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

Now that Assemblymember Wilson is here, well, we. We will start. Actually, I, I had to be over at elections Assemblymember Wilson. So I just got here and so welcome everybody to this Assembly meeting and good morning. Today we have an informational hearing on proposals from our transportation agencies. We'll not be taking any votes today.

We have four presentations planned today and 17 other proposals that will only hear presentations on if requested by a Member of this Committee. After all the items are heard, we'll take public comment. Each Member of the public will have one minute to speak. Let's go ahead and get started.

We're at issue one, which is motor vehicle account Fund transfers. And appreciate the panel coming up. And each panelist will introduce themselves as they begin to speak. And the panelists get to arm wrestle over who goes first. Right. And with that, whenever you guys are ready, I'm gonna, I'm gonna say this to.

If all the panelists can hear this and stuff, we do much better in this room if the panelists don't lean way forward, but instead they bring the microphone to them. There we go. Good. All righty. Thank you. Yeah. Now, go ahead. Try that now.

Good morning, Chair Members. Bowen Peterson, Department of Finance. 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 25-26 expected to be about $5 billion, with the main sources of that revenue being the $71 vehicle registration fee and $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.

As a solution, the budget proposes a one time $166 million total transfer from the Air Pollution Control Fund and Greenhouse Gas Reduction Fund in 25-26 to offset the costs associated with the California Air Resources Board mobile source program. We will be happy to answer any questions that you may have.

Thank you. Anything else, LAO?

Good morning. Rachel Ehlers with the Legislative Analyst's Office. So the administration's proposal to address the motor vehicle account shortfall this year is not unreasonable, but it does have trade offs associated. I think a few important considerations we would raise for you.

First, the proposal does have some relation to the overall approach of shifting some costs onto Proposition 4, specifically 32 million for a clean energy program that then frees up 32 million in greenhouse gas reduction funds that are a portion of this.

That's just a portion of the overall proposal, but it is an approach this Committee has raised some concerns with previously, so I wanted to highlight that portion of it. Second, this also relies on $81 million in the greenhouse gas reduction Fund.

And as I know you'll talk about in your hearing in two weeks, their revenues are coming in lower projected for that Fund already in the current year. Those trends continue in the budget year. There could be some concerns about the availability of GGRF Fund existing commitments, let alone new commitments as is proposed here.

And then third, fundamentally this represents a one time solution to an ongoing problem. Now you may choose to adopt a one time solution this year or something temporary to give you more time to develop an ongoing solution. But eventually this is going to keep coming back before you.

And developing an ongoing solution isn't going to be easy for this. It is a fundamental imbalance right now between the amount of revenues and the amount of expenditures. Not only an existing gap that the expenditures are growing at a faster pace than the revenue. So the gap will continue to grow.

You could look at the expenditure side of the ledger, but that's not going to be easy. The account funds core services that Californians depend on primarily from the Department of Motor Vehicles and the California Highway Patrol. So reducing services will be difficult and have impacts on Californians. You could look at the revenue side of the ledger.

Raising new revenues will mean raising fees, which obviously comes with trade offs for Californians. You could look at shifting some costs onto other funds. There aren't any funds just sitting there waiting, having available funding ready to absorb these costs. We all know the condition of the General Fund, so this has been a long standing issue.

I went back and looked at how many LAO publications we've written on this and it is almost annually for the past 20 years. So it's not a new problem. But again, it's growing and it will continue to come before you until there is some ongoing solution identified. Thank you.

Thank you very much. I will. I don't have. I'll do my questions after Assembly Member Wilson, but I do want to start with some overall. I'll actually do a couple questions too if you don't mind. I just want to set the scenes here as we begin this.

And my first question is, has the Administration ever used GGRF funds to balance this MVA account in the past? No. Have you ever done transfers that essentially result in Proposition money like Prop 4 being used to balance the MVA account?

Okay, so this is we've had a 20 year deficit as pointed out by the LAO and pointed out by the Administration. And everybody knows we've got this problem. We have expenses growing faster than revenues are growing. And this problem is not going to get better each year. It's going to get worse each year.

And the patchworks will get more and more extreme each year. And the patchworks are already moving into what I would call extreme category in that we're going after GGRF funds, which we haven't used before, for MBA accounts.

And we're going after a Proposition that almost everybody would say, you hear over and over again here in the Assembly, people didn't pass the Proposition to backfill the issues, you know, that we have. So I'm not faulting anybody here at this point in time. We all have been part of this problem.

People a lot sharper than I over the last 20 years have been up here trying to figure out this problem. I don't have the solution to this problem as I'm sitting here, but the one thing that I am going to do is emphasize that I'm not going to sit silent for the length of time I'm here and just keep kicking this can down the road.

We may end up kicking the can down the road, but I'm not going to do it silently. And then I say that because we may not find the solution that is out there.

But when I was a county supervisor in County of Ventura, as I began it, they had a structural deficit in many departments, and it was because they didn't have the courage to actually either deal with the revenue side or deal with the expenditure side.

And so my challenge to all of us is we've got to have the courage to do that. And I think if I asked out there, is there anybody out there that's ready to cut the expenditures on this side?

There wouldn't be very many people putting their hand up, offering suggestions, anybody willing to do it on the revenue side? There'll be some people offering that. People that don't have to get. Stand in front of the voters, et cetera. But we need to hear those suggestions and we have to have the courage to.

To try to address this, because it's not like it's a problem and we're getting better every year with it. It's a problem, and we're getting. The gap is growing every year.

And so with that, a few other thoughts, but I want to turn it over to my colleagues for their questions first, now that I've set that particular scene. Thank you.

Through the chair.

Go ahead. I'm sorry, Assemblymember

I appreciate the chair's comments and I echo amplify them. I put them with a spotlight that is it extremely important to deal with this issue and that it has been an ongoing as was noted for the last 20 years. This has been an issue that's brought up.

Was brought up and what's being proposed is the same thing. What I assume in the previous years that using one time solutions to an ongoing problem that we're seeing and now I would say for you all we legislate which creates cost pressures on you all. So I don't consider it to be your problem alone.

As was stated from our chair, it is an ongoing problem that we all take part in.

And so I wonder one of the things that was noted in our agenda question and I do want to make sure that's answered is as it relates to the REAL ID, what specific cost pressures has that brought and has there been any additional federal resources to deal with it and are we expecting any future federal resources to deal with it as the deadline is looming?

Yeah. So in terms of Real ID, I do want to just touch on the topic that driver's license fees themselves have only had CPI increases since the implementation of these real IDs. They have not been raised to cover any cost related to Real ID itself.

And from 2016-17 to 2024-25 a total of 591.5 million has funded the implementation of Real ID workload of that 300 million of it was General Fund and the residual was MVA. However, DMV has not received any federal funds for these purposes federal funds at.

All as it relates to that. And then just to correct. So the cost to get it driver's license and the cost to get the real ID did not change at all. Only the cpi. There was no distinction difference.

Yeah. Not beyond CPI changes.

Okay. Which Real ID takes way more time to process. Right. Than a regular driver's license. And I know this is the ongoing. I mean this is the future now it's you can't get a just a regular driver's license. You can only get a real ID. Right. Can you apply for a regular post the deadline.

Not today, but post the deadline. Can you apply for a, a regular driver's license? It would have to be a real ID. Have to be. Right. Okay, that's what I thought.

And then one of the things that I haven't seen last year and this year having had the chance to serve on this Committee for you know, a couple of years was basically any recommendations of potential Policy changes that would alleviate the cost pressures.

And so are those proposed at all in terms of actual legislation to roll back and anything like that? Maybe I'd look to.

We do have some proposals on hand, such as the delay of the AB3 implementation date that would help alleviate the cost pressures of the mva.

Just delayed implementation.

Yes.

Alleviate the cost because that's one. It's a pretty significant. I guess what I'm saying. It's structurally the issue is pretty significant. And so delaying AB3, that wouldn't solve it. That's just one item. Right. So there's only been one suggestion as it relates to the expenditure side.

Yeah. So it's in terms of alleviating some of the cost pressures, but it also ties into DXP, DMV's modernization project in order to prevent any delays for that project. This is also assisting with that due to IT resources.

And I just assume that everybody in the room knows what AB3 is. Can you briefly say yes?

So AB3 for itself is. Allows the existing law. So existing law authorizes the courts to suspend or restrict driving privileges for 90 days to six months for violations that occur on a highway or an off street parking facility. And AB3 enhances that and makes language changes to make it more broad.

Okay. And so I'm, I'm concerned that we don't have a real idea of what we would have to do because that, that's, you know, key piece of legislation. But it is not the legislation that I would say is driving the expenditure to cost. It's just more recent one that if it was delayed, it would help with cost.

So I think that we really have to have a discussion about real rollbacks as it relates to expenditures, real ways to reduce expenditures based on policy that we've implemented in the Legislature. I think it is difficult on the revenue side just because we're dealing with issues of affordability.

And the only way to increase on the revenue side is to actual. Is to the actual people with driver's license IDs who are actual consumers of. Of what the DMV does. And there is a big piece in here which we have to support and I know they need more support, which is chp. Right.

And so I'm just really concerned that we're not at the point where we have relevant data to be able to make great decisions as to dealing with this structural issue. And so I think we definitely have to continue to have conversations.

I look forward to your leadership on this, Chair Bennett, and I support you being as loud as possible through this process to ensure we deal with the struct issue on a go forward and we don't kick the can beyond our time in the Legislature.

Thank you other Assembly Members. Assemblymember Connolly,

Thank you, Chair. Want to associate with my colleague on kind of the concerns with the approach to the motor vehicle account utilizing yet again kind of short term approaches to a long term problem.

So I guess the question and apologies for being a little bit late if this has been covered, but does the Administration have a long term plan to help solve the structural deficit in the motor vehicle account aside from this short term fix?

Yeah. So currently the Administration continues to monitor the condition of the Fund and explore options to lower expenditures or raise revenues. We look forward to collaborating with you as the Legislature throughout this process. Currently the budget proposes the one time $166 million transfer and ongoing reductions in order to assist in maintaining the solvency in the budget year. Is there actually a effort to come up with a long term plan though?

Yes, we are evaluating different solutions.

Okay, so where does that stand at this point?

It's just in the works and we will be happy to share that with you once we have a final product that we could propose.

I think you're hearing there is an obvious need I would submit, but also strong interest on our part to see that obviously work with you. So let's follow up on that for sure. The other thing and I'll just probably more just a comment at this point. I think it was raised again by the chair.

It's an ongoing issue throughout our proceedings week after week and that is the use of Prop 4 monies as a backfill solution. That is again being done here.

The question rhetorically in my view is this appropriate given that proposed Proposition 4 was approved by the voters to help California reach our climate goals and not to be used as backfill for the motor vehicle account. So I don't know if you want to address that. But again hard pushback from this Subcommitee and throughout our proceedings on the whole notion of doing that.

Yeah. Eamon Nalband, I think we've heard that point from this Committee several times. We understand your position on that and we read the law or Proposition for literally when we proposed our Governor's Budget and but we've heard this feedback so.

Thank you. Mr. Chair, just a few quick questions. Can you tell me why the Energy Commission and the Air Resource Boards are spinning from the mva?

Yeah. So I can't speak on terms of the Energy Commission. However I can speak in terms of the CARB. And it's further a mobile source program to basically limit and restrict and propose regulations to reduce greenhouse gas emissions.

And that is the mobile source program. That's basically the description of it.

Yes.

And what about the Department of Education?

I do not have that information at this time.

Yeah, anything on food and ag?

Food and ag. They do have posts presented in the borders as you go in or out of the state, the food check stations.

And one last what about public health?

Do not have that information at this time.

Thank you.

Well, good morning. Thank you again for being here. I think I don't actually have a question. I just want to echo Assemblymember Connolly's concerns regarding the utilization of Prop 4. In some cases, you guys are using Prop 4 funds. In some cases it's GGRF. That's not what those funds are intended for.

That's not consistent, I think, with the promises that we've made to Californians. And there's also some instances where you've actually taken money from the SERAP funds, moved that around. So that was, and I think this is also a comment that I've made in previous hearings, that SERAP funding was established in 2021.

It was part of an agreement between the Governor and the Legislature that came on the heels of the State of California realizing that, oh my God, we weren't going to be able to keep the lights on if we could not reauthorize Diablo Canyon.

The Governor asked the Legislature to act in a period of two weeks to reauthorize Diablo Canyon. As part of our agreement to take that action, we agreed to create SERAP and as a $1 billion fund to help accelerate clean energy development and deployment across the State of California.

So over the last several years, the Governor and the governor's office keep kind of pushing that money out, pushing that money, you know, into out years, and you're now taking away that money and through all this sort of, you know, weird accounting maneuvers, utilizing it for once again, purposes that are completely inconsistent both with the promises that have been made to Californians as well as promises that have been made to members of the Legislature.

So it's not actually a question. It's just registering once again my very grave concern with those proposals. Thank you, Mr. Chair.

Thank you. Any other Assemblymember comments? So I stepped out for a moment, but I suspect that Senator Cottie was echoing the same things I said at the beginning. Beginning of the meeting. And at the beginning of the meeting, I, with Assemblymember Wilson and I both pledged to not go quietly on this issue.

It's been 20 years that the, I'm going to repeat some of this, it's been 20 years that this has been kicked down the road. This can has been kicked down the road. And we keep coming up with just sort of patchwork solutions to it.

And I acknowledge with some humility that we may not come up with a solution to this. It may be politically too hard. But even if we don't, it won't be quietly that we not get there. Right.

We will at least try to have the courage to call all of this out and then see if we can actually muster the appropriate solution to this.

So this is sort of like trying to put everybody on notice that we don't want to just at the end of our terms here say, you know, another 20 years has gone down the road and we still just have this continuing problem that is, that is out there. That being said, the.

There are a few questions that we still want to make sure that we have, and that is what are the, what, what's your identification of the cost drivers of the expenditure growth?

So the largest driver of the expenditure growth is statutory employee compensation increases.

Okay. And what percentage of the, what percentage of the problem right now would you, would you say that is relative to the other issues that we have? You've identified some other cost drivers like real ID is costing us more money? What percentage is that?

I would say it's one of the largest causes of the expenditure growth itself.

Can you estimate, 51% is one of the largest, 30 is one of the largest, and 75 is one of the largest. Can you estimate what percentage it is?

Yeah, rough estimates. We'll go ahead and say it's probably around 70% of the largest growth.

All right. So you've identified the largest issue out there. And, and if I could. It's just the volume level, right?

Yeah, if I could, I just want to point out, and I told Assemblymember Wilson before she stepped out, she said, well, the solution is you've got to get these expenditures down because we're not going to touch revenue.

And I'm going to say from my position that you don't tackle a 20-year problem that is a combination of an expenditure problem and a revenue problem by ruling out forever half of the potential solution. We have to be creative, but we also have to be courageous.

Certainly right now everybody is concerned about cost of living, et cetera. But that shouldn't rule out someday, somehow some way us doing a better job. Because what we're trying to do is we're trying to do ongoing expenses with one-time revenue sources or revenue sources that are not ongoing.

That is a nutty way to try to do budgeting. Right. And that's not a healthy way for any government entity to budget. We need to come up with ongoing revenue sources that match ongoing expenditure needs. That's the healthy thing that we have to do.

And it may not be this year, but it should be where we end up if we really value the expenditures that we are incurring right now. And I think most of us would say we value the expenditures on salaries and benefits and employee compensation. We value that.

If we value it, then we have a responsibility to find the revenue for it and revenue that is not patched together and puts those expenditures at risk every year of this kind of shortfall that's out there. So that's the challenge and we will continue to raise that.

I also want to ask air pollution control funds, have you ever used those before for the MVA account?

Not to my knowledge, no.

Okay, so for the benefit of the Assemblymembers, which is all of you here that weren't here when I began with my questions. So we.

I asked, have we ever used GGRF funds before to balance the MBA account? The answer was no. Have we ever used Proposition 4 type bond funding to balance this? Which is clearly one time funding. The answer is no. And now we have, have we ever used the air pollution control funds to balance this?

So clearly we are at a tipping point here. We are trying to solve a problem, pulling in things we've never done before. Setting precedents we haven't done before. Using GGRF funds, using proposition, you know, bond funding, using air pollution control district fund transfers. That should get our attention that this isn't a small issue.

This is a big issue. That again, the people that are being paid through the MBA Fund deserve to have a revenue source that matches the expenditures that are out there. And with that we will, unless we have anybody else.

I have a note that I have to dash over to elections again and we need to go on to. I think we're ready to go on to issue two, and that's CalTrans. And so I will leave this and be right back.

Good morning.

Morning.

Good morning. Stephen Keck with the California Department of Transportation. The item before you today, the department is requesting a one year increase of $25 million in operating expense from the general gund to establish the Clean California Community Cleanup and Employment Pathway Grant Program. I got it out without stumbling.

The new program builds upon the successes of the limited term General Fund program, the Clean California Program, by providing competitive grants to local entities. These grants would focus on litter and Graffiti pickup in public spaces, with an emphasis on investing those funds through workforce development efforts that focus on vulnerable populations.

The grant program will leverage local funding to support litter and Graffiti abatement, foster community engagement, and create career pathways for individuals overcoming employment barriers. We recognize that there is a high bar to meet for this program, but we believe that there's an opportunity for us to capitalize on the successes of the Clean California program.

We saw many local agencies and communities make long-term pledges through our Clean California Community Designation initiative. Local governments participated by creating long-term plans to keep their communities clean by organizing and supporting community cleanup activities and fostering a sense of civic pride and a shared commitment to cleaner public spaces.

This was done even though Clean California funding was one-time funding. The new grant program would provide not only employment, pardon me, not only employment opportunities for cleanup efforts, but also encourage community groups, businesses, and individuals to participate in cleaning up their communities and keeping them litter-free.

Thank you. Are there any other comments before we open it up for questions? Yes. All right, thank you.

Good morning Committee Members. Frank Jimenez with the Legislative Analyst Office. We recommend that the Legislature reject this provision proposal. We find that given the limited general fund available, that the Legislature should have a high bar in approving any new general fund spending. And we find that this proposal does not meet that bar for a couple reasons.

First, while addressing local litter issues may be a worthwhile goal, it doesn't represent a core state responsibility. And we find this distinction particularly important. In a year in which there are limited general fund dollars in the state, it may want to prioritize addressing issues related to its core responsibilities, such as maintaining state highways or other state owned infrastructure.

We also find that one time funding is unlikely to address persistent issues around litter on local right of way and local public spaces. And then within the larger budget picture, our office and the Administration find that the budget is roughly balanced.

So in order for the Governor to make room for this proposal, he takes action across the budget, various actions within this Subcommitee that includes shifting previous general fund dollars for various climate packages to the Proposition Four bond. So the Legislature would have to consider this proposal and that trade off within the context of this specific item.

So if the Legislature were to approve this proposal, it may have to consider making those Proposition Four dollars not additive. Happy to take any questions.

Thank you. And then Mr. Pollack from Department of Finance.

Benjamin Pollack, Department of Finance. We just note we feel strongly about the value of this proposal. I mean, understanding the general fund cost pressures, but through local matching, gives the potential to maximize the value of utilizing those funds.

And you know, cleaning up the state just gives a sense of pride through local engagement and just keeping the streets clean.

All right, thank you. We'll go ahead and open it up for member questions or comments. Assemblymember Connolly.

Thank you. Undoubtedly a worthy objective. We all want to clean up our local streets, abate litter. As a local official for many years certainly had my share of those and always found them very worthwhile. But I have to say the LAO's concerns resonate here. So really to the administration, can you provide the rationale for including this in the budget?

Given local litter abatement is usually a local responsibility and not within the core responsibilities of the state.

Certainly. Thank you Assemblymember. And I'll also defer to Department of Finance if they wish to add to this. But what we saw with Clean California, which was one-time funding from the general fund, is we were able to leverage that local community participation and really see long term benefits even though it was a one-time fund.

So what we're looking at is we want to be able to use that same CalTrans infrastructure that we put in place to enable this grant system to work and do the same kind of work with this new funding by utilizing what we already have in place and capitalizing on the successes that we already saw.

So although it's unusual for us to do something like this, because it works so well in Clean California, I think the administration's interested in seeing that continue.

So would this money be utilized for, let's say a local group, civic-minded, wants to clean up an off-ramp or on-ramp to a state highway? Is this the money source that would be used to supplement those efforts or is that something else yet again, no.

Generally, on- and off-ramps are the responsibility of CaltTrans. This would be more for local streets and local areas.

So what's the state tie in then?

So again it's because of the successes with Clean California. So Clean California provided $400 million for local agencies. A lot of it was for art projects and beautification, but a lot of it was also for litter pickup and Graffiti removal.

So because we have those contacts in place, I have the program manager here with me to answer detailed questions.

Well, and let me tee it up. My hypothetical was actually real world, so Local Lions Club in my community, frankly, because the on-ramp off-ramp to Highway 101 was so not clean. There was a bunch of litter out there. It was not being done by CalTrans, offered their services. I think CalTrans appreciated that.

There may have even been some cost deferment or whatever.

If we're not even taking care of business at the state on the state responsible roads, why now again going to the issues go into local communities where it seems like there is relatively good coverage by locals now? Shouldn't we just kind of be focused on that core responsibility more?

So CalTrans is focused on that.

Excuse me sir, I'm going to ask you to move the microphone so you're speaking into it rather than it being on the side. So turn the mic. Yeah, yeah. So in other words, you keep. You keep facing him and the people in the back aren't going to be able to hear you.

I think Andrew is going to help you out there, like that, there we go. Go ahead.

Thank you. Chair. Yeah. Oh, I can hear it now. Oh. Makes a big difference. So in response to that, CalTrans has stepped up efforts to improve litter cleanup on the highway system. And we do have hotspots. And as always, we welcome the help of local communities through Adopt-a-Highway or through other means.

We also have prioritized our own funding to increase litter pickup. We have now twice a month litter stand downs where our maintenance crews stop their regular maintenance work to focus on litter cleanup. So we are increasing our efforts in that area. As the clean California funding tapers off, we're picking up the slack there.

But again, because of the successes we saw with local agencies, the Administration feels that it's a good time for us to strike that while it's hot and use those connections that we formed.

Thank you. Go ahead.

All right, I'll be brief. I know that this is a 25. It's a $25 million item. Right. So I know we don't want to belabor it too much.

But I do think it's important to echo the concerns raised by the LAO. by Assemblymember Connolly, because I think it's indicative of a wider issue, which I think is two things. Number one, I think that a lot of our agencies got kind of addicted to a surplus era notion of budgeting.

We were blessed enough to enjoy a year with a $74 billion budget surplus, a year with $100 billion budget surplus. We did things we'd never done before. Those years are over. They may come back, but that's not what we're dealing with this year. Like, we need to have a come to Jesus moment about this year's budget.

We do not have money for new programs, no matter how worthy they are. We're going to be in a situation of having to cut existing programs and existing funding. And the conversations that are going on in other budget subs, you know, Health and Human Services are really scary. So we've got to just reorient ourselves to the reality that is the budget in 2025.

I'd like to, I'd like to phrase it this way and certainly agree with the sentiments, and that is this 25 million here could be, it's general funds. So it's an ongoing revenue source and it could be used for the MVA deficit that we just talked about before. Correct?

I would defer to Department of Finance, but I believe that's correct.

Right. Could be. So basically what the Administration is saying is this litter program that is a brand new program with no guidelines that we've never done before like this, is more important than solving the MBA deficit problem. That's how I would interpret this.

And if I was an employee being paid by the MBA program that is being patched together with one-time funding, I would say I'm more important in this litter removal side of this. And that's part of how I hope to be able to address the solution to the MBA problem moving forward.

So other comments, questions? So I haven't seen a lot of support from my colleagues for this through this expenditure. So I hope it's very clear to the Administration that we have a lot of work to do in terms of working some things out with you with regarding to this particular issue. And with that we will move on.

We really appreciate you being here. And by the way, none of these things are personal. We realize you guys are just trying to do your job right.

Understood. Thank you, sir. Okay. Thank you.

Issue 3, Tahoe Population Funding formula. Hope you're not asking for new money, right? Go ahead. I'm joking. I'm joking. Right? Here we go. All right. Tahoe Population Funding Formula. You are in a sense, but by changing the funding formula. But anyway, go ahead.

Good morning Chair Bennett, Committee Members, and staff. My name is Devin Middlebrook and I'm the Government affairs manager for the Tahoe Regional Planning Agency. With me today is Nick Haven, the agency's Metropolitan Planning Organization Director.

I want to thank you for allowing us to speak today about our request through the budget process to administratively recognize Lake Tahoe's federally designated population figure for state formula-based funding programs. In short, we are asking for the State of California to be consistent with federal law.

Since 1969, with the creation of our organization through a bi-state compact with Nevada, California has been committed to supporting transportation at Tahoe to protect the environment, ensure equitable recreation access, and support a vibrant community and economy. Lake Tahoe is a national treasure and the lake's world-famous clarity is threatened by pollution related to transportation impacts.

Tahoe's multi sector collaborative of federal, bi-state, local, tribal, and private sector partners are committed to funding transportation needs in the region through a shared funding framework. This agreement grew out of work that then Resources Secretary Laird did with establishment of Nevada and was formalized under Secretary Crowfoot's leadership.

California's share of this $20 million annual commitment is $4.5 million per year. Today's request would help secure a large portion of this funding goal providing vital and sustainable transportation support. California's funding will also leverage federal, Nevada, local, and private sector funding commitments. This request does not ask for new money nor does it modify existing formulas.

It does call for the Department of Finance to recognize Tahoe's federally designated population figure for state formula funding programs. This figure considers Tahoe's visitation and full-time residents of the basin. This recognition was first enshrined in federal statute in 2015. We are now asking for California statute to reflect the same reality.

This change would increase Tahoe's population figure in California from 40,000 to 145,000. I will make one note in the staff report of your packet. The first sentence of the report says 165,000. It should read 145,000.

Based on input from staff for the committee, Department of Finance and legislators, it has become clear that the concept of helping Tahoe is supportable. But there is concern about impacts to other regions of the state due to the increased population figure in Tahoe.

With this in mind, the TRPA supports language that phases in the population increase over a multi-year period. Any impact on other state transportation agencies would be spread across multiple funding programs sequenced over time. Thank you for your time today and consideration for our request to align state formula-based programs and exist with existing federal formula figures.

I will now turn it back to you, Chair Bennett. Thank you.

Nothing from you. Great. Do we have questions or comments from members? I have, my comments are, I think that you've made a good argument for the fact that this is a California resource and that we should match the population numbers with the federal population numbers. There will be some impact on other agencies.

Appreciate your willingness to phase this in to try to minimize those impacts on other agencies. But unless we hear something else from, as we move forward, I certainly think there's general support here from staff and from Members in terms of doing this in terms of what I've heard. So thank you very much.

We'll go on to issue four, High Speed Rail Authority and before they begin, I will make some comments, but I'll let the panel get up here and get seated first. Oh, well, thank you.

Well, with this massive panel that we have in front of us right on high speed rail, I just want to make some, some initial comments. I know that Members have strong feelings about high speed rail, both support and opposition to high speed rail and where we need to have appropriate conversations throughout the Legislature about this.

As we're talking about greenhouse gas fund reauthorization expenditures, all of that needs to be talked about. I'm just, my request is people can say what they want from the microphone, but that people recognize this is not the time for us to have that because we don't have the report yet.

Basically, what we got from my standpoint was a statutorily required report that just was a placeholder to say the real report is coming. All right. And unless we have the real report in front of us, it's like having the conversation without any real numbers to talk about.

That being said, I know some people are going to want to express some overall thoughts about the, about high speed rail and that's not inappropriate.

I just don't want to try to turn this into a big back and forth about high speed rail when we're going to have a back and forth about high speed rail after we get the report. So that being said, again, they've told us summertime. Yeah, exactly. They've told us summer, which is vague. Well, exactly.

And so I'm, that's why I'm saying, go ahead. If you have things you want to say, you can say them. I'm not trying to block that. I'm just saying it's not going to be an open debate here. We don't even have, you know, we're not going to have a big debate here without those facts.

But people can say what they want. So all the things that you, all the concerns that you might have, it's fine to bring them up, but bring them up all at one time, not in a debate. Back and forth. You know, kind of thing that we're looking at is my request only.

And with that, let's hear from Lao, who has a number of valuable things to say about high speed rail.

Good morning, Chair and Members. Helen Kerstein with the Legislative Analyst Office. So I've been asked to briefly summarize the project update report. As was mentioned, I did prepare a handout which I think you hopefully all have copies of.

It's also available on our office's website and I believe it's also on the Committee's website for those watching from home as well. I'm going to use that to Guide my comments. If you turn to page one, we provide just a little bit of background on what project update page one of your of the handout.

Do you have the handout?

Hopefully you all got it. Good.

Sorry, can you hand me the handout, please?

Our sergeant did a great job of making sure everybody has it. Yes. Okay, there we are. We're at page one.

Sorry about that.

No problem.

So we provide just a little bit of background on project update reports and business plans. So basically the authority is required annually to provide plans. Every even year it's a business plan. Every odd year it's a project update report. Traditionally, the project update reports were kind of slimmed down versions of the business plan.

But some changes were made in 2022. The Legislature wanted more information out of those project update reports and so required additional information specifically related to, mostly related to the Merced to Bakersfield segment because that's supposed to be the initial operating segment for the project.

So there were some additional requirements that were put in in 2022, but the project update report is required to be provided by March 1st of those odd years. The authority, as required, did produce a project update report.

We would note that it didn't meet some of the statutory requirements because there is a new CEO, there's new leadership, they're evaluating the project and sort of looking at top down. So they weren't able to complete all of the requirements in code.

And so they indicate that they are going to provide a supplemental document which will come out sometime in the summer. And I think there was some reference to that by the Committee as well. If you turn to page two, we do summarize what is in the project update report.

So it's largely unchanged from the business plan as was referenced that we that you all saw last year. There's no update to the project schedule. So as you heard last year, the plan, at least at that time, was to launch interim service between Merced and Bakersfield sometime between 2030 and 2033.

That's still there's no update to that plan. There's also no update to the project costs. So as of last time there was an update, the project costs were estimated to be 35.3 billion to complete that Merced to Bakersfield segment and meet some other existing obligations that the project has to locals as well as to the Federal Government.

There are minor updates to anticipated funding and basically those updates are to reflect that we have more actual information on GGRF revenues. So. So as you'll recall, the project receives 25% of GGRF on a continuously appropriated basis. So they were able to update for actual receipts of those funds.

And there was also a small grant that was received after the last business plan.

We would note that the project update report assumes that the project will continue to retain all of the awarded federal grants, including some funding which has not yet been obligated, and also assumes that the project will receive $1 billion of GGRF annually through 2030.

The project update report also notably mentions a new financial strategy which would include long term sustained investment, innovative financing to drive construction momentum, and public private partnerships to leverage state funds. But there isn't any detail at this point on what would be involved with that new plan.

So if you turn to page three, we just include a figure here that shows the projected funding and costs in kind of a table form, which at least for me is easier to see. You can see there's about a $7 billion gap between projected funding and costs as they currently stand. And again, they haven't been fully updated.

So if you turn to page four, we highlight some key issues that we think are important for the Legislature to consider. One is that there is no specific plan to meet that roughly $7 billion gap for Merced to Bakersfield. We also think there's some risk that that gap could grow.

We do note that the CEO is really trying to reduce costs and is engaging in this effort to try to find some savings. At this point, it's not clear, because that's still an ongoing process, what that will result in. However, there's some other pressures on the other side.

One of those things is the federal funds uncertainty, particularly those unobligated funds, could potentially be at risk. The Federal Government is launching or has launched a review of the project. There's also potential for some inflation and cost increases, particularly with a project like this.

And then there's some uncertainty with GGRF revenues, which is kind of inherent in those revenues. So we think the Legislature faces some really key decisions very soon. There are a couple reasons for that. One is this funding gap. This isn't like a way out in the future funding gap. This, this is a pretty immediate funding gap.

The OIG, for example, highlighted in its October 2024 report that the majority of this funding gap likely needs to be secured by June 2026, which is right around the corner, or risk schedule impacts for the project. So this is very soon.

The second thing we wanted to highlight is that decisions on cap and trade could happen in the near future term as well. The Legislature is considering there's some Active pending legislation in both houses, I believe, related to reauthorization of cap and trade. So that's an issue that may come before this Legislature in the relatively near future.

As part of that reauthorization, one of the questions the Legislature might want to consider is does it want to continue the continuous appropriation as it currently stands, or does it want to modify that?

So if you turn to page five, we highlight that we think aligning funding availability with the timing of those funding needs is going to be really important. Right. Because those funding needs are near term. And GGRF, for example, if it's extended, that would be all the way through potentially another couple decades.

So it's particularly important because GGRF is not well suited to securitization. It's very hard to borrow against because it's not a very consistent funding stream. So that's something that's going to be a real challenge, I think, for the Legislature to consider.

So we think in this context, the Legislature would benefit from additional information, updated information on costs and funding as soon as that's available.

We understand that the authority is working on that, as well as details on this proposed funding strategy, so the Legislature can understand what's involved and what kinds of actions it can take to help consider in its consideration of the project. So, happy to take any questions.

Thank you very much, Members. Questions or comments. Assembly Member Petrie Norris.

Thank you. Thank you for this and for all of your excellent work on this and everything. Let me make sure that I understood what you said. So you said that the $7 billion funding gap needs to be addressed by June?

The majority of that, yes. So.

Of this year?

June of 2026. The last information we have now.

Yeah. Sorry.

2026. Okay. So.

All right.

Yeah.

Not as scary as I thought you would say. I thought it had to be done by June of 2025.

But the fiscal year is, you know, 25-26. Right. So we're passing the budget for 25-26. So that's really like this. This. Ideally, it would be considered as part of this budget deliberation.

Yeah, yeah, no, excellent point. Yes. June 2026 is right around the corner. That does raise some very grave concerns. I know you're not the one doing the, you know, project review, but the timing of the project review seems totally out of whack with when we need to be making decisions about what the plan is for this project.

So I don't know if the high speed rail folks are listening, but I think we need, we need to have that review completed before the Legislature is asked to take any action on addressing that funding gap is my view. And let me just make sure I understand.

So because the feds are also, you may or may not know this, the feds are also kind of evaluating that. Right. So they've asked us to do this project review. Then they are going to presumably look at that and let us know what they think.

Do we have any sense of what the timing for that assessment is going to be?

I don't know. I understand that they actually have federal folks who are coming and doing a review of the project and asking for information. So that's separate from the project update report. The project update report is the authority conducting that. I don't know the timing of when that would be completed. The authority would perhaps.

I'm going to interrupt real quick just, just to add. While we don't know the timing of the federal review, I think it's pretty certain what the results of the federal review are going to be.

That's a fair point.

And so I just want to add that back to your back. You still have the floor though.

I would say, I think the question, I think at various points the Federal Government has, I think, threatened not just to stop additional funding, but to try to claw back funding that's already been granted. So I do feel like all of those data points are really, really important for us before we can make any decisions on this.

And given your excellent point that we need to pass a budget in June, I would. Yeah, I don't think we can. I do not think that we can make ongoing commitments to the high speed rail project in the absence of that information is what I would say.

Assembly Member Lackey.

Yeah, I'd like to thank the LAO for their report. I'm going to save most of my concerns until we have this procrastinated report that we're due to. To review. But I think it's also disappointing that we don't even have high speed rail sitting at the table.

I find that to be a disappointment and know, I think the old adage actually applies here that if you're not positioned at the table, you're likely to end up on the menu.

Welcome, gentlemen.

Good morning.

Good morning, Chair and Members. Mark Tollefson, Chief of Staff with the High Speed Rail Authority.

Could you pull that microphone closer to you? Thank you.

Is that better? That's perfect. So really appreciate the opportunity and want to thank the LAO for the great overview today. Yeah, as mentioned, we are diligently working on getting that additional information. With respect to scope schedule ridership.

With the new CEO coming in, he is doing a deep dive on every aspect of that project, really taking a different view in terms of how we can work smarter, more efficient, more economically in terms of delivering the project. So with that being said, we have committed to getting that done in the summer.

But as information becomes available, we absolutely do want to share that with the Administration, with the Legislature, so that we have that information to make some of those decisions with respect to funding for a project.

We think, you know, in terms of some of the changes with respect to the project scope, as we look at, you know, completing Merced to Bakersfield, possibly getting further out into population centers, we will look to have a stable funding source, as most projects absolutely need.

But with that, we do want to make sure that we are providing you with the right information, good information, so that you all can make decisions that you need to make.

Great. Thank you. Anything else, Mr. Lackey? Assembly Member Petrie- Norris.

Hey. Okay, I just want to make sure that I understand the numbers. So I am looking at the LAO report that shows projected funding. Let's see. So we've got the projected funding, 28.21.0% billion to Bakersfield cost. 35.3 billion. How much of that 35.3 billion have we already spent versus how much of that is budgeted?

What have we already sunk into this? I just. I can't remember.

Assemblymember Norris. Thank you. My name is Jamie Matalka. I'm the Chief Financial officer for the High Speed Rail Authority. The funding that's shown here is a cost projection. So we don't actually have 35.3 billion in funding. What we have spent to date to get to the answer of your question is about $13.8 billion, advancing this program.

13.8. Okay. Yes. And how much of that has been Federal funding?

Approximately 23%. 2. $2.5 billion of that money spent came from our earlier grant under the American Recovery Reinvestment Act.

Okay. Okay, that's helpful. And how do we have it right here? Okay, so we've got what I'm not clear on. So we've. What are we. What were. For this 35.3 that you're projecting? How much additional federal funding were you anticipating as part of that?

Yeah, back in the 23. Per 2023 project update report. In 2024 business plan, we were going after a goal of $8 billion of federal funding total.

Okay.

Yeah. We did achieve approximately 3.4 billion in new grants. Since that time, as you guys have already discussed here the Administration has changed over and things have changed, changed.

And so now we're undertaking with our new CEO that's come on board, as Mark has mentioned, a bottoms up effort to what this program total cost estimate actually is going to be with the changes that the CEO has instructed for the authority.

So giving an assessment at this time is a little bit premature because the value or the cost estimate is going to change. And then where the funding that we currently have identified, how far that will go will better inform the Committee as to what a gap, if there is any left.

And when is that assessment going to be done?

It's going on right now, but it is a significant effort and we are projecting that will be done the summer of this year. To give that information back to you guys.

By summer, do you mean July or September?

Right now our current projection is towards the end of August.

Okay. And okay, you're the chief financial officer, you said. Okay. So you do a lot of budgeting.

A lot of budgeting.

So to the conversation that I was having with, with our representative from the LAO, how would you be approaching this?

So you, we're, you're potentially asking us to fill a $7 billion hole today, but we haven't received the assessment or the project evaluation yet. So how would you suggest we do this?

As you are. I heard your comments and I thought they were right on. It's premature to really address something right now that you don't have the full information for. And as part of our project update report, we are just informing and saying we need a little bit more time to get you that data.

Okay. All right. So you do not anticipate that there's going to be a request for additional funding in the governor's may revise or any subsequent budget proposal?

No, I don't have that type of information, but I know that I can get you what this project is going to ultimately cost. The scope, the schedule, and then from there we can work together. Okay. To see what, how we fit, how we continue this project to move forward.

Assembly Member, if I may, you know, in terms of your question about, you know, funding ask. I think we are doing that deep dive that assessment.

Okay, thank you.

There is the opportunity possibly, you know, while we may not have the formal report done until that August timeline, there may be information that we can share on an earlier basis, possibly looking segment by segment of the project. So I think there are opportunities for us to help inform some of those conversations in the near term.

Okay, Right. And that's going to be really important. I think if you're asking us to do anything but the baseline of where we are. Right, absolutely. Thank you.

For the benefit of the Members, the Inspector General for the High Speed Rail is here in the room. Wasn't scheduled to be here on the panel. But just so you're aware of it, if, as these gentlemen approached, there were some additional questions. If you don't have anything else, I've got some questions.

No other Members, so less questions than, than, than comments given where we are at this point in time. But bottom line is just to try to look at the big picture. We have no plan for the $7 billion deficit, you know, that is out there.

It's likely that the $7 billion deficit is going to grow or is in fact growing right now as we speak, with decisions being made at the Federal Government level with potential things happening with GGRF funding that is out there. So we've got no, we've got a deficit problem. We have no plan.

We have good likelihood that it's going to get worse and we have a short time to try to solve the problem. Right. That's not a good place for government to put itself into and we've put ourselves into that. So here we are talking about the MVA account earlier. That was 20 years.

And while we have a, you know, difficult time trying to figure out the solutions to that, we don't have the same pressing deadlines that we have here where things really get messed up if we don't come up with the funding that just in terms of, of wasted investment, you know, that could potentially be out there.

So you have just the worst overall sort of combination.

And if there's ever a time for political courage, it's with these kinds of situations, if you have a big deficit, no, no good solution in front of you at this point in time, a likelihood the deficit is going to grow and not much time to try to solve it. Right.

So we have to really have those hard conversations and we have to step up. And I want to make sure that we do that and have those conversations and we desperately need the information. So certainly getting that information so that we have time to have a good, healthy time to review it before we're done.

So in other words, earlier in summer is better than later, but it has to be in summer. It has to be while we're still in session.

We have to be able to do this adjustment and we implore you to try to make sure that you have that because there are hard conversations that we really have to have about sustainability and what's in the best interest of California at this point in time.

And I don't think anybody, and these are the final two things I would mention. I don't think anybody who would look at what we've done so far would say this has really been good for California. Right.

Getting ourselves to this situation where we have a big budget deficit, we have the possibility the likelihood is going to grow and not much time to solve the problem. I don't think most people say, hey, we've really done a great job with this. So that's one.

The second thing I would end with, and that is Japan found themselves in a similar situation when they tried to build their high speed rail and their solution was to stop having the government try to do it and they turn it over to essentially public private partnerships and they got much more efficient at solving the problem.

Now they also had a much greater government commitment to trying to make the whole thing work and they gave a lot more authority. So they allowed the real estate value of the stations above each one to be used, the growth in the real estate value above those stations to all go to help pay for high speed rail.

They did creative things, but the bottom line was they scratched their head and said the government's just not going to do this properly and they came up with another solution. And I'm suggesting that if we don't have the courage to at least ask those kind of questions right now, we really are not serving California well. Assemblymember Connolly,

Well stated. And I noticed in the LAO 2025. Update it mentions HSRA plans to pursue. A new financial strategy. Do you know what type of strategies this is referencing? Is it public private? Is it? What's the breakthrough here?

I think perhaps the authority can speak in more detail. There's not a lot of detail, but I do understand they are definitely pursuing the idea of a public private partnership. So I'll defer to them to provide more details.

Absolutely. And Chair, I appreciate your comments. Hear you loud and clear with respect to the Assemblymember your question. So we are looking at everything that's available to us. We had actually kicked off an industry forum in late January.

Over 400 experts across all different fields from construction, maintenance, track and systems technology financing were there, had a lot of good conversations with people who do P3s throughout the nation and the world have a lot of good ideas in terms of how we could do something as the Chair alluded to, such as in Japan, really capitalizing on real estate value, looking at different opportunities to have a private operator.

I think there are definitely opportunities for us to do things differently. However, we are really are trying to solidify kind of what that cost is, what that gap is, what our sequencing is, to really dive into those conversations.

I think a lot of what we heard was really our focus on the valley, but also getting into some of the population centers, so possibly moving into Gilroy, into Palmdale, to connect in Caltrain in the north to the high desert corridor in the south, really creating some of that interest from the private market.

So those are all things that are being explored. We don't have all of that detail today, but those conversations are ongoing.

Thank you. And again, from Leo's standpoint, do you have any concerns with public private partnerships or cost sharing arrangements?

So I think one of the things that I would note is there's. It certainly is one of the options that the Legislature and the state and the authorities can and should consider. I think historically the state hasn't necessarily had great experiences with P3s. We haven't necessarily learned how to do them well yet.

And so I think we would want to make sure that we are proceeding carefully and really making sure that it's a good deal for the state and that we are not overly enriching private entities, that we are transferring risk where appropriate, those types of things.

We would note that the authority has explored the concept of P3s before at least a couple of times in the past, and actually done quite extensive work to try to pursue them. Some of the challenges have been, as I understand it, that a lot of the private sector entities have been interested.

Once there's rider, you know, once it's operating and they can see a revenue stream, there's more interest in, you know, in sort of providing those public private dollars, or if the state's willing to commit, like, okay, we're going to give you this money, basically state funding, and it's essentially just a financing mechanism. There's more interest.

But one of the challenges has been that there's been a lack of interest from the private sector, I think, in General, in the past, at least, in taking on that risk of, okay, what if the private sector puts up billions of dollars to build this, and what if the ridership projections don't materialize?

I think there's been challenges getting them to take that kind of risk. So I think, really thinking. I think it's a really important conversation and it's good to certainly explore these issues.

But I think we do want to make sure that there's a really solid plan and that we're learning from the state's past challenges and that it's really going to be something that fits within the project's needs at this time, given that we don't have anything yet operating.

Want to get this out? Want to get this out there. California and Japan are almost the exact same size in terms of long narrow countries. Right. Yet Japan has four times the population of California.

It makes it much less risky to get involved in a high speed rail public private partnership, if you're a private company to tackle that when you have 130 million people versus 40 million people. And so basically what's happening is people, the private sector's recognizing how risky this is. And so I'm going to say this facetiously.

Why don't we solve the problem by having a bunch of private individuals write a bond measure, initiative, put it on the ballot and try to convince the public whether it's a good idea or not. That's how this project got started. It didn't get started with a careful analysis by the public representatives.

It got sold by some private individuals who had private profit in mind and sold the public on this. And the concept is a wonderful concept, high speed rail, it is a wonderful concept.

But the practical implications of it in California with two dense population centers that you're trying to connect together, that have lots of challenges in terms of making those connections and a much lower density than you have in places like China or Japan, mean that it is a different kind of economic challenge and a different kind of business proposal to try to be out there selling.

We've never really had those hard conversations. And it's time. Right. Go ahead. Assemblymember Petrie-Norris.

Yes, thank you, Mr. Chair, for those comments. Okay, just coming back to the numbers I had not fully internalized that this 35.3 billion is just the Merced to Bakersfield piece of it. Okay, what is the update in terms of the budget for the total project?

Well, as, as we're working through the effort to update the capex that that's going to be part part of what you'll see. So the 35.3 right now is not going to be the number when we're done with this exercise. So I could, you know, what we put in the business plan of 2024 was $106 billion, right.

For phase. $106 billion for phase one. That number is an outdated number until we're done with this exercise.

But there has been a number for the whole project that's been out there in the past. What's the past number for the whole project? Which is what? But I think the Assembly one is.

106 billion at its base case.

That's phase one.

But for the whole project, LA connecting to Anaheim.

Okay, so that's San Francisco to LA. Right. Okay. Which as Assemblymember Bennett referenced, this kind of got started with the ballot initiative, I believe the number that we put in front of Californians back then, way before any of us were, you know, in the Legislature, mind you, it was like 10 billion. Right. For the whole project.

23 at the time. Again, a very preliminary estimate of what a project would cost without any design work. Really?

Yeah, I thought it was about 30 billion. With 10. 10. Yeah, 33 total with 10 billion. Be the initial.

Thank you. Okay. All right. Okay. So, yes, I think lots more to be discussed when and most appropriately when the project review is done. But so echoing I think the Chair's excellent assessment, the definition of insanity is doing the same thing over and over again and expecting a different outcome.

So we cannot keep doing the same thing and expecting a different outcome.

I think we agree. I think that's why we're undertaking the effort to do the due diligence and bring back to you the right information to make a decision. I think there's one more thing I wanted to add on the public private partnership front.

The fact that when we had the industry day like Mark was mentioning, a lot of interest came to us because the vision that's being painted by our new CEO is the connection to major population centers, not just Merced to Baker Street. Connections made to what?

Major population centers, meaning Gilroy in the north, then connecting to Caltrain, connecting to the other feeder systems, and then down to the south in Palmdale where we connect to the new Southwest region regional high speed rail network through high desert corridor all the way into Las Vegas. We're now talking two states being connected.

I think another thing that was mentioned, Helen did a really good job on. The fact is no one single entity can maximize the benefit of a project of this magnitude. So bringing in private investment is definitely something that we strive to go for.

But the hurdle that we have to get to the major population centers again, again, is long term stable funding. And I think that's one thing that's always on the table, as you have mentioned a few times.

Great. Well, thank you very much. We look forward to the next robust conversation. Right, thank you. Appreciate you stepping forward there. And with that, we are at non presentation items and no one has asked for any of the non presentation items. To be called off.

And so with that we're ready to open this up to public comment, right? Yeah. Do any Members have any, any comments on the non presentation items? Okay. All right, we're ready for public comment. One minute. For public comments, one minute.

Very generous. Good morning Chair and Members. Jeanne Wardwaller on behalf of Greenlining and Transform, the Leadership Council for Justice and Accountability, Climate Plan and I've also been asked to add on for Move California and Rails to Trails. This is in regard to Caltrans.

We are really concerned that the Administration has not proposed additional investment to backfill cuts to the active transportation program despite the agreement with the Legislature last year to look for opportunities to make this additional investment. We urge you to find a solution to last year's cut of 400 million to the ATP.

We recommend looking at the state highway account and flexible federal funding and trying to mitigate impacts to highway maintenance. But we think those are both good options to avoid having to look at things like ggrf. This is really the most effective transportation program from a perspective of climate, safety equity.

And over 90% of the projects have benefited disadvantaged communities. Because of the cuts last year, CTC was only able to find about a dozen programs out of over 300 applications. So really urge you to give some attention to this. Thank you.

Thank you very much.

Good morning Chair Bennett and Members. My name is Laura Tolkoff. I'm the Transportation Policy Director for SPUR. We're here to speak about the fiscal pressures that are facing public transit across the state. As many operators have significant operating and capital shortfalls due to the same pressures that state agencies are facing that we heard this morning.

In the Bay Area, our four largest operators which are responsible for 30% of all transit trips in the entire state, face operating deficits that are 25 to 40% of their budgets. And these are really existential shortcuts calls.

These short term deficits on this scale really create irreversible damage like eroding our economic competitive competitiveness and increasing cost of living for the hundreds of thousands of people who use those systems every day.

So we're encouraging you to support Senator Araguin and Assemblymember Gonzalez's budget request while also exploring longer term solutions to stabilize and grow revenue for public transportation transit. Thank you.

Thank you Morning Chair Bennett and Committee Mark Foxovich on behalf of Streets for All, State Policy Director. I appreciate speaking after the previous speakers because we take a position support position of both of those asks on active transportation.

Just to echo the comments made, only 12 projects were funded last year out of the 300 that were applied for. That's thousands of dollars of consultation, consultant money, staff money that local governments are putting in for a highly competitive application process that's leading them to no rewards.

And that includes cities that I'm hyper familiar with, like the City of Costa Mesa that have applied for active transportation and others. On the note of transit funding, we are also hyper aware of this being not just a NorCal issue, but also a SoCal issue as well.

The structural deficits are coming and coming fast and we don't want this sort of issue of the fiscal cliff coming with lower ridership equaling lower money given from the state which equals cuts to service which equals lower ridership. And the cycle continues and continues. This is a very pivotal moment and I understand it's a tough budget deficit.

Thank you.

Thank you.

Hello. Kendra Ramsey, Executive Director of the California Bicycle Coalition. Thank you for the opportunity to speak. I echo my colleagues comments comments about the active transportation program.

The $400 million cut to ATP is a huge gap and an already oversubscribed program that serves California disadvantaged communities and really is the only place where they can find program funding for active transportation projects. We have a growing public health crisis and safety crisis for people walking, biking and taking transit in California.

And active transportation program funding is one of the main ways we can solve this crisis. I urge finding a solution as was discussed last year, especially looking at the state highway account. Thank you so much.

Thank you.

Mr. Chair, Members. Michael Pimdell here with the California Transit Association. I'll keep my comments brief given the observations made by some of the previous speakers, but did want to uplift of course the ongoing needs of public transit agencies, particularly in this moment as they look to recover from the pandemic.

The budget does include as a proposal $1 billion for the transit Intercity rail capital program. It's a formula program established in 2023.

We want to make sure that those monies advance and then would be aligning ourselves with the larger call that has been made by Senator by Assemblymember Gonzalez to find additional resources to help support public transit agencies in that ongoing recovery. It's central for the state's overall transportation policy and programming decisions. Thank you for your time. Thank you.

Good morning Mr. Chair and Member. Karen Lang on behalf of Mayor Lurie in San Francisco in support of the Transit Association's asks regarding the fiscal cliff and supporting public transit in the state and also on behalf of Placer County in support of the Tahoe regional planning agencies request for the funding formula. Thank you so much.

Thank you.

Good morning. Commenting on item number two. My name is Ryan Souza. I represent Rediff, a venture philanthropy who works to aim to enhance employment social enterprises across the nation. ESCs not only create and provide jobs, they do so with a mission to hire individuals who are at risk or face systemic barriers to employment.

A program known as Back to Work, created with Caltrans and the Butte College County Office of Education, acting as a contracting hub, has provided litter abatement to do so by not only getting individuals on career pathways, but stabilizing housing and providing ancillary services across the state.

In previous years, Back to Work had a base funding of about 40 million, was expanded to 100 million under clean California. That was cut last year. A couple years ago, the Governor and Caltrans committed to keeping it at the 80 million. But.

But we're hearing that grant program, that program is being cut, work crews are being cut, people are becoming unemployed. And so we believe that the grant program proposed today is a great idea. But in lieu of doing that, this funding could go right back into that Back to Work program.

Maintain the crews, maintain the stability, and we'll help people keep out of housing and unemployment. Thank you.

Thank you.

Good morning. Chair and Committee Members. Certainly, Sophia Elquihel, Coalition For Clean Air. Also speaking on behalf of Safe Routes Partnership and Cal Walks, I wanted to echo some of the previous speakers that we urged the Legislature to allocate an additional 400 million to the active transportation program to backfill last year's funding cuts.

California continues to suffer the worst air pollution in the nation with over 90% of Californians breathing unhealthy air at least once a year. Additionally, nearly 10% of Americans do not have access to to vehicle and struggle to get to their destinations due to unsafe pedestrian infrastructure. And those that do afford a car, struggle to afford it.

Auto loans have significantly increased over the last three years. The active transportation program helps clean our air and make it more affordable to travel by building biking and walking infrastructure that allows Californians to get to their destinations without having to drive and also reduce pollutant emissions from our transportation sector.

We call on the Legislature to restore this funding and invest in creating a more cleaner, healthier and affordable capital California. Thank you.

Thank you.

Morning, Mr. Chair and Members.

Dylan Hoffman, on behalf of the Center for Employment Opportunities- CEO, is a strong supporter of the funding request for the Clean California Initiative and a proud partner with CalTrans to provide crucial beautification services and immediate employment to people returning from incarceration alongside wraparound vocational Services to aid participants in their pursuit of quality jobs and meaningful careers.

The Caltrans Litter Abatement program has been. A lifeline to so many people returning from incarceration while also working to help beautify the great State of California. We're a proud supporter and strong supporter. Of the funding that is in the. Budget and would request that funding be maintained and increased in order to continue providing these services. Thank you.

Thank you.

Good morning, Honorable Steve Bennett and Members of the Committee. I am a Member of the private sector that has been part of this long unending metaphor for high speed rail for probably 20 years now. We've been talking about trying to get this project off and running, so to speak.

But I personally feel that this, what everybody has iterated already is really reflects the General populace in terms of conversations I've had about this. It's good for California, it'll be good for tourism.

Also, on behalf of my side of things, being a lobbyist for Nobu Consulting, I kind of feel like I have a bias that we would need this project in California.

But I really do hope that the Chair finds that this project is going to be financially beneficial for California for the safety of its citizens and anybody that wants to come to California for an economic and for ecological reasons. Thank you very much. Thank you, sir.

Last but not least, just made it.

Thank you, Mr. Chair. Mark Fenstermaker here for the League to Save Lake Tahoe, also known as Keep Tahoe Blue. Just want to offer our support for. Issue three, the transportation funding formula. Caught the comments from TRPA. I think they did a really good. Job of laying out the reasoning behind it for us.

Transportation in the basin remains one of. The most critical issues. Decreasing lake clarity, the sedimentation, the runoff. All the car trips. You know, it adds to the challenge. That we have been trying to address for over 60 years, which is to keep Tahoe blue. So. So thank you very much.

Once you lose it, it's oftentimes lost permanently. Assemblymember Rogers has revisited the dais and so are there any. Anything you want to get on the record on any of our issues before we adjourn this meeting?

No, I really appreciate the opportunity, Mr. Chair. I did mention the staff and I'll just mention, just to make sure it gets captured for the beautification program for litter and for graffiti for local jurisdictions. I just also wanted to make sure that business improvement districts were included in that.

Many of our local jurisdictions are partnering with BIDS to be able to do that work already. And that's where the matching funds would come from. So I'm fine with the program as was sort of laid out, but with that caveat that I think that BIDS should be included. Great.

All right. Thank you. Seeing no other comments, we will adjourn this meeting and see you guys next Wednesday.