaptation projects to advance equity and health outcome.

Number five: $1.1 billion for zero emission Transit capital for the Transit Zero. $150 million for grade separation projects that support critical safety improvements and improve traffic and rail movement by separating the vehicle from the railroad tracks. In addition to maintaining the transportation package, this transportation budget includes two General Fund proposals.

First, the proposal has $25 million in General funds to establish to help further the already established Clean California Program for a Community Cleanup and Employment Pathways Grant Program. This investment in Clean California reflects our commitment to improving safety, advancing equity and developing our workforce.

This funding will provide matching grants to communities with a Clean California Community designation with an emphasis on prioritizing grant proposals that integrate workforce development initiatives and target underserved and vulnerable communities.

And a second and final part of the General Fund proposal is $5 million in General Fund ongoing funding to support CHP to expand its Computer Crimes Investigation Unit to investigate and assist allied agencies with criminal investigations dealing with the distribution and downloading of child sexual abuse material throughout California.

This investment will improve safety and help the state lead the way in developing strategies for combating these types of crimes in our county cities across the state.

Lastly, the Governor's Budget proposal also includes a transfer of $166 million, including $85 million from the Air Pollution Control Fund and $81 million from the Greenhouse Gas Reduction Fund to the MVA, the motor vehicle account, to offset the State Air Resources Board's mobility source program expenditures.

Funding these transfers come from available Fund balances and funding made available from Proposition 4 backfills. Our colleagues at the Department of Finance will provide additional information about this proposal if necessary.

I look forward to continuing our progress in implementing our investments in transportation infrastructure that improves safety, advance equity, address climate action and invest in our workforce. I'm happy to respond to any questions you may have this morning. Thank you again, Chairman Bennett.

Thank you. We will have all the presentations before we entertain questions, but I do realize I would like to give an opportunity for my Vice Chair to make any introductory comments here as we're beginning, and if any Members have just overall General comments. Assemblymember Lackey.

Well, thank you. It's an honor to spend some time with you, sir. We are appreciative of the responsibility that you bear and it's a big one. I'm very thankful for some of the provisions that you just mentioned.

There are some laudable circumstances, but there's just one that really is a glaring frustration for me and it's probably pretty predictable what I'm about ready to share with you. We've spent about $13 billion so far on this high speed rail project.

In that $13 billion, we're still about six and a half $1.0 billion short on resources for just the first segment and we've only completed about 22 miles of guideway and no track has been laid. The average person that I speak to because this may come through in a proposed manner is supposed to come through my district.

I think that's highly unlikely, but that's not what I'm sharing. Let's just think for a second. If this was a project to renovate our home and the estimate more than tripled and the contractor couldn't provide a completion date, would you complete that renovation with your own money? I think it's highly unlikely. Highly unlikely.

And this, this project appears to be a betrayal of trust. I mean I, I actually fought for this because I was believing it was going to be a benefit, but it's proven to be far less than that because of a number of circumstances.

And so you indicated in your opening statement too that economic prosperity is one of the goals, the primary goals. I think that this threatens that. And so that's really all I have to say.

Any other Members have overall comments as we begin and should I wait to.

Respond or to Vice Chairman or just come back after?

Well, we Were going to respond to specific comments, but you have a question from Vice Chair, so let's go ahead and let's let you respond. Right?

Yeah. Vice Chairman, look, I think this is, this is one of those projects that undoubtedly has a lot of controversy around it. There's no doubt about that. But I believe in this role that this is probably one of the most important transportation projects or infrastructure projects in the entire country. That challenging past that it has,

I think we are on the path now to get it completely straightened out. I really believe that. The point you make about economic prosperity, I think is an important one. But if you think about it, so far this project has created 14,500 jobs.

A majority of those jobs are directly in the Central Valley region, a region, when you look at it economically, probably one of the most challenged economic regions in the entire country, not just in California.

So creating jobs right there, opportunities for careers long term, and when it's complete, again, sustained jobs and the economic activity that it will induce as well is something that we currently aren't even being able to measure today. But we can look all across the world, Asia, Europe, where projects like this have been completed.

What happens after they're done to those communities, the vibrance economically that is generated. So I completely hear you on this challenge pass. I'll just, just give you two more other important things beyond the 14,500 jobs. There are 100 structures, viaducts, bridges, etc that are needed on this project. 150 of them are now completed.

Obviously no trains running on them yet, but that's evidence. If you're driving down 99 in Fresno, you can see one of those key viaducts and bridges right over 99, probably pretty close to your district.

And the other thing, I'll say just as a, as a little bit of, as a little bit of an indicator is the environmental process on this project. Its total 500 miles, roughly. The average U.S. project, major infrastructure project in the U.S. takes about 15 years, 13 to 15 years to get there.

A large part of that process is the environmental process. In many cases that takes that long. And we're talking about projects that are 5 miles, 10 miles. This is 500 miles, almost. We're essentially almost done. We're 95% of the way done from the Bay Area all the way to LA, done with the environmental process.

The only segment that's remaining is from LA to Anaheim. That's the final piece, and we'll be done. So a lot of the hurdles hopefully are behind us. The challenges, they're behind us and we're on the path to being able to get this train operational in five to seven years.

Thank you very much. We will go on to the other speakers. And I do have one overall comment that I would like to make. And it's not about transportation, it's about the overall budget. But transportation, unlike in the other categories, has maintained its funding fairly steadily over the years, and certainly in this budget by the Governor.

But this budget that we are looking at right now was actually developed before we had the crisis in Los Angeles in terms of what's going on there. Before we're starting to see just how dramatic the changes could be from the Federal Government in terms of our funding. And so we're really looking.

We have an interesting challenge ahead of us this spring. Usually we're diving into it and really going back and forth. It's hard to believe this budget is going to stay similar to what it is right now by the time we get the May revise.

So we're looking forward to trying to have as much information as possible from the secretaries, from the agencies, et cetera, on what your new thinking is. So each week we will say, no, you're going to give us a May revise.

But that doesn't give us very much time to do the due diligence that we would like to do as an Assembly in terms of moving forward. So we hope that you can help us with the fact that we recognize the budget is out of date almost.

In fact, it was a week after you had released the budget that we had the LA fires and the tremendous pressure that that's going to put on our budget as we move forward. So with that, will any other Members have any General overall comments you want to make as we begin this hearing?

We've had our first presentation. Assemblymember.

Thank you, Mr. Chair. I just want to also talk about the economic prosperity that high speed rail can bring. I do share the cities of Palmer, Lancaster with the Vice Chair. And I actually work on the high speed rail station that is planned to be founded during my time as a city planner for the City of Palmdale.

I do know and realize the challenges the parade has gone through. I know that there's a lot of questions as to how the parade has been handled and transparency, all those things. But I just want to show that I still believe that we can deliver to the California people on what we promised we would do.

Again, this is past, before my time. I'm a new Member, but I work in that project as a city planner for the City of Palmdale and the economic prosperity is something that I believe will happen. It has not happened in Central Valley yet. The project is not completed yet.

But eventually when we get to that section of the project in Palmdale, that's an area that will benefit from the economic prosperity. There is no other way to build in Southern California, LA, San Bernardino, there's the new frontier, which is the high desert. I believe that's the way we can bring the prosperity that we need.

And I just wanted to share that I still believe in that project, to use the analogy that you, the Vice Chair, use.

If I'm doing a remodel in my house and it turned out to be more costly and the contractors wouldn't deliver, I think that I am forced to complete the house and not live in a house that is just torn apart.

So again, just wanted to show my support for the project and I believe in the economic prosperity that the project will bring.

Thank you.

Well, we've certainly engaged on the number one controversial topic that we have and so it's good that we've kicked off with that. Let's go ahead and hear from the other presenters and then we'll go dive into specific questions on transportation.

Good morning, chairmembers. Bowen Peterson, Department of Finance. I'm here to give you guys an overview on the Motor Vehicle Account. So currently the Motor Vehicle Account provides funding to enforce the rules and regulations of the Vehicle Code and the use of vehicles on state highways.

It continues to face operational shortfalls as expenditures outpace revenues, with total revenue in 2025-'26 expected to be about $5 billion, with the main sources of that revenue being a $71 vehicle registration fee and a $32 CHP fee. Expenditures are expected to total about 5.2 billion, with CHP and DMV expenditures of about $3.2 billion and $1.4 billion, respectively.

And since the May revision, revenues from fiscal year '23-'24 to '25-'26 have decreased $103 million below expectations, and this resulted from lower volumes of new car sales and a decline in registration renewals affecting the revenue growth itself.

The budget is proposing a one time 166 total transfer from the Air Pollution Control Fund and Greenhouse Gas Reduction Fund in 2025-'26 to offset the costs associated with CARB's mobile source program. And I will be happy to answer any questions that any of you may have on this matter.

Great. Thank you. Next presentation.

Morning, Rachel Ehlers with the Legislative Analyst's office. I'll keep my remarks brief. I think the big headline around the transportation budget is that there aren't too many big headlines this year, which is really different from the past several years.

As you'll recall a few years ago we had a big surplus and so we we, you, the Legislature, the Governor, the state budget included really unprecedented levels of General Fund support planned across multiple years for transportation programs which historically had been funded almost exclusively by bonds and special funds.

And then the past couple of years was an issue of right sizing those plans for the less than anticipated surplus that materialized for the state. So as the Secretary mentioned, there are a few proposals that are within this budget that are definitely worth discussing and I know you will in your subsequent hearings.

In particular, a couple of relatively modest General Fund new expenditures for California Highway Patrol, computer safety and clean California program, as was noted. And then addressing the Motor Vehicle account ongoing operational shortfall certainly is something the Legislature will need to deal with.

Even if you take the kind of one time fix proposed by the Governor this year, that will be an ongoing issue that will face you until expenditures and revenues are brought into alignment.

The one thing I would note for you, as highlighted on page 2 and 3 of your agenda that shows the multi year state funding investment plan in transportation, that was originally mostly General Fund and then through some adjustments became a big mixture of General Fund and greenhouse gas reduction Fund.

You'll note that there's a few more years of funding the budget year '25-'26 and then three more years of funding planned. As the Chair noted, the state may be facing some tightening budget constraints and conditions.

So I think one thing that's important to highlight is some of that out year funding, has already - most of that out year funding - actually has already been committed to specific projects.

You may, those of you who were here last year, may recall that there were actions taken to do some cash flow adjustments to delay funding to future years when the projects were ready and actually needed the money. But those funds have for most of these programs have already been committed to specific projects.

The local project implementers have entered into contracts. So it would be pretty disruptive to pull that funding back. So as you're looking at the out years, knowing we're facing deficits, knowing we may be looking for tools, there may be some kind of less flexibility in looking at some of these funds than otherwise.

Not that anybody wants to make reductions, but as you're looking at tools, I think that's an important constraint to highlight for you. With that, we look forward to future discussions on the details as your Subcommitee hearings roll out over the coming weeks.

I have three questions, but I will defer to my colleagues. First, on transportation questions, Assemblymember Creel.

Thank you. When you see that most of the money has been committed to specific projects, is there a list that we can look at to see where those projects are?

And if those in that list of projects, there is nothing that will go to areas like the high desert, the freeway 14, the bottlenecks, something that has created a lot of tragic and loss of life. In a lot of instances, we don't get to have an equal distribution of these funds.

Areas like the ones that I represent continue to be left out, and the danger of driving on those highways, those freeways, continues. And I can think of two in our district, and I share Palmdale and Lancaster, the 14th Freeway, and Highway 138.

How do we make sure that we actually get something that we can show that it's being done in our regions?

Yeah. So I'm sure the Administration could provide a list of the projects. When I say they're committed to specific projects, what I mean is that these programs have gone through a competitive process. Applicants have applied. The California Transportation Commission has gone through their process and awarded the funding.

The only reason it's showing up as out year is in the state kind of pulled it back for cash flow purposes to score General Fund savings, but they have gone through competitive process. So, I think the Administration could provide the list.

We'll get a list. Okay. Absolutely. Assemblymember? Yes, we can. We can get you a list of projects if that's something you need for which, just to be clear, which specific program? The 14th Freeway.

Okay. Highway 138. Yeah.

Assemblymember Rogers.

Thank you so much. And thank you for being here. I have a couple of questions. One is sort of a broad question to the group. There's a number of different expenditures that are in here that are out of the GGRF.

And obviously, as we talk about possible reauthorization or what that looks like, one of the conversation topics is how best to utilize those funds to achieve greenhouse gas productions. Obviously, some of it, like high speed rail, is built in, how it's allocated, but some of this is discretionary, like the Motor Vehicle Account, for instance.

How was it determined that these were the best expenditures to reduce greenhouse gas emissions, or was it used mostly to plug budget holes?

I think the context I would provide is that the planning for the expenditures of GGRF in the past two years, but particularly in the '24-'25 budget, was somewhat of a departure from prior practice in that it in two ways.

One, that it planned expenditures of that discretionary funding for several future years, which was not the historical practice. Historically, it had kind of been a year by year conversation between the Administration and Legislature of what are the highest priorities.

In this case it planned, you know, almost $2 billion per year for out years, for three years, which has some uncertainty depending on how revenues materialize. The second way that I would characterize it as somewhat unique is that it was used as a budget balancing tool in order to sustain previous plans for a wide range of activities.

Being able to score General Fund savings and use that GGRF in order to sustain those activities without the strong nexus to greenhouse gas reductions that had previously been the case.

So if you look at the wide list of activities and we can provide that we've got in a report, I think you'll see a broader mix of activities that don't have as tight of a nexus to greenhouse gas reductions, which is legal. The reauthorization of the cap and trade program was done with a 2/3 vote.

The revenues can be used flexibly, but that was really a policy decision to be able to sustain those plans and use that tool.

Yeah. Matt Almy, Department of Finance. Agree this is going to be an ongoing conversation in the future. Maybe the way I would like to characterize the investments of Greenhouse Gas Reduction Fund is a portfolio approach where you look at both kind of short term GHG reductions but also long term investments as well.

The climate goals are you know, in a time horizon of decades, so you know, 2045. And so it's a combination of short term GHD reductions such as funding for zero emission vehicles, but also building infrastructure that supports that transition of zero emission vehicles. You think about the transit funding, a lot of those projects do take years.

High speed rail is part of the kind of the long term transition into a transit oriented kind of transportation system.

And then of course there's the climate resilience side of the equation such as the wildfire, fuel reduction, and healthy forests and then on top of that of course there's the equity lens funding such as AB617 for communities that are somewhat disproportionately impacted.

So you kind of just as you would say your 401k where you have a portfolio of different investments that achieve certain, certain things. There's kind of long term, short term as well as various different aspects of the climate program.

I can appreciate that. And obviously things that are allocated based on formula that's been approved. Not questioning that. And we don't need to go into the details.

But I think as we go through these hearings, I am going to be interested in hearing from folks how they're using GGRF and other funds that are supposed to be maximizing our greenhouse gas reductions appropriately. So I'll have more questions about that later. I had a question about supply chain package.

The port operations improvements appears to have been zeroed out. And obviously one of the focuses, not just in my district but in the state, has been on offshore wind development.

We know with sort of a hostile White House towards it, that California's role is going to be to continue to invest in the infrastructure to make it feasible in the future and keep those projects moving.

And so I'm just asking about how was it determined that the port operations improvements and a reduction in port and freight infrastructure programs overall, how does that play into sort of that overall goal of offshore wind development?

Thank you for the question. I'm Christine Casey, Deputy Secretary for Freight Policy. So we haven't had a decrease in the port and freight infrastructure program. We've actually, to Elio's point, kind of spread that funding across the years. So we had an initial $1.2 billion in investments and those are still the projects that are in that portfolio.

They're less focused on offshore wind, although we know that the ports will be part of that ecosystem for staging integration and we know that there's part of the bond funding available for that port infrastructure. Our PFIB projects are really based on other parts of the supply chain.

So increasing capacity of rail, increasing the ability for the ports to accept large vessels that are calling, making improvements on grade separation that can carry more rail from the ports to alleviate congestion on our roads, zero emission vehicle and infrastructure projects at the ports. So that is, again not offshore wind related.

That will be separate with the climate bond. But there is still $1.2 billion and we're making progress on those projects with PFIB.

Great. Thank you so much. And then my last question is just very broadly we have the Middle-Mile project that is making its way. We heard in communications and conveyance last week that one of the big hold ups is actually the right of way acquisition from Caltrans.

How are we investing to make sure that we have also the human capital to be able to achieve these projects, not just the dollars for the projects themselves.

Yeah, an important question. Look, I'll say that just to be clear, there are 798 miles roughly that Caltrans is specifically overseen for broadband.

And then there's another 7,000 plus miles that joint builders are working on to complete this vision of, you know, roughly 10,000 miles of broadband for the middle mile, broadband for the entire, for the entire state. We're making the shifts internally within the Department, so the joint builders are doing their part.

But internally we're making the changes from a process standpoint to help expedite the delivery of these projects. Like our encroachment permit process is something that we've been working on extensively over the last several months. I'm sure you've probably heard some of these hearings.

But also putting the right personnel on the project, one of the things that we've done is the chief engineer for Caltrans, which is one of the biggest responsibilities in the Department, a role that oversees probably 10,000 people, has now been spending a majority of our time over the last, over the last several weeks on this, including the management team to help deliver this program.

This, and again, this is not something that is, you know, typically a part of Caltrans portfolio. This is all new. And so over the last several weeks and months, process improvements, including putting the right personnel all the way to the top of the chief engineer and below to focus on this, including districts.

Each district that has a broadband project to deliver now has a point person.

And all the information as a request comes in for an encroachment permit, all that information trickles all the way to the top to the chief engineer, including the Director of the Department, now spending weekly meetings and working with CDT and GovOps to help deliver those nearly 800 miles that we have responsibility for at the state.

So this is a big deal. It's a big focus for us and of course for Governor Newsom as well.

Yeah, no, I really appreciate that and I know preaching to the choir, but need to keep impressing upon you that if Caltrans is the choke point on this project and we miss a construction window, that funding is at jeopardy. Right. Okay. So I appreciate your attention to it.

Zero, absolutely. And includes my attention. Yeah, absolutely. My attention on those projects as well. I didn't mention that.

Assemblymember Macedo.

Thank you, Mr. Chair. It's an honor to be a part of this particular group because it intersects a lot. And I'm really proud to say I represent Central Valley, which has been a big topic today about the high speed rail underserved areas. And you know, I love talking about job creation in the Central Valley, I really do.

But I also want to highlight for legislators that maybe aren't from the Central Valley that we've also lost jobs as a result of this project because of the farm ground that's been taken out of production, and I firsthand witnessed dairy farms that had been in families for generations be sold off and cleared for this project.

And we don't really see all of the, well, we do see the structures, but we're not seeing the track. Additionally, in the Central Valley where I am from, 4 out of every 5 jobs are either directly or indirectly tied to agriculture.

Now, when we're talking about creating economic opportunity and wealth, we are not commuters in the way you are in big cities. We are driving from very rural areas on roads that are not maintained to get to work that then we're going back to our homes in rural areas.

So my question is, is when we're talking about these areas, have we done any studies in the communities that we're talking about in the Central Valley that's very rural and very underserved of how many people would actually utilize the high speed rail for getting commuting to and from work?

Yeah, yeah. Very important question. Assemblymember. Look, I'll say that to your point about first of all, your point about farmers losing their jobs or livelihood, that is absolutely not something that we want to see. You know, I would love to see what those numbers look like of those potential impacts.

But as this project is happening, I mentioned the environmental process that we are nearly 100% percent complete on. That environmental process considers all those things, any potential displacements and impacts on businesses, homes in the communities that we're building projects in.

So if that's happened, that's something that I know the team at High Speed Rail has directly, or hopefully they're directly addressing with the people who have been impacted. Because that's absolutely not what we try to do whenever we're building a project, we we try to reduce and minimize any impacts to people economically when we're building a project.

But too to your point about ridership, I think was the second point that you were making. Look, it's true that in urban areas, transit and rail and bus seem to be the more viable options for people to be able to commute and get around.

But this project, as you know, has multiple stops throughout the valley, including one of one of the sort of highlight stations, if you will, that's going to be in Fresno. It's probably going to be one of the more exciting stations that are going to be throughout this entire project.

But with all those stops, people will be able to, regardless of where they live in the Valley, be able to get to their job or home or whatever because of this, this project. And it's going to have last mile connectivity with existing transit agencies that are there. So we're not building this project in a vacuum.

So you're going to build the rail, but there's also going to be connectivity through buses because it's not going to be able to get to obviously every home or every business, but transit agencies along the way are going to have connectivity to this, to this train station.

So today, may be the case that people don't use transit as much or obviously they don't use the rail because it doesn't exist.

But in the future, that's the hope that we have that option for people in the Central Valley to be able to say, I don't need a car, I can use the train and use the bus to get from any destination I want to within the Valley or beyond, ultimately to LA and to the Bay Area as well.

I appreciate your optimism and I too hope for that someday. But I also want to highlight something that an important intersection of this Committee and I'm not expecting you to know this, but for most of us will become very familiar with sigma, right? We're talking about natural resources.

We are fouling a million acres of farm ground in the State of California as a result of sigma. And along with that, we just talk about the farm ground, but we're not talking about the farm worker. We're not talking about the number of jobs that we are going to lose as a result of sigma.

So once again, if we get rid of all of this farm ground, we might not have the population to even use this rail. So when we're talking about a very tight budget, I would really encourage fellow legislators to look at how are we actually helping people not only keep their jobs but then get to their jobs.

And I would argue in rural areas like mine, making sure we have stable water sources and safe roads for these individuals to drive on is more important than a rail project that we have not seen the benefit of and we're probably not going to see the benefit of for a while.

That I understand projects like this in commuter towns of trying to get to the Bay or trying to get to the heart of downtown LA. But in the Central Valley, we in the Central Valley, I mean, I won't speak for everybody, but I'll speak to the majority of people that I've talked to. We don't want this project.

We want real resources that are going to protect us and this just isn't it. But I appreciate it and I'm excited. When high speed rail folks are here, we can talk more numbers. But if we're truly going to help the Central Valley, let's talk about farmers and farm workers too.

Thank you, Assembly Member Petrie Norris.

Thank you, Mr. Chair and good morning everyone. I have a couple of questions related to CERIP, which is the Clean Energy Reliability Investment Plan. If I am understanding correctly, it looks like there are a number of cuts being proposed to those CERIP dollars.

I think it's $50 million in cuts and then through some maneuvering, I think some of it is being utilized as part of the DMV backfill. Is that correct?

David Evans, Department of Finance. I would characterize the CERIP allocation, the plan is being kept whole in the Governor's Budget. The whole billion dollar plan is being kept whole.

But in order to produce a balanced budget and to also address the budgetary shortfalls of the Motor Vehicle Account, $50 million of that is going to be supplemented by Prop 4.

I think you've, I mean I think it, you've cut it. It actually says it's 950, so you've definitely cut it at least $50 million.

So there's a redirection of funds, of allocations. And so, the 2023 budget included $18 million, 18 million General Fund dollars which we are going to supplement in '25-'26. So on paper it kind of looks like a cut, but when you total everything, it will equal up to $50 million.

So of the $18 million that's being reverted from the 2023 Budget Act dollars, that's going to be supplemented by $18 million in Prop 4 funds for '25-'26.

And then also there's an allocation plan for $32 million in '25-'26 of greenhouse gas reduction reduction funds, that's also going to be swapped out and supplemented by the or backfilled by the Prop 4 dollars. So that's the $50 million.

So in various based on allocation years and fiscal years, it appears as though there's a $50 million cut, but it's being maintained and hold by Prop 4 dollars.

Okay, so I've got a couple comments, does anyone else want to comment on that before I, is that, does that reflect your understanding of

The two actions related to CERIP that we are tracking? One is a portion that was planned to be funded from the Greenhouse Gas Reduction Fund will instead be funded by Proposition 4 under the proposal.

The second is that the multi year plan for that $1 billion had scheduled $50 million for this coming budget year without identifying what specific activity would the funding would be used for, and the Administration is planning to dedicate it for the demand side grid support program.

So those are the two issues I think we would highlight for you. One is a swap of a portion of the funding to Prop 4 and the other is the decision of how exactly to use that plan funds.

Okay. And I think that will be the subject of continued conversation amongst local Legislature. I think most of the folks at the table here are aware, but we've got a lot of new Members on the Committee.

That $1 billion was a really important part of a negotiation between the Legislature and the governor's office related to the extension of Diablo Canyon. That $1 billion is intended to fuel really critical investments to help accelerate our clean energy transition. And so I think it's really important that

Yes, that that money, we don't see that as expendable because it was, it was part of an agreement that was reached a couple of years ago. And then I wasn't going to mention Prop 4, but I think you talked about that. There's a number of places where we've kind of utilized Prop 4

to backfill existing programs and deficits. I don't think that's appropriate. I think many of us in the Legislature don't think that's appropriate. We asked voters to vote on taking out a new bond to Fund new projects and new very critical investments. And so I do not support utilizing those funds to backfill existing programs and spending.

I think it's really, really inappropriate. And I know that's mostly the topic of our next thing, but since you brought up Prop 4, I'll just close with that. Thank, thank you.

I will, I will try to. Excuse me. Try to summarize where I believe the Assembly is as we move from transportation to our next next topic here. But I want to make sure that. Okay, Assembly Member Connolly.

I wanted to talk about the active transportation program. We know last year in these hearings that kind of emerged as a key issue. Originally slated to incur about $500 million in budget cuts. We were able to work through those issues, I think largely preserve the funding.

So just wanted to kind of check in on where things stand with ATP now. So first question to the panelists would be if you could speak to the return on the investments made to ATP today.

Yeah, and my colleagues here from DOF will probably get into some specifics on a little bit of where the money is. But we're at roughly $650 million. So you're right about the $500 million haircut, if you will. So roughly $650 million.

But as far as the return on investment, I think they're pretty significant, even in a state as large as ours that that return on investment you can go down. I mentioned our core four, the top four priorities we have, our values that we have in transportation for the state. Number one, safety. Think about it.

A lot of people don't know this, but roughly 12 people a day die using the state's transportation system annually. More than 4,000 people in California. A majority of those, nearly 30% of those folks are vulnerable users, people who are walking, biking, or trying to get access to transit.

So making these investments are going to improve safety for what we consider vulnerable users. So that's number one, just out of the gate. Number two, climate action as a priority. The more obviously we get people to walk and bike and try to get access to transit, we're going to reduce emissions in communities.

The more we make them walkable and bikable, you know, very obvious. And there's a connection to health as well. Whenever you make those types of those investments. Number three, equity on that priority list. Very often communities where a large number of folks don't own a car are, you know, those marginalized communities.

And they need to be able to have other means to be able to get to whatever destination they need to get to. So there's an equity benefit from making these investments as well. And then economic prosperity.

Our fourth priority data for years now show that when you make these types of investment, you build a sidewalk or a bike lane or a Greenway trail, or you add a bus transit shelter to a location. That return on investment comes especially from the private sector. People say, zero, the government's doing that there.

I want to invest there. So the ROI is just not in dollars. You can obviously quantify that as well, but very much in many cases, it's those four priorities or the former three priorities that I mentioned, not just the ROI on the economic side.

Agreed. Other perspectives on that.

Benjamin Pollack, Department of Finance I definitely agree with the points made. I mean, you know, there are clear benefits in terms of meeting the state's climate goals, promoting active modes of transportation. I know the Department of Finance, we're consistently receiving support calls from stakeholders. It's definitely a much appreciated program.

You know, although we don't have the dollar per dollar, you know, it's clear as the points made by the secretary here, you know, just increasing these active modes of transportation, biking, walking, you know, promoting safety.

You know, I'll use my own personal experience of just riding my bike and just here in Sacramento getting to have that protected bike lane, being someone that appreciates the program. So just would concur with the points made.

No, I appreciate that and I think it underscores continuing to prioritize this funding. And so let's talk about that a little bit. Last year the LAO suggested using the state highway account to backfill the cuts to ATP.

Is there an opportunity this year to utilize a state highway account to restore any remaining cuts that were made last year?

Look, I'll assemble, I'll let my DoF colleagues chime in on this as well. We've used this Fund to, you know, sha the backfill to the tune of roughly $600 million in the recent past.

The challenge we have is an obvious one of, you know, the balance of how you balance investments when you have maintenance needs and you need to make these investments that are going to improve mobility generally.

So the more we tap into the sha, the more we tap into the Fund that helps actually maintain the highway system, this vast highway system that we have in the state, more than 15,000 miles that we're responsible for as a state.

So we can't continue to always go to that Piggy bank, if you will, because it's set up specifically mostly majority of the funding, not all of it, but a majority of it is for maintenance activities.

So the more we go into that, the more we start to see potholes or bridges in need of repair or whatever, whatever it may be. So there's a balancing act there. The need to do more active transportation, which we clearly are making a priority, but also maintenance needs as a state.

I don't know if you have wants to add more.

I would concur. Nothing to add.

So one of the elephants in the room throughout is going to be the federal picture. So why don't we take a stab at it here. Are there opportunities that you see to direct federal, federal funding toward ATP? Get your crystal ball out.

Is that a trick question? Yeah. I think so. Look, there are funding pots from federal highways and FTA that are what we consider flexible accounts where, you know, they're set up for, you know, highway projects or highway programs that can be flexed over to do active transportation and transit investments in this new Administration.

As we think about reauthorization and work towards that, we'll look into that. But yeah, there's availability or flexibility, I should say, to be able to do that. But we'll see as time goes forward.

Thanks, Chair. One final question and this really goes to kind of a topic raised by Assemblymember Petrie Norris as well as Assemblymember Rogers. And I think you're going to hear the ongoing concern and think theme around this Prop 4 backfill issue.

So if I'm understanding, in order to help prevent the motor vehicle account shortfalls for 2526, the Governor proposes shifting funds from the Air Pollution Control Fund and ggrf. A portion of the GGRF funding shift is dependent on shifting planned exposure expenditure of Prop 4 monies. I would concur. Is this appropriate?

The original intent of Prop 4 was to enhance the state's climate efforts, so yet these funding shifts impede this goal really by only sustaining current commitments instead of investing more.

Eamon Albin, Department of Finance so we can't speak to the voters intent in terms of the climate bond being additive to the previous climate investments. The administration's proposal maintains funding for that important program that we use here in the backfill with a different Fund source, thereby achieving GGRF savings necessary to protect.

Current service levels of Fund users of. The motor vehicle account. Without this GGRF transfer, the MVA users would be impacted.

It's going to be an ongoing fight, so we're going to get into it more in the next panel. But that, that is not an adequate answer in my view. So we'll continue to push back on that. Thanks.

Thank you. So to wrap a few things up, one, I just want to get on your radar screen something that I think reflects many people in the Assembly's point of view and that is we've made significant investments in port infrastructure partially because we are out there concerned about wind energy, etc.

But there is a new development that the Assembly spent considerable time on right at the end of the session last year and that is the whole issue of gasoline prices, etc. And I think everybody's starting to recognize we will need to import more gasoline to smooth out our declining supply curve as refineries close, etc.

And so I just want to get on the radar screen. I know you know, transportation is only a part of that in terms of ports, but we have $1.2 billion that's been set aside over the last four years for this.

I shouldn't say not just the last four years, but we're at 100 or 200 in the out years going forward.

Has the Administration been thinking about a significant expansion of infrastructure specifically for gasoline imports and significant expansion of gasoline imports, which all of us are going to be a little frustrated with because it's a, it's going to be a temporary, temporary but essential if we don't want to have gasoline prices get out of control for us.

So can you help us with that? Where's the Administration in conversations about that?

Assembly Chairman Bennett, you alluded to the fact that you were transitioning from transportation to my colleague.

Right.

It's a perfect transition because that's the area. That's one of the areas that he over directly oversees. I'm more on the infrastructure side of you all.

Sure. Please. How about the infrastructure coming from the ports? I mean that is the relation to transportation, the infrastructure coming to the ports. Significant issue with transportation or do you feel like we're, we're pretty solid in terms of transportation coming? That I cannot answer because oddly enough.

zero, you can't.

Christine Casey, Deputy Secretary for Freight Policy Again, not having a crystal ball, but I know that the special session Bill of last year did direct the ports to report on their infrastructure capabilities. And CALSTA has a very strong relationship with the California Association of Port Authorities. So we meet with them regularly.

And this is, it's definitely after today and from previous discussions has been recently put on our radar. So we will continue to engage with them to determine if we do have sufficient capabilities for the increased imports. We might see.

Great. Thank you. All right. See, that's what I was going to say. Yes.

I was going to say we're going there next to capa. We're going to meet with the good port leaders next.

The, the quick specific question. Department of Motor Vehicles is going to constantly become sort of a sore spot in terms of the perception that there is a structural deficit there.

And it feels like, as we've heard some of my colleagues already mentioned, we're just using the greenhouse gas Fund to sort of, you know, balance the budget rather than this has a real relation to the goals of what we're trying to accomplish with the greenhouse gas Fund.

And particularly as we're going through the reauthorization of cap and trade, we want to try to make sure we have as much credibility in terms of the spending of the greenhouse gas Fund.

So there will be significant interest on the part of the Assembly in carefully evaluating how we're spending greenhouse gas funds and trying to tie those as much as possible to short term quick fixes either in terms of carbon emissions or into other things that demonstrate significant long term improvements.

And I know there's, there's one of those that some of us left here on the we recently had a conference and, and heard about the value of California investing in clean technologies. And I know this gets into the second panel, but into clean technologies that we can export. You know, I really admire what the Danes do.

The Danes get the become world leaders in something and then they export that technology and the engineering science that they have. California can do the same thing. But those are the kinds of things we're going to be talking about with greenhouse gas funds.

So my question is, is there a plan to deal with the structural deficit at the DMV so that next year we're not taking even more greenhouse gas money? Not that we're even going to take this green. It's going to be a debate whether we're going to do it this year.

But where are we with the structural deficit with the DMV in terms of trying to deal with that?

Yeah. So given the projected fiscal constraints.

You got to get closer to your mic please. Yeah. For the benefit of the people in back. Right.

Given the projected fiscal constraints in the NBA by 2526, the Administration is going to continue to prioritize fiscal discip discipline and set a high bar for any new workload or initiatives that will be proposed coming forward out of the NBA.

And we are going to continue to monitor the condition of the Fund for any ways to either lower expenditures or raise revenues. And we will continue to work on this throughout the budget process and provide an updated picture at the May revision.

But you don't have any cuts that you, that you're recommending this year.

There are no proposed cuts. However, within the solution there is ongoing efficiencies and vacancy savings that are included.

Any revenue increases that could deal with this issue of structural deficit if you can't cut the expenses. Anything on the revenue side? Not at this moment. Great. Thank you. And then I want to go to the clean California, the 25 billion. So we've allocated 1.1 billion in the past for the Clean California program.

Has that money all been expended?

Yeah, that, that money has all been expended, Chairman Bennett. And I'll say that it's probably one of the more, at least in my space, one of the more important programs that this body signed off on and that the Governor signed into law. But it was 2021 when we were able to get that program going.

And to date we're closing in on 3 million at this 3 million cubic yards of litter that have been collected. That's nearly a thousand Olympic sized swimming pools of litter, a thousand that have been collected across the state. So I would say a very successful program overall.

And 11,000 jobs by the way, also created because of this program. So yeah, that $25 million as I mentioned in my remarks, is to continue try to further the efforts around Clean California.

Interesting. You know, just a quick Aside, you know, $1 billion created 11,000 jobs there. 14 billion or $13 billion created 14,000 jobs. We might want to think about what kind of job creation we're getting for per billion, you know, out there.

But so, but your point is you feel strongly about this 25 million for the Clean program and you don't have any of the 1.1 billion left for that?

No, yeah, we've, we've expended those funds. And by the way, I couldn't feel any stronger, Chairman Bennett, about this.

I would say if you feel strongly about that, that's what it's obviously clear. But we wanted to know, we wanted to make sure we understood what happened to the 1.1 billion. So we appreciate that.

So in terms of big picture issues here, greenhouse gas funds, I think you're going to see us being carefully careful in terms of scrutinizing those expenditures both in transportation and as into the next session that we're going to have here moving, moving things along, particularly you know, with the reauthorization coming up.

And then you've heard from my colleagues. But Prop 4, this question, this is before again, before we had the crisis hit, we were already dipping into Prop 4. Now with the crisis, there's going to be even more pressure to dip into the Prop 4 bond funding.

And there is unlike what we've done in the past when we're dealing with General Fund, there has been a pre, we've been, we've allocated that money out into the future.

I think that the Assembly feels a special responsibility to be true to the voters here that they voted for climate funding to try to obtain new accelerated efforts in the areas that were identified. And it's not all just climate, but wildfire prevention, water, et cetera. And so there's a.

I think there's going to be extra vigilance on the Assembly's part with regards to those Fund, you know, that funding. And at the same time, I think I have to recognize with more pressure coming on, you know, can, you know, can we hold that?

But the justification for tapping into Prop 4 funding for anything other than new programs is going to have to be high. So trying to identify those things at this first hearing, because during our weekly hearings, Prop 4 will come up every time during our weekly hearings.

The greenhouse gas funds will come up every time during our weekly hearings. And I just wanted to get that on the radar screen. Those are issues that I'm hearing from my colleagues over and over again that will be important to us as we go forward.

And with that, we want to thank you very much for giving us your time. Appreciate everybody else being here. And we're going to go on to issue two, and that's the overview of the budget of natural resources, environmental protection and food and agriculture. We appreciate the fact that we have three secretaries here today to testify for us.

Yes, right.

And we normally start with the secretaries, but today we are going to start with the Lao We've for our two secretaries that have shown up since the beginning of the session. Welcome. Appreciate that you're here and want to let you know we have a little change in program. So LAO's office, good morning again.

I'm still Rachel Ehlers from the LAO. I'm going to be speaking from a handout which I think the sergeant is passing out. It's also on our LAO website and on the Committee website for those following along at home, I also brought you copies of the report that our office put out last week about Proposition 4.

I'll be speaking to the overarching comments, but we also have little subchapters on each chapter of the bond that I know will be the template for your future discussions and future hearings.

I also just want to recognize my colleagues Frank Jimenez, Luke Cuchmarrow, Helen Kerstein and Sonia Pettic who contributed to this report, who you'll hear from in the coming weeks, and particularly Sonia, who worked on our overarching comments. I'm going to be very brief on describing the proposal because I'll leave that to my esteemed colleagues here.

But I think the reason I was asked to go first is to give you some of our overarching comments so you can kind of have that context and perspective as we go into just the specific discussion.

So turning to page one of the handout, here you have a figure that shows you the governor's multi year spending plan proposal. You see the 10 billion total, you see the different categories of the bond. You'll Note that there's 2.7 billion proposed for the budget year 2526, which is about one quarter of the total.

I think another important thing to highlight is the subsequent two years have pretty big chunks of funding too. So most of the funding proposed to roll out over the first three years. I'd draw your attention to that final column of the pending amount and we'll talk about that again in a little bit more detail in a moment.

But those are categories and amounts for which the Administration has not proposed a specific timeline for the funding and is proposing to enter into negotiations with you all to decide how that will be allocated.

Another thing to highlight here is you can see the amounts proportions vary by category in terms of how much is proposed for the first year of rollout. For coastal resilience, only 14% of the total proposed for the first year as compared to the bottom climate smart agriculture 45%.

So that varies another Issue we would highlight for you as part of the proposal is the Administration is proposing budget trailer Bill Language to exempt spending from the apa, the Administrative Procedure Act. That is consistent with resources bonds over the past several years, but it is an important component of the proposal.

I think another piece to highlight here is this is a multi year spending plan. Future years of funding would have to be approved by the Legislature in the annual Budget Act. None of this is proposed to be continuously appropriated.

But as part of the proposal for this multi year plan, the Administration would not come forth with specific budget change proposals in future years. It would essentially kind of build that funding into the baseline and then just highlight for you if there were changes from that.

Turning to page two, this is a little bit more detail on that final pending column, the 814 million. This gives you an idea of the specific programs and activities for which there is no timeline proposed for various reasons. And again I'll defer to the Administration to discuss kind of the specific rationale behind those decisions.

Also we'll highlight that the Administration has not yet proposed specific staffing and kind of administrative expenditures for each of these programs because they're still reviewing that and have indicated that. I'll come back to you for the May revision.

Turning to page three, this has already been some discussion today of the proposals for funding that the Administration is proposing to reduce. General Fund and a little bit of ggrf, mostly General Fund expenditures that were already provided in prior years and then backfill that funding with Proposition 4 because the categories align.

So on the bottom bullet here, I think we would highlight for you there's kind of three key effects from this proposal. The first is that it maintains previously planned amounts. We wouldn't characterize this as a cut. It is maintaining the previous amounts that were planned by the Legislature and Administration.

The second is that it frees up General Fund and greenhouse gas reduction funds to use for other purposes. Now the Administration has planned how they would propose to use those funds. Certainly if you wanted to use this tool, you as a Legislature could decide what your highest priorities are for freed up funds.

And then the third I think is what has been highlighted here already today, which is that this precludes the Prop 4 funds from being additive or being used to expand and enhance on previously provided funds. It basically holds funding for these categories at the same level as they were planned rather than adding additional funds.

Certainly a lot of trade offs associated with this decision. So then turning to page four, highlighting our specific comments for you on this proposal, I think the first bullet is really important and maybe goes without saying, but I think we want to highlight it as your legislative staff that this was a legislatively crafted bond proposal.

So the Administration has, the Governor has the constitutional responsibility to present a budget proposal before you. So that's where the specific spending plan comes. It's certainly very helpful that they worked really hard in a short timeline after November to put something before you early rather than waiting until May. But this is just a starting place.

Maybe it represents exactly what you had in mind when you drafted the bond and you want to move forward exactly as this. But maybe there's some differences and we would really remind you of that, that this is just a starting place.

And to the degree you had different intentions when you were crafting the bond to take the opportunity to make those modifications, we do think the proposal before you has a lot of merits. There was a lot of thought that went into it even with a short time frame.

We note that there in our review that there are differences across different programs that were intentional because of the capacity of departments or the assessment of the capacity of the field to take in new money and when to spend builds in many cases on the existing funding that was provided over the past few years and the architecture of those programs that were set up and then waits in some cases when the Administration has assessed that programs aren't ready to expend funds right away and so maybe could stand to better use the funding strategically if the funds weren't provided right away.

In terms of a multi year approach. There are kind of pros and cons of this approach in our assessment.

Some of the advantages are that it allows for a longer term strategy, more certainty for both the administrating departments as well as the field of when funding might be expected to be provided allows them to prepare certainly some kind of staffing efficiencies to make these plans plans. But there's some drawbacks as well.

When you kind of set the funding on autopilot, even if it's coming back before you to approve each year, it increases the procedural burden from adjusting from that plan and from pivoting.

In particular, if there are events like fires or droughts or changes in federal funding that may lead you to want to have a different strategy for not only when you are providing those funds, but some of the specific activities.

Keep in mind that there will be a different Governor and Administration over the life of this bond as well as many changes within the Legislature. And so thinking about the degree to which you want to kind of set things on a path versus have some flexibility to do some pivoting based on some of those changes.

I think another issue we'd highlight for you is having this multi year plan can reduce some transparency in terms of not having proposals come before you each year. And this is in particular an issue for some of the programs that are brand new or that may not have been as detailed.

It's less of a concern for some of the programs where the bond is just providing another year of funding that have been long established programs, but some that are brand new where the details are still being worked out.

You may want some more information over the coming years how those programs are being rolled out rather than just setting them on a multi year plan that gets baked into baseline budgets at this point. Another thing we would highlight, I'm here on the fourth bullet about the proposal reflecting the administration's preferences.

There are some categories of the bond where it's very explicitly clear the funding must be used for this particular program. There are some where the bond lists a number of different allowable programs and activities. So the Administration, in putting together their budget, made some decisions about how exactly to use those funding from within those allowable activities.

You may have different preferences. And so I think those cases in particular, we would suggest that you may want to look very carefully and make sure that the proposed plan aligns with what your original intentions were or if you had different ideas when you all as a body were drafting the bond and listing various different activities.

And again, in some of the specific, as we work through over the coming weeks and in our report, we highlight some of those areas where some of those explicit decisions were made. Even for the programs that are established and kind of have been running for years. We think oversight is really important for you to understand.

How are the funds being used? We'll use the flood program for an example that Department of Water Resources runs. They've got very established kind of list of priorities and projects and processes for deciding how those will be, which projects will be funded.

But that still may be an area where you want to ask for some information each year. Well, how are those funds being used? What are the projects that are being funded? How are those projects progressing? So we would encourage you to identify the areas where you want more information and continue to use the budget process reporting language.

You know, the many tools that you have to get that information, the bond language, intent language listed specifically a number of different reports and strategies and initiatives that the state has for various different goals related to water, related to wildfire, related to land conservation.

And you may Want some more information about how explicitly these programs and funded activities are leading to some of the goals, things like water recycling, things like forest acres treated.

So thinking about what the explicit goals you have, we would suggest you may want to be pretty strategic about the amounts of reporting you're getting from the Administration focusing on what's really important to you. But we think that that's an important issue to understand for the voters and the public. What are we getting for these funds?

And also to help inform future expenditures. What is most effective, what strategies, what programs for the next round of bond discussions we may be having in a number of years. The next to last bullet here. Just highlighting again what's already been a discussion here about the Fund shifts. This is a tool, it is a policy choice.

It is available to you to free up other funds to Fund your priorities. It may not be a choice that you want to pursue because you want to have Prop 4 be additive. That will have implications on other areas of the budget.

From the General architecture that the Governor has proposed that roughly 300 million that is freed up by the Governor. If you want to reject that approach, then you'll have to find 300 million in the overall architecture. So again, just policy trade offs here of what your highest priorities for funding are.

And then finally on the Administrative Procedures act exemption, we do think this is reasonable. It does have past precedent. The Administration has committed to transparent processes. But you could add additional statutory language to help guide some of those processes of guideline developments and that sort of thing for some these programs, if that was a concern for you.

So the final page here on our recommendations, they track pretty closely with the comments. Our first and overarching recommendation is that we recommend that you treat this proposal as a starting point. You are the authors of this bond, so make sure that the implementation plan reflects your intentions and priorities. In terms of the multi year plan.

I think our overall recommendation is that maybe you consider tailoring your approach to the specific programs for those that are existing and you're comfortable with them. A multi year plan does have those advantages, but for some of the newer programs you may want to request more information coming forth before you approve a multi year plan.

So maybe a differentiated approach there. For the areas where there is some flexibility around how funds can be spent, we would recommend putting your clear intentions in statute to guide to make sure that the Administration is following what your priorities are for that funding. Particularly, again, because in a few years there may be a different Administration.

Unless that's memorialized, there may be challenges in ensuring that the funding is being used with Fidelity to your intentions, thinking about reporting language and potentially even evaluations if there are activities that you really want to learn about how they are being implemented and what we are learning from them.

Evaluations cost money if you want them to be done well. So there are trade offs there. But that is something you could think about in terms of the Fund shifts. Again, thinking about how the budget condition evolves over the next few months. This is a tool available for you. It may not be one you want to use.

And again, policy trade offs associated with those. Finally, we would suggest that you approve the APA exemption. We think the administration's made a compelling case that would allow programs to be implemented much more efficiently and quickly. But if there are transparency or public process issues you're concerned about, you could think about language to implement that.

And with that, happy to be here as a resource and looking forward to the conversations over the coming weeks.

There is a reason why we wanted to start with the Laos office this time, which is unusual for us in terms of doing this, because we wanted to give the three secretaries an opportunity to respond. Partially, we wanted to elevate how much, excuse me, how much the Assembly seems to align with Laos offices, concerns and recommendations.

And the biggest challenge, because it's one we talk about every year, certainly in the from the legislative standpoint Assembly, we sit there and say we'd like to have more oversight, we'd like to have more feedback.

And so in the spirit of the collaborative comments I made at the beginning, I'm really just asking if you could, as you make your comments, think about the reaction that we get oftentimes when we ask is it's just too much. You can't keep giving us feedback. You can't give us the information that we're looking for.

And that's a frustrating answer for us to hear. But because we try to predicate some of our decision making on getting this feedback, etc. So I'm very interested in collaboratively trying to say what's practical, what would be a practical way for us to get the feedback.

And particularly since this year we're going to feel greater responsibility because it's the Prop 4 bond, which as the LAO's office pointed out, at least there's some pride of ownership in the Assembly and the Legislature that this was something that was not necessarily supported by everybody in terms of what bonds are we going to do, but it was one that was pushed forward.

So with that, and I appreciate the smiles, we do feel, you know, greater responsibility here we'd love to have a really great partnership in terms of having these discussions about how much of it should be additive and how much of it, you know, could be something that's done in Fund shift.

Our starting point is, hey, that's what the voters wanted that to happen. But how do we get that feedback? And so while you're thinking about that, we get a whole 60 seconds or so, I'm going to turn to Lao and ask, do you have suggestions or recommendations?

You know, your last recommendation is that we do the APA exemption just, you know, from an efficiency standpoint, but that we perhaps have greater transparency. Do you have any recommendations on how we achieve that greater transparency?

And if you don't today, since we have these weekly meetings and you're going to be back, we'd love to hear it on specific programs, you know, as we're going forward. And then you also have, I think, an recommendation that strikes me as very sound, which is for existing programs, we might want to do multi year.

For new programs, we're much more likely to say, let's just allocate that and let's hear back and get that feedback. But in terms of the Transparency act suggestion that you have there, do you have any specifics in terms of how we implement that?

Yeah, I mean, I think in a lot of cases these are steps that the Administration is undertaking already, but you could put them in language to ensure. So things like requiring proposed guidelines to be published online, requiring public notifications, public meetings, opportunities to provide public comment. You know, these are things that the APA requirements ensure.

I think there are things that the Administration is doing and has done for previous bonds. But if you have concerns that there may be cases, those are things you could put in language to require.

And so we could, we selectively waive the APA requirements.

I mean, the Administration can respond more about the difficulties that would entail. My understanding is that the APA process is very prolonged. And so to the degree you leave it in place for certain programs, there would be time and administrative requirements that come along with that.

Well, I'm letting them sort of noodle on these questions. I'm asking you just, just one, you know, one additional one. And that is we have in many pieces of legislation, I've seen that there's supposed to be a report due. We're supposed to get a report due January 12024 and that report's not ready in January 12024.

So we put it in the statute. It's actually in there. We're supposed to get this report. But the report doesn't come. Now, I know there are many of those reporters. And so if we have it in statute, what else? Is there anything else we can do?

And quite frankly, some people have proposed some things like, well, what if we change the administrative budget of the agency if the report doesn't come in on time? I say that partially facetiously, but partially. We're trying to find some way of if we do actually put it in the statute, it actually means something.

So with that, thank you very much. We have three great secretaries here and we're ready to hear from you in whatever order you'd like to speak to and if you can in any way address that and know it's an ongoing conversation and you won't be here on these weekly. On the weekly basis.

But that's why we wanted to emphasize this to you today. Thank you.

Thank you very much. Well, huge thanks, Chair, for having me and having us. My name is Wade Crowfoot and I lead our California Natural Resources Agency as our natural resources Secretary. And I want to acknowledge that we'll talk a lot about what we're proposing here today, but we'll also mark some progress over the last several years.

And I think the vast majority of that progress is possible as a result of funding that came through this Subcommitee. So huge thanks for the collaboration and holding us accountable.

I do want to mention as we start this discussion that we meet in the wake of the Los Angeles wildfires and while the work of the state has to continue, know that our agencies, under the governor's direction are working daily and hourly to keep people safe and to help people recover and rebuild.

And I think, in fact, Secretary Garcia was on a call, you know, with leadership just before she got in here on that very topic. So know that our focus very much remains in Los Angeles as we turn our attention to the budget.

What I want to do is provide, you know, high level thumbnail of key shared priorities like wildfire water, coastal resilience, and then we welcome your specific questions. We, of course have experts here from CAL FIRE and Department of Water Resources and all of our departments that can answer very specific questions.

But I want to jump into Prop 4 in the interest of candid dialogue and respond to Ms. Aylor's her very cogent assessment of our proposal. And I'll just be candid. I think it's clear and it's straightforward and it's very helpful. These are policy decisions for our Legislature and our Governor to make.

And we sit before you as the implementing agencies Now I am excited that we are prepared to begin implementing this climate bond beginning in the summer. And I want to acknowledge the Legislature's leadership.

Much of what we'll talk about in terms of new funding to protect, protect communities from wildfire and build our climate resilience is as a direct result of that $10 billion of investment that Legislature put on the ballot and the voters approved. So I want to give credit where credit is due there.

I want to also acknowledge ultimately it's policymakers decisions about how, you know, how this impacts the overall General Fund. I will acknowledge that we're proposing, the budget that we're outlining today proposes $2.7 billion of the 10 billion be expended.

And I think the amount that's being discussed as backfill for General Fund is 273 million of that 2.7 billion. So about 10% to keep things in context.

And I think we're all collectively proud of the $54 billion of investment that we made into climate action, protecting people, shifting our energy, et cetera, that we, that we called for three years ago. And we ultimately worked together and needed to dial that back by about $10 billion.

And we maintained an investment of $44 billion that's making a difference in Californians lives. So I want to put that in context. I also want to agree with Ms. Ehlers on the importance of the exemption to the Administrative Procedures Act. Now you know, more transparency can always sound like a good thing and we welcome that.

But that APA process through the Office of Administrative Law adds a year to the implementation of these dollars and it slows down getting dollars into your communities to protect people from the climate impacts that we're feeling. That being said, we are fully 100% committed to transparency and accountability.

I'm very excited that our agency, Natural Resources, as the entity that's coordinating the implementation of the bond with our sister agencies, has already held two public dialogues with stakeholders that want to inform how these programs come together.

And we have an open solicitation for input and that will change the way that we actually roll out these programs, making them clearer, more accessible. And we look forward to coming back to you in coming weeks and months. I can tell you, Chair, that we do our level best to respond to all of our legislative reporting requirements.

We literally, I think if you totaled it up across our agency, we have several hundred reports that maybe over 1000 that are due to the Legislature each year. So know that we work to meet those goals while delivering on the implementation of our shared priorities. But Know that this bond, we aim to be accountable.

We want it to be the most accessible bond ever. So that's enabling public input to shape how it gets allocated, but then also improving our grant programs to be more accessible, easier to apply for, particularly for communities and groups that haven't been able to in the past, and then ultimately to be trackable down to the project.

There's already a legal requirement to do that. But we're really excited that we've got a lot of platforms that I won't bore you with that are showing how dollars are hitting the ground in ways that are really more extensive than ever. And then lastly, we want to be coordinated and focus on multiple benefits.

You know, you all built a bond that has numerous chapters on several priorities. And sometimes historically, I'll observe that our programs, even within our agencies, across our departments, don't talk to one another.

So if you're a group that wants to do something that builds wildfire resilience, protects a watershed for water, expands open space, you might have to apply for seven different grant programs on seven different schedules that don't talk to one another.

So we're working to actually coordinate and streamline that to be much more cohesive across these different sectors and ultimately achieve more benefits. So really quite excited about that. So, again, I want to give thumbnail outline update on the most important priorities that our agency helps to lead, certainly starting with wildfire. So let's just mark our collective progress.

You know, over the last several years, CAL FIRE, which is already the most sophisticated wildland firefighting force in the world, has become that much stronger. It has grown from a Department of over 5,000 people to a Department of over 10,000 people, the vast majority of them women and men on the front lines fighting fires.

We plan for 2,400 more positions in coming years. The budget has almost doubled from 2 billion almost to $4 billion. In recent years, we've expanded the world's largest aerial firefighting fleet together as a result of our investments, we've invested in artificial intelligence, satellite technology. That's making a difference in the firefight. We.

I can say with confidence, California has the most aggressive and sophisticated response to wildfire on planet Earth. And that's the result of this shared investment. At the same time, I'm proud of the progress we've made.

Before wildfires ever start this resilience, we know that we can protect ourselves and our communities best if we actually get in front of fires. So under your leadership, the partnership with the governor's office, we've invested all told about $3 billion of funding in recent years. Significant multiplied investment on projects we've completed or underway across the state.

2,200 projects. Those are fuel breaks around your communities. Those are prescribed safe fire to reduce catastrophic wildfire risk. Vegetation thinning, home hardening. And these investments are paying off. We have the largest network of what are known as firewise communities, over a thousand across the state. Recognizing we need to empower communities to help themselves be safe.

And one thing I'm really excited about is through our task force, our state, federal, tribal, local task force called the Wildfire Resilience Task Force, we're focused on regionalizing and empowering regional leaders to actually identify the priorities for wildfire resilience. Wildfire resilience is not a one size fits all across the state.

It looks different on the north coast than it does the North Bay to Ventura County to Orange County. And as a result, the goal is to take funding from the Legislature and Governor through our task force and get it into those regions to Fund regional priorities. So I'm excited about that.

What does it look like moving forward, keeping $200 million of GGRF funding to this critical work of these resilience projects which are of course limiting emissions from catastrophic wildfire. It also looks like significant new funding from the climate bond, thanks to you all. $325 million to these priorities.

I want to next touch on water, which is a shared partnership with Secretary Garcia and Cal EPA. Again over $8 billion of investment made across the State of California. Strengthening our water security, restoring fisheries, building our sustainability to challenges across California. And it's paying off.

This money has hit the ground into communities, into water agencies and is making a difference. We know that the climate is getting more extreme. This weather whiplash is getting more intense. Great example, you know, Los Angeles, Southern California, driest start to a winter on record. Bone dry conditions exacerbated the wildfires.

We've experienced this whiplash in the last couple of years. Very dry months, very wet months we've had over the last six years. The driest three year period in the state's history. Followed two months later by what's probably the wettest three weeks in the state's history. This weather whiplash we have to adapt to.

So what does that look like? It looks like diversifying our water supplies. That's things like urban stormwater capture, groundwater recharge, water recycling and major investments are being made there. It also looks like modernizing our backbone infrastructure. At the end of the day, 3/4 of Californians get their water through the state water project.

And we have to help that be climate resilient. It's why the Governor has championed and continues to champion the modernization of delta conveyance. That's why the Governor is a strong supporter of expand of creating the site's reservoir to capture this water like in big atmospheric river rainstorms like we've had recently for use during these dry periods.

We also have to rehabilitate the aqueducts in the conveyance as a result of land sinking or subsidence. So it's diversifying water sources, modernizing infrastructure. We also have to restore our fisheries.

And I don't have to tell you that if you represent communities that have the fishing sector that's been decimated by the continuous closure of the salmon fishery, we can strengthen water security for Californians while restoring our fisheries and that sector. It's what we can do and it's what we need to do on water.

I'll note that our proposed budget includes upwards of $500 million under the water provisions of Prop 4 for everything from dam safety to more local assistance to water agencies to flood control, including our priority to restore the Salton Sea, which we have essentially a special legal responsibility for. So that's water. Coastal resilience.

Recognizing many of you represent the coast. I talk about weather whiplash on water. Well, we know sea level rise isn't a planning challenge for future decades. It's here. There were communities on the Central coast that were absolutely battered by storm surge and coastal erosion. Our state parks are still recovering.

One of the most popular rail segments in the country from Los Angeles to San Diego is currently disabled because of coastal erosion driven by sea level rise. So it's here and we need to address it.

And thanks to you all, we are, we put to work over the last year $250 million investing in 92 coastal resilience projects to protect communities. And then we recommend or propose through this budget again Prop 4 funding another $172 million for everything from funding to protect communities to actually restoring the coastal environment.

That's obviously really important to so many things. Let's move to extreme heat. Over the last six years we also experienced the longest, hottest heat wave in American history in the west that disrupted our energy grid. And we know that a lot of Californians live in hot places that are getting hotter.

So the shared investments that we've made include over the last year upwards of $70 million from everything from green schoolyards and shades to urban forestry to helping communities actually develop heat related emergency plans and Response. And so our priority continues there. I want to touch on energy because energy is a shared priority.

We're proud to support the Energy Commission in our agency, but of course works with the California Public Utilities Commission as well as the Independent System Operator.

We have made through the Energy Commission important investments, thanks to your leadership in demand side energy management and plan and propose to do an additional $50 million of demand side energy management, all towards energy reliability and affordability.

Moving forward, two more priorities I want to mention conservation and nature based solutions, which is really quite important when you think about what we mean by this. These are conserving, protecting our natural lands. They serve as buffer to these climate impacts we're experiencing. They provide expanded outdoor access to get people outdoors.

They of course care for the natural world, this environment, this biodiversity that we care about as Californians. And they sequester carbon, they remove and store carbon in the ground. And so major progress being made in this effort.

One way we measure it is the 30 by 30 commitment and now law to conserve 30% of our state and coastal waters by 2030, making big progress, over 1.5 million acres of additional conserved lands in the last two years alone. It's really important. It's a partnership with local organizations and agencies.

I want to acknowledge the creation of two new national monuments which are enhanced protective measures on federal lands to keep those sensitive environmental and cultural lands to our Native American communities protected. And of course, all the work we're doing with ranchers and farmers on working lands which are part of our nature based solutions.

We propose $286 million of climate bond funding into these priorities through the Wildlife Conservation Board regional conservancies and through one of the projects I'm most proud of, our Tribal Nature Based Solutions project program, I should say, where we're actually getting funds to tribes to return ancestral land to their ownership and stewardship for conservation.

It's not only the right thing to do, it's the smart thing to do, given the stewardship of these communities for thousands of years. And then lastly, outdoor recreation. This cuts across geography, it cuts across ideology. We all love being in California because of the outdoors.

And together we've made remarkable investments in outdoor access over the last year alone, $237 million in grants that our state park system has put out. We initiated our newest state park, our first State park in 10 years in Stanislaus County, Dos Rios.

Our conservancies, like the San Joaquin River Conservancy, are opening up new open space lands to Californians year over year, month over month, and then we are finding innovative ways to get people into parks, including free passes to state parks in our libraries, automatic enrollment of needy Californians that take advantage of CalWORKS and SSI to get free access to our parks.

And then, of course, our Adventure pass for fourth graders and their families, which I took advantage of last year as a parent of a fourth grader. And then I would say that we're excited that this climate bond again allows us to propose over $286 million in funding for parks and outdoor access. So that's a lot.

We obviously have a broad portfolio across our agency. Thanks for your patience. And I'll just tell you, we take very seriously this partnership every year, and particularly on Proposition 4, given your collective authorship of this, and know that we are committed to, in coming weeks and months and certainly years, maintaining whatever transparency functions and reporting functions.

So you know that that money is being well spent.

Well, thank you very much. I know we have the other secretaries, but because there's so much in your portfolio, I do want to stop and make a couple of quick comments before we move on. And number one, you have a broad portfolio. Everything sounds great in the portfolio.

And one of the issues that I think we have to ask ourselves is where are we, you know, where's the most efficient spending, for example, in wildfire prevention?

That whole issue, I'm going to digress into that more than anything personally, and I think many of us in the Assembly are recognizing this, and that is we can do all kinds of things in terms of wildfire. What are we going to do in terms of recovery, what are we going to do?

But bottom line, in California, if we don't find a way to decrease the losses when these extreme firestorms hit, because as you talked about with climate, the whipsaw of climate is going to get worse, not better. So the wildfires are going to come.

The question is, when they come to the community, how do we keep the community from having as devastating losses we have if we don't address that, the economy of California is going to really be in crisis for all kinds of reasons. One, homeowners insurance and business.

You know, fire insurance will just, pardon the pun, go through the roof. You know, it'd be astronomical. So I, I think that we need a laser focus on what can we do to decrease losses, solve that problem. You solve a whole lot of problems, right. If you can do that.

And we have ideas that we're going to be bringing forward, and we really look forward to a partnership. But I hope we can just sell everybody that if you solve that problem, then we're spending hours on what do we do with the fair plan. If you could solve the loss problem, you would have that.

But it requires robust water systems, you know, for fighting fires with a recognition. You can't build a water system big enough to do what you have to do. But the water system we have needs to be robust. Right? So it doesn't run out.

But the issue of home hardening, almost everybody knows what the things are that we have to do with home hardening. But we've talked about it and talked about it, but we're not really making much progress in terms of actually doing it. In terms of. Of home hardening.

We need a certification program that says this home is truly all the way hardened, not partially hardened. I did the roof, so I got a discount. If you don't harden the whole home, if you don't do everything, you don't really accomplish it. We need a really clear certification process.

And that then leads to, as it leads to insurance, meaningful insurance reduction. But we also need that process not to be for an individual, but for a whole community. So we have these firewise communities.

Those firewise community has to be even more meaningful to the insurance companies, to the point where we say if you get X number of homes in your community that are certified, credibly certified, that the whole structure is hardened, that the whole community gets a fire discount.

Those are the kinds of things that have to be a major part of our solution. And I really welcome the partnership. We will be coming forward, you know, assertively with those kinds.

Kinds of programs. And I just wanted to get that on the radar screen. There are many other things that I want to talk about, but let's go on to the other, other, other Members and we'll get into those details. But I wanted to take that opportunity to say I hope you'll work with us on decreasing losses.

If we don't do that, everything else is we're going to be chasing our tail. Right. In terms of trying to come up with, you know, imagine spending all the time on recovery funds. Right. That's, that's not where we want to spend our money. Right. And stuff. So thank you, Secretary Garcia.

Thank you. Point very well taken, Mr. Chair. Thank you for the opportunity to be here. Always a pleasure to join my colleagues here before you all and do want to start, you know, where my colleague, Secretary Crofut started and left off on the emphasis on transparency and accountability and reporting out to you all.

I think we are quite aligned, actually in our priorities in terms of where we want to see these dollars spent.

And certainly the California Environmental Protection Agency, through both the State Water Resources Control Board and the Air Resources Board, has extensive experience, as do many of our colleagues, in providing reporting to you all and also ensuring that we have a public process with respect to our expenditure plans and that that goes before the public, that we hear from advisory groups, that we hear from the public.

And every time that we spend those dollars. And so we have every intention to continue to use those mechanisms that have been tried and true and to improve them as we can as we move forward in making these expenditures of Prop$4.

You know, of course, we have been spending quite a bit of time in Los Angeles and the devastation cannot, you know, cannot be overstated.

I think we are at a time where we can all appreciate the urgency with which we have to continue to move the needle on climate action and with which we have to continue to build resiliency in our communities and to your point, really avoid the extent of losses that we've been seeing.

I want to share a little bit of the progress that we're making at Cal EPA with respect to some of our water work.

I'll start a little bit with some of our work around drinking water investments and then want to pick up where Secretary Crowfoot left off in some of the investments that we're looking at in some of the bond dollars for resiliency in water recycling and other related projects in some of our climate work.

So with respect to drinking water, you know, we celebrated the 50th anniversary of the Safe Drinking Water Act in December. And while 98% of Californians have access to safe drinking water, nearly a million Californians still lack access.

And delivering clean and safe drinking water to those million remaining without access has been a strong priority of the Governor since he came into office, as it is of ours now, the State Water Board SAFER program, which was enacted in 2019, has delivered to 900,000 Californians who lacked access to clean and safe drinking water.

That right over the time that it has been delivering investments to Californians and in the past fiscal year alone, the State Water Board distributed over $500 million to improve access to safe drinking water in disadvantaged communities. A total of $880 million for both water resilience and drinking water projects have gone out the door.

I share that because it's a market improvement, but we still have much work to do and thanks to you all.

In addition to supporting our work to provide clean and safe drinking water to the remaining Californians who still lack access, Prop 4 will support and enhance our ongoing work to ensure that our water systems are more resilient and able to withstand some of the weather whiplash that we have been experiencing.

Prop 4 of course allocates $585 million to the State Water Board to improve water quality via loans and grants, and the Governor's Budget includes 183.2 million of these funds to support work in 2526.

This funding is intended to help subsidize water systems, addressing critical water infrastructure needs and improving their long term water resiliency, creating an opportunity for them to lower costs that they pass on to households through water bills as well. Now in addition, Prop.

4 recognizes of course the importance of investing in our tribal communities and it allocates $25 million for tribal water infrastructure through grants for projects that provide safe, clean and reliable drinking water to tribal communities. And the Governor's Budget includes 11.2 million to support this work in 2526 as well.

Now of course again, with respect to transparency, reporting and accountability to distribute these funds, the Water Board will use its well established funding processes, informed by public input and refined continually through stakeholder engagement to deliver these dollars.

And the budget also maintains 100% of the $1.7 billion in drinking water and wastewater infrastructure in the state Revolving Fund resources to help us with this as well. Now, overall, the State Board is responsible for allocating $1.1 billion in Prop 4 funds.

And in addition to drinking water allocations, investments are designed to help meet the state's needs as we experience both dry and wet weather events in the years to come. This includes $386 million in grant funding for water reuse and recycling. The Governor's Budget includes 153,002,526 for this purpose.

It also includes $110,000,000 for multi benefit urban stormwater management grants. And the Governor's Budget includes 1.1 million in 2526 for this purpose as well. Finally, $50 million to address water quality challenges arising specifically in the California, Mexico cross border region and in related coastal waters is a priority set forth in the bond.

And the Governor's Budget includes 9.4 million in 2526 for this purpose as well. Now the Climate Bond and the water investments are but one set of priorities and I want to talk a little bit about our climate and air quality priorities as well.

As you all know, the Air Resources Board continues to advance clean fuels to support our transition to a zero emission transportation system and to continue to protect consumers from gas price spikes, which I heard in the earlier portion of this hearing is of ongoing concern to all of us collectively.

CARB, as I think you are aware, is accelerating the evaluation of increased ethanol blending in gasoline to 15%, also known as E15 fuels, as a potential strategy to augment existing gas supply and reduce gas prices while supporting our transition to carbon neutrality. As you all know, the Low carbon fuel standard was also updated recently.

31 billion gallons of petroleum liquid fuels have been diverted from the market through through the LCFS. Throughout its implementation it has saved us $5 billion in health costs.

And I want to note that throughout the GGRF implementation through our Climate Investments program we have delivered $11 billion, $8.5 billion of which have gone to disadvantaged and Low income communities all across our state, something of which we are extraordinarily proud. We've also achieved a reduction of 112.8 million metric tons of carbon dioxide emissions.

This is equivalent to taking 80% of the cars on the road today off the road. Something that we are also extraordinarily proud of and need to see more of.

Now I mention these because of course throughout our climate Investments programs as well as through the State Board programs, again Board processes, public transparency and reporting many reports that go to you all which we intend to continue.

Now finally, I just want to note a couple of additional priorities of ours that are subjects of much input from you and your offices and that I know are also priority for you.

First, with respect to a circular economy and catalyzing a circular economy across the State of California CalRecycle is building a circular economy that reduces waste and reuses materials through the implementation of a variety of programs, including beverage container recycling, food and yard waste recycling, as well as extended producer responsibility for plastic packaging and textiles.

Our food recovery programs have successfully rescued an incredible 217 tons of fresh unsold foods, redirecting them to California communities in need. That's millions of meals going to families instead of landfills, making a real impact not only in the fight against climate change, but also in the fight against hunger.

In addition, Californians have recycled 18 billion beverage containers just in 2023. California is leading the nation to create a circular economy in which our waste is viewed not as a waste per se, but as actually an economic resource. And we look forward to continuing this work with so many of you.

Now, finally, as I transition to my colleague Secretary Karen Ross here, as many of you know, the Department of Pesticide Regulation is focused on its work to increase the availability of sustainable pest management tools and practices and implementing the ambitious goals and objectives laid out in the 2024 budget and associated legislation in AB 2113 passed by the Legislature last year.

We're also seeking the Legislature's approval of additional resources in this year's budget to implement recently chaptered legislation, including AB 1864 that helps us to provide notices of pesticide use near school sites as well as AB 2552 related to rodenticides.

Now, I will end by saying that again we share the clear priority to support our communities in LA and all across the state State of California from the impacts of climate change as well as wildfires, sea level rise and storms, and hope to see you all here much more often in terms of reporting some of our progress in not only implementing the Prop $4, but also in implementing so many of the programs that you all care about, as do we.

I'll transition it over to Secretary Karen Ross or to the Chair.

Good morning Mr. Chair and Members.

It's a pleasure to be here and I want to start by saying we agree with my colleagues at cdfa and I want to thank the LAO for that very thoughtful presentation because I feel that we're very aligned with many of the points that they've made and I'm going to use our Climate Smart Ag programs that were included in the bond as an example of that.

The way we have gone about making our decisions around the principles that we've all agreed upon and we've already had listening sessions about is our commitment to very broad stakeholder engagement.

We've also learned over the years where you all have worked with us to be able to make investments for climate smart agriculture, the importance of ongoing stakeholder engagement going back out after every round of grants of what did we learn? What could we do better and how can we make improvements?

And I'll be able to speak to a couple of those. I would like to say that over the lifetime of the climate smart ag programs that we have had at the Department of Food and Agriculture, we've been able to make investments with over 3,000 projects. Several of them are included in the bond.

But I also want to remark on the progress we've made on all of our climate smart ag programs because it's helped us achieve over the lifetime of These projects over 27 million metric tons of CO2 equivalents reductions in greenhouse gas emissions. Emissions. I think that's something to be very proud of.

In addition to the multi benefits that come from active farmland and the farmers and farm workers and the full supply chain that works on those lands, it's about using a waste product and turning it into renewable energy. It's about jobs creation. It's about healthy food production and food security going forward.

It's about reducing energy and water use and saving 1.5 million acre feet of water through our on farm water use efficiency. And it's around increased biodiversity because one third of our biodiversity is underground. And that's what our healthy soils program is all about.

I think that's pretty remarkable for a piece of land to be able to do that and still be a very active part of contributing to our economy.

So I want to go through the programs that we have and speak specifically to how we have established our programs and why those are being proposed as spending in the current budget year and why a couple of the programs that were in the bond.

We will take more time to make sure that we're getting thoughtful input from our stakeholders and going through a process that makes sure we puts out something that aligns with what you want as well as what stakeholders and local communities are wanting.

So in the Prop 4 bonds for this current year, fiscal year, we have 18 points $1.0 million for an urban agricultural grant program. Now you may wonder why is urban ag part of a climate bond?

And I would say, well it makes a lot of sense if we can grow more food locally, especially in food deserts, even on a small scale. We're reducing million miles vehicle miles traveled. Sometimes it adds up to millions. But it's also increasing access to where those foods are grown.

It's also contributing to our farm to school Program, which I hope we get a chance to talk about later. We've established that program and in one round of funding it was tremendously oversubscribed. So we have a good base on which to say we can put this money out and put it to work in local communities.

In the first year of being able to Implement this program, $35.9 million is proposed for our Healthy Soils program. We have a good track record on this program. It too is over subscribed. First year took a while, it was a new program, but ever since then it's been tremendously oversubscribed.

And I would say with a lot of the work that's happening as farmland as part of the solution to be able to sequester carbon and become part of active carbon markets, which are being driven by the private sector right now, huge opportunities for some revenue generation in that local community. In addition to getting those environmental benefits.

We have $37.6 million proposed for our statewide water use Efficiency and enhancement program. This is one that was created in 2014 when my colleague was in a different position. It was the very first climate smart program that we implemented.

And the fact that we're reducing water use, reducing energy use, and helping with bringing new modern irrigation technology, which also is improving nutrient management, gives us a tremendous bang for the buck. And this is one that has been oversubscribed and people say, can we stop investing in it now?

We can never stop working on new modern systems that will allow us to save water in the state. And this technology, irrigation technology, is one of those exportable technologies that we can take to the world and to the many small farmers around the world. We have $19.9 million to Fund projects around invasive species.

It's hard to see without being on the ground on a daily basis what the weather changes are doing with the introduction of invasive species coming into hemispheres where they've never been before.

And we've had a number of those, not only at the Department of Food and Agriculture, for those that are agricultural pests, but many that have a huge impact on our natural resources and our water resources.

Thinking about some of the new mussel species that are coming into the state, let alone the nutria that are continuing to be present in our water systems.

I want to also comment that the Invasive Species Council is overseen by a multi agency invasive species council, but it's very dependent on a state, federal, tribal and local government set of people that come together on a monthly basis to provide the input and to go out and collect the input from others.

On stakeholders priorities for invasive species projects. And then finally the proposal for the current fiscal year is $37.6 million for our fairgrounds, which have become an increasingly important part of emergency evacuation.

And what we are trying to do is not only make them more energy efficient efficiency as a way to capture greenhouse gas emission reductions, but improve health and sanitary facilities and connectivity to make them more useful for the communities throughout the year, not only in times of evacuation.

We've already been able to implement $150 million between ourselves and the Strategic Growth Council. So we've got a good track record of what stakeholders are looking for and the tremendous built up need for those projects.

I'll close with two newer programs, but they're built on existing programs where we have tremendous active advisory committees for our farmers markets, $9.6 million each for the development of a certified mobile farmers market grant program as well as for a year round certified farmers market program.

While their new programs are built on the infrastructure of certified farmers markets and they're built on very active and I want to underscore active active advisory committees, both from the organic community, which is very dependent on a lot of these markets as well as our farmers markets programs.

So these will be ones that we feel very confident that we can deliver in the first year of the budget. The last two I want to touch on are newer programs and one of them is not new to you, Mr. Chair, but we don't have the experience in implementing them.

So our budget proposes for the current fiscal year $200,000 each for a tribal food sovereignty grant program as well as for a regional farm equipment sharing program.

It's our intent to use this first year to stand up the programs, to go through the stakeholder process, to really show you what a program would look like, make sure that it aligns with what your desire is when that was included in this bond. So that's it for Prop 4.

I do have a couple of programs that hopefully I'll get a chance to talk about just to highlight the small but very important investments that the Governor has proposed for new General Fund spending for the Department of Food and Agriculture. Thank you. I tried to go as fast as I could go.

Go ahead, talk about those programs if you want to get said real quick. Yeah, okay.

But once you get me started, you can't stop. You know that our farm to school program, which has been proposed, posed for $24.91,000,001 time funding. I want to stress how important this program is at this particular time.

It is a newer program, but it's one that has really taken off with the support from this Legislature, the support of our first partner and the fact that it's investing in kids and in local small resilient farms and local farm food systems. These are multi benefits that that can have long term healthier outcomes for our children.

At a time where we're spending a lot of time talking about chronic disease, how we know many of them are preventable. And so this investment can really make a difference. This program that has been established with your support, your investment and your vision are reaching over 49% of our school children and four years of grant programs.

I think that's pretty remarkable. And they've been oversubscribed since year one. I think it's because it stands on three pillars. It's about supporting local small and bipoc farmers who without some reliable markets like institutional procurement, we're seeing more of them go out of business.

And over the last five years when the census was taken for agriculture, this state has lost over 7,500 farms. Many of them are small scale. It's just really hard without a local market, local procurement. So this keeps dollars locally.

And we've already seen from testimony from our farmers and the evaluation that's been done that this is drawing through climate smart ag practices and organic practices into school food programs and is keeping these people in business.

It also is about investing and making healthy, more fresh, cooked from scratch, not just cutting open plastic for the foods that children get. It has eye appeal and it tastes good and it's good for them. If it's not being consumed, it's not healthy for them.

The program, through our partners at the Department of Education is also investing in culinary training to make sure that we're really delivering the kinds of meals that parents want for their children. It's supporting agriculture and we believe it will take time to measure this.

But if we want to talk about making people healthy, investing in school children to set those lifestyle habits young, we think we'll see better health outcomes because of this program. And finally, it goes back to one of the points that Secretary Crawfat talked about.

It's investing in experiential learning for kids to get out, to see how does food get produced, to do gardening, to do their own preparation, but to also experiment, explore nature and to understand that we're all stewards of our environment. So for those reasons, I hope you see the multi benefits of this with $24.9 million.

There's two other programs I wanted to touch on very briefly and that is the investment for our IT and security going forward that's based on a cybersecurity event that we had in March of 2024.

We were able to create some temporary solutions to that, but our budget proposes, I have to take a look at for the current fiscal year, $2.5 million. For the current fiscal year, $4.1 million in 2627 and $3.6 million 2728. Moving forward, we have some very antiquated IT systems.

We know we have vulnerable databases and that's what happened to us. We were able to create a temporary solution, but it's not the long term solution without this kind of investment.

The last thing I wanted to touch on is, and you may have questions about the current Avian influenza, everybody else does, especially when it comes to the price of eggs. With vision from you and the Governor, we have been able to create a new State of the art animal health laboratory in Turlock.

This is replacing a Turlock laboratory that was established in the 1940s and they've been able to do remarkable work with equipment and building that's almost the same age.

But what's really remarkable about this investment is that it will not only serve the laboratory, not only serve the Avian and poultry sector of the northern San Joaquin Valley, but also be able to do mammalian tasting and surveillance.

Having this lab in place will help us divert the many, many samples we send to UC Davis so that surveillance and testing results will all give us information faster for rapid response and complement what this Legislature invested in with the Tulare lab, which was new eight years ago and was flooded in the floods and is still not back online.

But with this lab system, it's hugely important for our food security and food safety programs and the ability to do current State of the art science and diagnostics to respond quickly, to keep the bad stuff out, to respond quickly and keep our food supply safe and secure.

What's the funding amount for that?

The ongoing amount would be in the first year, this year. zero, and I forgot to say the most important thing. Ribbon cutting interlock December, I hope. But I'm not going to guarantee $1.6 million for the current fiscal year and then it will be $3.3 million for the next fiscal year and ongoing operating costs.

We have the facilities, we have to put the people in the facilities. So thank you for indulging me in those three highlights.

It was nice to see you perk up for the things you're really passionate about. Right.

Well, but I also, I want to Say, I understand my first three years were about cutting budgets, severely cutting budgets. And I know it's hard to make these kinds of priorities, to really sort through. These are the things that are absolutely necessary.

These are the things that we would really like to be able to do, and these are the things that would be nice to do. It really does depend on all of us working together, listening to one another. But making those priority decisions are very difficult.

And so I have huge, huge empathy, respect for and willingness a partner with you and making those kinds of decisions, whether it's at the Department of Finance, what the Governor has to do when he puts forward a budget, as well as what each one of you do to come together to make this state the best that it can be.

Thank you.

Department of Finance do you have things that are essential that you want to get said to us given our time?

Lizzie Ury, Department of Finance I will be as brief as possible. I did did just want to emphasize specifically on the shift to bond funds, the administration's approach to strengthen budget resiliency and increase the General Fund Reserve. We have proposed $273 million in General Fund and 32 million in GGRF Fund shifts to the climate bond.

Would you like me to read the impacted programs? No. Okay, great. So we would just note that to maintain funding for these practices priority programs, we determined first what prior climate investments have comparable funding in the climate bond.

And for the programs that do have that comparable funding, we reviewed the available General Fund balances as reported to us by the departments to determine which programs had unencumbered balances that were not imminently expected to be encumbered. And so it is those appropriations that met that criteria that we proposed for a shift to bond funds.

This proposal maintains funding for these important programs with a different funding source while helping us to achieve those General Fund and GGRF savings to enhance our budget resiliency in the face of economic uncertainty, including around potential federal policy changes. So I'll leave it at that.

We're here for questions and you know, the question that I think still remains out there, and it's not actually in this part, it's in the transportation part, is how is the investment in the DMV a climate change investment? So we'll give you 60 seconds to answer that question if you want to try.

Matt Almy, Department of Finance the very short answer is that the Air Resources Board's base budget historically has been funded for the motor vehicle count. That's associated with the fact that their mobile source program relies on Fees from associated with vehicles.

What the Fund shift does, in essence is it funds the Air Resources Board support budget from the greenhouse gas reduction Fund instead of the mva. So since you heard Secretary Garcia talk about all of CARB's work on the climate related programs, using GGRF to support the Air Resource Board's work fits within the broad climate.

Thank you. I have one thing and I want to get on the radar screen for the secretaries if I could.

And that is a request that every year it feels like, and I'm going to give you an example, but every year there's this tension that goes on in terms of who, who gets what in the budget, et cetera. And every year the Legislature fights for certain things.

We are able to get those things into the budget and then they get cut the next year in the budget. Now that's when we have a budget crisis. It's understandable the Administration doesn't want to cut the administration's priorities. But dam safety, you know, for example, in 2013-2023, state auditors repeatedly warned us about the dam safety problem. Right.

And 2022 we adopted $100 million for a new dam safety program. Right. Grant program. 2023, the Administration proposed a cut. Right. The Legislature restored the cut. In 2024, the Administration proposed to cut the program again. Last year the Legislature put the money back in. The money's never been spent for from the dam safety program. Right.

So I would just like to see if we could.

I know you're not the final decision makers on these things, but in the issue in the area of budget sub 4, I would like to have us have a respectful agreement that even if you don't like it, if you agree to it and put it in the budget, then you've agreed to it and you put it in the budget and you're saying you're going to do it if you don't, if you say we're going to just keep trying to cut this every year, right?

Because we don't like it, don't agree to it, just be upfront with us and say we're not going to do this damn safety stuff, we don't think it works and that would be far healthier for the relationship, I guess, in terms of what I'm saying.

But to be in the third year now where you, you've cut it, we put it back, you cut it, we put it back and you cut it again now this year and you still haven't spent a penny of it, you know, in terms of getting it out in terms of grants, et cetera.

You know, that would be an example I think and you know we, that that would be helpful for us. Right. In terms of trying to do it. And that's. And then the other thing I would just point out is in terms of the climate bond, the it's Pre allocated almost $9 billion of the $10 billion.

That's, that's going to be very hard for the Legislature to swallow given the confidence level we have in terms of this Administration won't even necessarily be there but terms of having the oversight that we would want to have over that.

So I just want to get that on the radar screen early that the two to two and a half billion roughly for this year makes sense maybe next year some. But to allocate the whole 9 billion, it's probably going to be a pretty concerning issue for the Legislature.

So hopefully we can have some healthy discussions about that as we go forward.

Right. Can I make two quick points? Sure. The first is just on dam safety because I wouldn't want people that were watching to infer that dam safety is not a priority of the Administration. And I know that wasn't your point.

I'm really proud that our Department of Water Resources and its division for the safety of dams has actually become more robust over time over the last decade and is doing more oversight over potentially dangerous dams.

I think the policy question at hand is this has been a local responsibility for local water agencies to maintain the safety of their dams and then this proposal seeks to subsidize that local responsibility. Ultimately it's the policymakers that make that decision.

And I take your point and it's ultimately, I'm sure Department of Finance does, but I wanted everybody to know just of the priority that we bring to dam safety. And then I will say just to the lao's point about the continuity of out year budgeting, I take your point of course in terms of oversight.

But I will say where there's some predictability in future funding that's really beneficial for continuing to make progress on key priorities.

If it feels year to year and it's episodic, then for example on wildfire resilience, you know, communities aren't, don't, don't retain confidence that those funding streams will occur over time and they can build a pipeline of projects to give one example. So that's just one counterpoint of the benefit of multi year budgeting.

We agree. I don't think you, you're going to find the Assembly saying we don't want to do that ever. We, we do want to do that in the places where it's appropriate. We're not sure it's appropriate all the way across the board, particularly with new programs, you know, that are coming out. We want to try to see.

But there's certainly Lao made the case and you've made the case, and we agree with you. Let's just work together to try to identify where. Where is it that that ongoing stream makes a lot more sense and where is it, you know, wildfire prevention spending is as much an ardent as it is.

You know, we're still trying, you know, we've asked the fire departments, where should we spend our money? How much of it is on fuel breaks, how much of it is on this that, you know, forced thinning and all that. And it, and it varies depending on region. But still, it's not clear what are the best expenditures.

And we don't have unlimited dollars. You know, is it better to Harden spend money on grants to Harden the homes in an area or better to try to, you know, thin the forest that you're going to have to keep thinning and does the thinning actually work?

And, you know, so we're, we're open to all of that, but we want to try to be able to assess what's the most efficient expenditure of the dollars. Right. I know I've got colleagues who've been sitting here. Does anybody have anything that. Go ahead, Mister.

Rogers. And then first of all, I want to appreciate the chair's focus on the damn budget. I think that's what we're here for. I know we're at times. I'll be really quick with some of my comments and questions.

The first one just it was flagged in the LAO report that the proposal for the Prop 4 spending doesn't have the or there's at least still an analysis being done on what personnel is needed to implement these programs.

Do you have a placeholder in this budget for that staffing or is that an area where in the spring when we come back, we're going to have to find additional resources to actually be able to implement these programs that we're possibly funding?

Yeah. So I'm happy to take it. Thank you. So Proposition four allows for resources within the bond to support staffing. So there will be no additional funding needed to support permanent positions, should those be necessary. We've not proposed permanent positions in the Governor's Budget. We're still evaluating whether those are needed.

So we would come forward with a request for permanent positions in the future, but no additional funding outside of that already provided in the bond.

Great. All right. Thank you. This is a quick comment. Love the farm to school program. In my district we have a sea to school program as well to support local fishermen. So would encourage you to check that out and incorporate it in some areas. Be aware of it. Yeah.

And we also talk a lot and I appreciate all three secretaries touching on this in different regards. Typically we think of our natural resources through an extraction conversation, not in a how do we incentivize stewardship, sustainability and conservation and at least make it make economic sense as well.

And so I'm hoping you can talk just very briefly about some of the carbon sequestration or carbon capture work that that's happening as well, because that's a component we typically don't hear much about in the Legislature. And how are you making sure that there's an economic advantage for folks who focus on that in their districts?

I'll start and then transition to Secretary Crowfoot. Excellent question. I would say, you know, we've done so much work over the past decade plus to understand the industrial sources of pollution and then understand how we need to build out better carbon sinks.

And I'd say that the primary way that we can do that, to your point, in leveraging the multiple benefits associated with ecosystem protection and land conservation, is ensuring that our lands are able to capture carbon as much as possible.

And this is part of our natural working land Strategy and part of the ways in which we're now thinking about how to leverage the utility of our lands in that sense. Second in that loading order is engineered carbon sequestration.

And I think one of the things that we're really trying to incentivize and see how we can move the needle on is ensuring that we can transition existing infrastructure, that we can see investments in safe carbon capture and sequestration technologies.

Particularly as we bridge to some of the concerns around job transition, as we bridge some of the job transitions that are a necessary part of our pathway to carbon neutrality.

Just from working lands and agriculture in specific, our healthy soils program has really taken off because of all the multi benefits I talked about before. But our most popular ways that people are using incentive grants is around cover crops, hedgerows, mulching and compost. Compost.

I will also have to add, as part of our circular economy, that ability to turn our cow manure into compost and other ways of doing that. But also some of the new work that's happening on biochar in other ways. When it comes to measuring, monitoring and verifying, all we can do at this point is estimate.

And I was really pleased the outgoing Administration established a measure, monitor and verify task force at USDA because of all the work that they're investing billions of dollars, over 3 billions of dollars in climate smart partnership programs, which is all about collecting data that would hopefully lead to market outcomes as well as regulatory relief or offsets of some kind.

Unfortunately, we don't know now if that task force will proceed, but we worked very hard to make sure there was a Member with expertise from CARB that would be on that board because CARB has like some of the world's best scientists that would be looking at that. With usda.

I think that's going to be very, very important to really see private markets, especially within the full supply chain. As people in the corner suite start thinking about their scope 3 emissions, they're wanting to do more partnerships on the ground with farmers and be partners with that.

But if we have 22 different ways of measuring and monitoring, we won't be able to get to something that we all can verify from a state perspective or from the more important global way of knowing that the investment in these dollars is going to give us the return that we're looking for.

So I think there's still a lot of questions on the working lands themselves, but I think it's a very, very important one because it does create the potential of private markets also sharing the cost of transitioning to carbon neutrality on a farm scale.

Yeah. And I will say we have data that shows that some of those programs are responsible for the cheapest reduction in greenhouse gas emissions from the gdrf. We were talking about it yesterday. The cheapest per ton of greenhouse gas productions comes from those programs.

And if it leads to increased productivity and a changing climate, then good for all of us.

And I'll just say at the highest level, I think this is, as you heard, this is an area of really major progress in the last several years. As proud as we can be of California's climate leadership. I think historically nature, nature based solutions weren't really essential as they need to be.

And so now, thanks to the Air Resources Board and the scoping plan, you know, that large equation around how we're going to get to neutrality, there's now a variable for reducing the sources of emissions from our lands. And you all directed us to establish these nature based solution targets.

So the amount of acreage under healthy soils, the amount of land that's conserved for sequestration. So we're really excited to partner with you and you know, building policy to continue to drive this ultimately towards creating ancillary revenue streams for, you know, those who are sequestering carbon naturally.

Yeah. The technologies, the emerging technologies around this, I think the chair hinted at before, is exportable opportunity for California as well if we continue to lead on it. Two more quick things. One, Mr. Crowfoot, you mentioned sea level rise. State parks has had this mandate for a while of doing a comprehensive sea level rise assessment or program.

They've never had the funding. Is there anything either proposed to be utilized with the Prop 4 funds or from the General Fund to actually get that plan built and approved?