Senate Budget and Fiscal Review Subcommittee No. 5 on Corrections, Public Safety, Judiciary, Labor and Transportation

Number Five on Corrections, Public Safety, Judiciary, Labor and Transportation will come to order. Good morning all of you. We're holding our committee hearings here in Capitol, Capitol Room 112, and I ask all members of the subcommittee to be present here in this room since so we can establish a quorum before our hearing.

Today's hearing will cover the California State Transportation Agency, California Department of Transportation, High-Speed Rail Authority, High-Speed Rail Authority Office of the Inspector General, and the Department of Motor Vehicles. Oh, there's my lifeline. Before we begin, let's establish a quorum. Consultant, would you please call the roll?

[Roll Call]. Quorum is established.

It is? Oh, great. The consultant notes a quorum has been established. Let's start with Issue Number Ten: the California State Transportation Agency freight policy team. This morning, first we'll hear from Christine Casey from that department, and we'll also have with us this morning, Frank Jimenez with the LAO Office and Ted Doan and James Moore with the Department of Finance. Ms. Casey, would you like to proceed?

Yes, thank you. Good morning. I'm Christine Casey, Deputy Secretary for Freight policy at California State Transportation Agency. CalSTA requests a total of $603,000 in ongoing funding to convert three limited-term positions to permanent for a continuation of an agency-level freight policy team dedicated to oversight and coordination of freight policy across the state.

Three years ago, when CalSTA's freight policy team was originally approved by this body, as a condition, the Legislature required a supplemental report which we have provided to the Budget Subcommittees of both Houses and the Legislative Analyst's Office.

That report intends to provide the Legislature a clear understanding of the activities and accomplishments of the freight policy team and how they differ from those of other state departments.

I'll summarize some high-level points in my remarks today, but I please also ask to refer to that comprehensive document for additional details if you need, and I have extra copies here today. CalSTA's freight policy team oversees $1.2 billion in investments through the Port and Freight Infrastructure Program.

Due to the scale and complexity of these awards and the long-term nature of capital infrastructure projects and previous year's budget solutions, these projects are ongoing and will require agency oversight through at least 2028. Even after these projects are fully delivered, the need for this team at CalSTA will continue.

I've been in my role for a year and something that I was surprised to learn is just how much, quote unquote, 'freight policy is happening among each of CalSTA's departments, boards, and commissions.' CalSTA's freight team leads intra-agency coordination of these activities. It makes sense that this capacity is housed at the agency cabinet level.

CalSTA continually meets with a variety of external partners and industry stakeholders across the complex supply chain to coordinate information sharing to inform policy decisions. CalSTA leads the Supply Chain Task Force, which brings together many state agency partners to address upcoming or emergent supply chain disruptions, ensuring California's competitiveness in the freight policy.

There are currently a number of high-level projects across the state with freight and supply chain implications that require CalSTA coordination. For example, the Vincent Thomas Bridge Redecking Project, which is a vital freight corridor for the ports of Los Angeles and Long Beach, the Otay Mesa East Port of Entry Project, a critical binational trade route with Mexico essential for regional economic growth, and the upcoming LA28 Olympics, ensuring that freight and goods movement remain efficient and sustainable during this international event.

And now, why is all this so important? As you all know, California's economy is the fifth largest in the world with a GDP approaching $4 trillion. Trade is a large contributor to California's economy, and supporting this economic engine is a vast inventory of infrastructure, seaports, airports, railroads, highways, ports of entry, warehousing and distribution centers, and others.

At the same time, we know that transportation contributes almost half of our state's greenhouse gas emissions and high percentages of air quality contaminants. Transitioning the transportation sector to low carbon fuels and zero and near zero-emission technologies is critical to achieving climate change goals and clean air standards, and nowhere will this transition be harder than in the freight sector.

So I'll wrap up and say that the CalSTA freight policy team is a long-term necessity, not just a temporary program. The continued oversight of our PFIP projects, freight policy integration and climate action planning requires permanent resources to maintain California's global leadership and goods movement, and approval of this funding request will allow us to continue our critical work. I'm happy to take any questions.

Thank you very much. Did you have any comments that you'd like to add, sir?

No. Frank Jimenez with the Legislative Analyst's Office. The proposal didn't raise any concerns for us, but happy to answer any questions.

Thank you. Thank you very much. And are you Mr. Moore?

Yes.

Okay. Did you have any questions or comments?

Not at this time, but again, happy to answer questions.

Okay, thank you. Any members behind the rail with any questions or comments? Yes, Mr. Seyarto.

So how much of the time that your organization or your particular group, how much do they spend on the freight movement and planning for freight movement as opposed to trying to meet mandates or try to plan for mandates on the freight industry to try to achieve some of our greenhouse gas goals in the future?

Because this is another area, freight, that I'm hearing from everybody out there that is related to freight that we're putting mandates on them that they cannot achieve. If we're spending a bunch of our money trying to make mandates happen that can't be achieved and we're tight on money, then that seems to me like we should be focused more on how we're going to get these goods moved about. So can you give me an idea of how much time we're spending on each of those?

Yeah, we definitely work on both those issues. I don't know the exact breakdown, but in our conversations with industry, a lot of it is, you know, how do we continue to move our goods in California's regulatory environment? So, as you're aware, CalSTA is not a regulatory agency, and this was some of the questions that came up when the freight policy team was originally formed because we do still partner with our other agencies. So CARB has a division that oversees the emissions and air quality contaminants from freight, and they set those mandates and regulations.

However, we work very closely with industry, maybe, perhaps, for example, when they're encountering compliance issues with certain rules, to kind of broker some of these conversations and get to what is the impact this is having and how can we work together with our regulators to come up with solutions for compliance hurdles that we're facing and make sure that we are not just kind of saying, 'okay, go do this,' and you have no help to do so. And people aren't listening to your very real concerns about how you're doing, how you're able to do your jobs in the regulatory environment.

Thank you for that. You know, freight is going to be another--it's already a cost-driver for our cost of living in California, and it's one of the ones that people don't see that well, but it's happening behind the scenes, and that process that you're talking about is going on in almost every industry and it is killing us.

And at some point we're going to have to rely on people that are charged with studying these things and making recommendations about how we might be able to achieve, but also making sure that you relay to the CARBs of the world the expense that it will take and the effect that it will take and have on jobs and the economy.

Because combined with our energy policy and the reluctance right now, I'm hoping people will wake up here to change or modify our goals so that we don't have these cost-drivers because what's being driven is our people and especially our young people, the ones that can afford it. It's driving them out of the state.

And so this is part of the problem. We want you guys to be honest with those regulatory agencies about what should be achievable and how much it costs, cuz absent that, they make a regulation and a mandate and we pay for it, and a lot of people are sick and tired of paying for it. So thank you very much for the work that you do.

Thank you.

Ms. Durazo.

Thank you. Thank you. Well one, I totally support having permanent staff so that you can continue to do this work and that that concept of coordinating amongst the different agencies seems like a no-brainer but have to go through this to get there, and I've moved that concept in other arenas and I'm glad to see it here. Just one question and I don't know that you would have it right in front of you, but if you could provide to me this information, the $1.2 billion supply chain package was passed here when I was chair of the committee. It was awarded to 15 grantees for long-term upgrades?

That's correct.

So if you could provide to my office who were the grantees and what were those upgrades, I'd appreciate it.

Absolutely. We have an annual report that's also required from SB 198 that we released this year and I can get you that annual report to your office and then also a list of the project awardees.

Great, thank you. Thank you, Madam Chair.

Thank you. You might think that Mr. Seyarto and I were--came to work together this morning because I also had the question on how do you work with the other entities involved in freight policy such as CARB, Caltrans, and GO-Biz?

So I think it is really important and we're finding that to the degree we can have entities working together, talking together, helping you have a different--and I would agree with Mr. Seyarto--a more clearer policy idea of the freight policy versus just looking at it from an emissions perspective.

I was in a meeting and was told that the San Pedro Complex was the most polluted area in the state, and I'm like, did you include the airports in that? Did you include the three freeways around that? Did you--I mean just really the lack of understanding that the freight itself was not the core and the only contributor to the emissions in that area. So coming forward to the degree that you can strongly with your group share these concerns with these other groups would be very helpful to us.

The next issue that's coming up is Caltrans, I believe, and I'm going to ask them a question about the--you mentioned it--the St. Thomas Bridge. I live in San Pedro, and although everyone understands the need for the improvements to it, what we have not seen is the Department of Transportation's support to the community that now is going to have all that goods movement going into the neighborhoods because they won't be able to go over the bridge for over a year. So do you have any thoughts on that or...?

Yeah, and this is--thank you--this is definitely one of those critical, sensitive issues that the freight team likes to help coordinate with because we know our District 7 on the ground is working very hard on engineering and all this, but we get a lot of questions to the secretary from different groups.

There's community concerns, there's labor concerns, there's global concerns, you know, wondering if large ships will be able to come in during the Redecking Project, if there's any impacts to the clearance, and so we're definitely involved in these conversations. I know that District 7 has done a lot of public engagement, but we can always do more.

They have community advisory committees, technical advisory committees. I'm going down there next week to have some meetings with concerned stakeholders about the project, so we are following it very closely because we understand it's, it's kind of bringing--it's a tornado bringing together all of these different things.

You have the freight and goods movement, you have these communities that are impacted already by the goods movement and poor activity in the area and now having some detours because of that project, making sure that those detours are well-considered and thoughtful and minimizing community impacts.

Yes. So if possible, I'd like to maybe follow up offline if we could have a further discussion before your meeting next week because the community is quite concerned.

Yeah, I'd love to coordinate on that.

Thank you. Thank you all for your testimony today. We'll move on to Issue Number 11, which is the Clean California Community Cleanup and Employment Pathways Grant Program. For that, we have before us today, Mr. Steven Keck and Mr. Keith Duncan, both from Caltrans, and we have our same representative, Mr. Jimenez with the LAO, but we have--well, we also still have Mr. James Moore and I had one other name for Department of Finance, but thank you for being here. All right, who's going to go first?

Good morning, Senator. I'm Steven Keck with the Department of Transportation. I do have a schedule substitution with me is Walter Yu--oh, he's back there. Never mind. He's in the back. He'll come forward if necessary. He's the program manager for the Clean California Program.

Sounds good.

So for this item, the department is requesting a one-year increase of $25 million in operating expense from the General Fund to establish the Clean California Community Cleanup and Employment Pathway Grant Program. This new program builds upon the successes that we experienced from the limited-term Clean California Program by providing competitive grant funding to local entities.

The Clean California Program was also general-funded. These grants will focus on litter and graffiti cleanup in local public spaces with an emphasis on workforce development that focuses 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 experiencing barriers to employment.

We recognize that there is a high bar to pass for this program, but we believe there is an opportunity for us to capitalize on the success of Clean California. We saw many local communities make long-term pledges through the Clean California Community Designation.

Local governments participated by creating long-term plans for keeping their communities clean by organizing and supporting community cleanups and fostering a sense of civic pride and a shared sense of responsibility for clean public space. This was done even though Clean California was a short, one-time funding opportunity.

The new grant program would provide not only employment opportunities for cleanup efforts, but also encourage--excuse me--community groups, businesses, and individuals to take responsibility and participate in keeping their communities litter-free. And I'll end my remarks there and be happy to answer any questions.

Thank you. Any comments, Mr. Jimenez?

Yes, we actually recommend that the Legislature reject this proposal. Given the limited amount of General Fund available, we find that the Legislature should use a high bar in approving any new General Fund spending, and we find that this proposal doesn't meet that high 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 to be a pretty big distinction in a year where there are limited General Fund dollars and the state may want to prioritize its core areas of responsibility such as maintaining state-owned assets.

Second, we find that one-time funding won't address persistent issues around litter abatement at the local level. This new program would focus specifically on local right of way and local public spaces. And then finally, just within the larger budget picture, our office and the Administration find that the budget is roughly balanced.

So the governor is able to make capacity for this new spending by taking actions across the budget, and that includes shifting previous General Fund augmentations for climate programs to the proposition for bond. So the Legislature would have to weigh that trade-off within the context of this new proposal as well, but happy to answer any questions.

Thank you. Mr. Moore, any comments?

I think I would defer to my colleague, Ben Pollack, who is also from Finance sitting there.

Okay. Did you have anything you'd like to add, sir?

Benjamin Pollack, Department of Finance. I would just note, you know, Administration feels strongly about this proposal, the importance of using this funding to leverage through local matching and just really stimulating that pride in California, keeping our streets clean and continuing this very successful program in clean California.

So you're speaking on behalf of the Administration, and you made comments on behalf of the Administration, so--pardon? No, I understand that. So who did you talk to in the Administration to have a perspective different than Mr. Pollack?

During our analysis of each proposal, we do speak to the Administration and get their justification on various proposals, so we speak to both Caltrans and Department of Finance in coming to our conclusions. You know, this is a modest amount of General Fund, and we understand that the Legislature has many choices on how to use its limited General Fund dollars.

While this is a modest amount, we find that it doesn't meet the high bar that the Legislature that we think should have in approving new discretionarl General Fund spending.

I understand that part. I thought I heard you say specifically, though, that the Administration--you made some references to the Administration. That's why I was surprised because it sounded slightly different.

No. Maybe my comments in relation to the Administration; I'm not proposing anything on their behalf, but maybe making remarks in regards to their thoughts on their rationale, but our rationale for rejecting the proposal is that we don't find that it meets the high bar.

Okay, thank you. Members with any questions or comments? Mr. Seyarto.

I have no problem with clean communities. I feel like this might be one of those issues that Caltrans can stay in their lane, which is the highways, and allow local governments to stay in their lane, which is local communities; when we're taking $25 million from the General Fund to do a community cleanup, and then we're not funding things like Special Olympics and things like that.

I've talked to several very good organizations that are on the end of not getting funded, and some of them are $6 million a year. This could fund those organizations for three years. So I have to balance out whether something that can be done locally for, you know, not that much. I have communities in my district that do this very well, actually, but they would like Caltrans to make sure that they get the highway part of it clean. They don't want to put people out on the medians on the sides of the highways.

But those other programs, for me, at the end of the day, when we do our budgeting, for me to tell those programs they're out so that we can do a community cleanup, that wouldn't be as high on my priority list as those other types of programs. So when we're pulling money out of the General Fund to do it, those are my concerns. If we had money to do all of it, that'd be great, but we don't, and so we're going to have to make some priorities and trade-offs, and this is one that wouldn't be as high as some of the others.

I think it's important. Yeah, I'd love to have clean communities and get people involved and also help people develop job skills, but that can be done at the local level as well. So I appreciate the idea, but I think my feelings are a little bit in line with what LAO has come up with. Thank you.

Ms. Durazo.

Thank you, Madam Chair. I think we all want to see everywhere we go, everywhere we drive, to be clean, so I appreciate all the work that went into the Clean California. I was out there many times when those cleanups were taking place.

There are many parts of the state where you really can't tell where the state land ends and the local land starts, and that's the case in big urban areas like Los Angeles. And so we count--we need both. We have to have both the state land clean because nobody out there can tell the difference.

All they know is it's here, it's owned publicly, and so it should be clean, and so we need to do both, but along those lines, I still am concerned with this particular budget. If you could tell me how the State Highway Account, you know, does it have the funding to be able to carry out its basic responsibility?

And you know, what would be different from what we had before and now? And I do agree, I think these local programs, we're going to have to help because they're not going to have the budgets to do this, so some simple way, I don't know how far $25 million is going to get us as far as all of our local areas, but I think the idea is the right idea. So one is how much money is in the account for the highway, for the highway cleanup?

Second, if you could describe the guidelines for the training program because we want this to be, to really take people to another level, not just give them a job for a few months and then they walk away. I have another one, but if you could answer those.

Thank you, Senator. I would actually like to call on one of my lifelines here, Walter Yu, to come up and speak to the development. Actually, I think he might be able to sit in the front here. So I want him to talk about the development of guidelines for the program.

In terms of what you asked regarding the State Highway Account, I do want to clarify that this request is for General Fund dollars to continue in the same vein as Clean California. In terms of the litter pickup that we perform on the state highways, I don't have an exact number for you now and I hesitate to give a wrong number, but we can provide that quite quickly. In fact, I bet my colleague back there already has a number and he may text me sometime soon. However, it is in the process.

We are right now looking at prioritizing litter pickup and we have already been doing so on the highway system. As Clean California sort of tapers off, we are doing things with our own internal State Highway Account budget, like having twice a month litter stand-downs where our maintenance crews suspend their regular maintenance activities and look to pick up litter.

So we are concentrating on that now within the funds that we have available in the State Highway Account, but this proposal would be separate from that as General Fund.

Yeah, I just want--how much is going to be dedicated to the highways?

Yeah, we're getting that for you now.

Okay.

All right, thank you, committee members. So Walter Yu, Clean California Program Director, Caltrans. So in answer to your question, the guidelines are still under development, but we do see it as a major component being the workforce development, so we will be leveraging similar mechanisms to which we have under our Clean California Program.

We are continuing with our litter crews this fiscal year. This is in partnership with Butte County of Education, BCOE for short, and they partner with local subcontractors, if you will, many actually in Southern California. So we may not particularly cite BCOE, but we'll encourage the local grantees to work with, as a part of their grant application, to work with these subcontractors and really create those pathways for low-barrier jobs.

And to your comment about just giving temporary jobs, we do see in that existing program and ones like it by the subcontractors, just pathways of permanent or long-term employment, so it's not just a temporary seasonal work, if you will. We really do see that transition in addition to total hiring of these employees that go on to either within Caltrans or outside of Caltrans to really have those long-term pathways that we envision.

Thank you. And then speaking of the workforce training, a couple of years ago I had my bill, SB 150 was signed into law and took effect immediately. That bill required Caltrans to work in partnership with the California Workforce Development Board on high-road career training.

Caltrans was supposed to reserve $50 million from the Federal Infrastructure Investment Jobs Act Fed dollars to support the High-Road Construction Careers Program. We didn't get it for other things, but we got it for the construction. So if you could describe how that money has been used for training workers and creating those pathways you were just talking about?

I will have to defer to my colleagues here with Caltrans, both our chief--behind me, Steven Keck, or chief financial officer. Okay. Keith Duncan.

I brought a lot of support today.

Lucky you.

Thank you. Keith Duncan, Caltrans Budgets. When it comes to the funding for--we are working directly with the Workforce Development Board. We're currently executing an interagency agreement so we can begin the flow of funds. We expect that agreement to be executed later this fiscal year, so within the next month and a half.

And then the funds can start flowing out to the regional work centers, but just working through the mechanics to make sure that the funds can flow through that and make sure we're meeting all the federal eligibility requirements. So that's part of the true up that we're going through right now, but the funds are expected to start flowing out in July.

Okay, so we're still counting on those 50 million?

Yes.

Okay. Okay, great. Oh, well, that's good news. Good. Yeah. And it kind of goes back to this original point, which is if we're going to use our dollars, let's use our dollars to help people get jobs and, you know, get started on careers in their lives, especially high-paying jobs like construction careers. So appreciate that. Look forward to hearing from you as it flows out. Thank you.

Specifically for the federal funds, I know there's concern about that. Our Federal Highway Administration Formula Funds are federal flowing, we'll say, uninterrupted at this point, so that's why we're able to continue to make sure that that commitment is set aside to be able to fund this effort.

Thank you.

Thank you. I believe my question might be for Mr. Keck, but of course you can feel free to use the lifeline should you need it. How does Caltrans prioritize locations for litter abatement and encampment cleanup? And why are certain areas more attended to than others like mine?

So Caltrans does what we--it's almost like a walking audit where we have local crews in each district surveying the areas for litter needs, also working with local communities to identify hotspots for both litter pickup and for encampment cleanup, recognizing that these are two entirely different things, and we don't necessarily want to mix and together.

And in terms of prioritization within the district, that is mostly up to the district and how they maintain their areas. They have their own individual budgets for all maintenance activities, including litter pickup, and they will make that determination at that local level.

I would suggest if you have a particular hot issue, that the district director in that area would be a really good contact, and I'd be happy to speak with them on your behalf to get them to reach out to your office to contact for specific areas, but generally it is through visual inspection. It's not really a walking audit, but it's more boots on the ground, looking to see what's out there and taking action.

Do all the districts have the same budget?

No. Each district is significantly different in size and population and a number of lane miles that they cover, so each district has a different budget that's based on a number of factors, including need in that area.

And do the directors report to you?

No, they do not. I'm the chief financial officer. They report directly to the director of the department.

Okay. So if you could provide to this committee, I think, all the directors in, you know, throughout the state, so if other people have questions, not just myself, they would at least know who their contacts are. I would tell you that, you know, because we are members, we drive different areas all the time, and my area looks significantly different than other areas that I drive in.

I would also say that if some areas have enough money for pretty tiles and designs in the concrete, maybe some of that money could go to some of the districts that actually have the trash and the litter that needs to be picked up, and there clearly seems to be a discrepancy, or--I could use stronger words, but I'm going to maintain my temper today--but I really find it to be quite unacceptable. So, yes, I would look forward to the information, and yes, I would like to have the meeting.

And yes, I'd like to better understand how the money is distributed by district for these programs because the end product is not the same, and I could provide pictures for you to show you that, but I represent more in the South Bay Area from San Pedro, Wilmington, Carson, Compton, Watts, Willowbrook.

Then you go over to Lawndale, Lenox, Hawthorne, and Inglewood, and I can tell you our freeways do not look like my neighbors to the south and some of my neighbors to the north. It's really bad, and so I certainly would look forward to more information and follow up to myself and to the committee.

Certainly. Will do so.

Okay. In terms of this program, I certainly support. I agree with Ms. Durazo that we have many boundaries in my community where it's a very thin line between what's state property and what's a public property, so I could see where this would be needed because I've been in meetings where people have said, 'Caltrans has said, well, that's not state,' you know, and so then, 'well, who is it and who's going to clean it?' And it just is a problem.

So I actually look forward to a program that would put the hats aside and actually let's clean it up, and I think the ability for people to have jobs and future employment is quite exciting, so these are very good paying jobs, and for people to have an opportunity would be helpful. However, as the LAO and Mr. Seyarto also said, I think we first need to make sure, though, that your core job is being done, and in my community that I observe, it's not. So I think we need to make sure we hit that balance. With that, did you have any comments before I defer to Mr. Durazo?

I do not have any comments. I will take all of your comments into advisement and certainly get the information to this committee.

Thank you. Ms. Durazo.

Yeah, I'm hoping that with that connection with our chair's district, with her and our chair's district, that this will be, you know, it will improve what is taking place that she's referring to. I'm able to say that in my district, maybe because we've had a continuity there, the District Director, Tavares, in our region four is very responsive to our issues.

Is it always done as much as we want done? No, because there's a lot of cleaning to take place, especially in certain area, but we work very well with that director, and I'm hoping the same kind of relationship could develop with the chair. Thank you.

Mr. Seyarto.

The subject of jobs has come up a couple of times here, in all the jobs, you know--when we're talking about cleanup, most of the jobs are picking up litter and putting it in a bag. If you're talking about some graffiti abatement, I guess you could put in some painting and spray washing, but what are the other jobs that are substantial that would be being trained in a community cleanup type of program that translate into construction jobs and higher paying jobs like that?

Certainly. Thank you for the question. So in response to that, Dubuque County of Education, as I mentioned, they provide--well, many of these are justice-impacted individuals or those suffering housing insecurity.

So first of all, it gets them that baseline of a steady income and really gets them out of that transition back into normal life, if you will. In addition to that, many of these entry-level jobs, it does create opportunities. So we did see a number of them transition into full-time Caltrans employment.

So in that regard it's moving from a contract, sometimes temporary, sometimes not, but more into a permanent position with Caltrans from which they can then promote into a equipment operator, and we have training programs within Caltrans to facilitate that.

Also within BCOE there are other parallel programs similar to operator or electrical work in which they can cross-train and move around within BCOE. So in that regard it is more of a workforce program and workforce development.

So you're looking at more as an entry-level recruitment type of program?

Correct, in which they have, again, pathways within both BCOE, and because they're doing work with Caltrans, then ultimately, potentially would help them--

Yeah, those pathways should exist regardless of whether they're out picking up trash or not. I think working with the CDCR--and we have programs that they should be integrating already to do some of this work, and so those people should be pre-identified to go out and be able to start working these programs, save us some money, and be able to beautify communities in a safe way and they achieve the same thing.

So I'm a little skeptical about the jobs part of it because I think there's plenty of ways to entry-level people in, and so I remain a little bit concerned about the priorities being expressed that this would be a higher priority than some of our other organizations that are helping our disabled people and things like that. So, thank you.

Thank you all, members. Seeing no other--Ms. Wahab? Yes.

Thank you. Sorry. I just wanted to understand a little bit, kind of along the lines of why we would need a new grant program that uses General Fund money to do local litter abatement when we should just be working with the local cities.

So Senator, let me address--Senator, if you will, Stephen Keck with Caltrans. So what we're looking to do here is to capitalize on the success that we had with Clean California where, you know, using similar funding pathways, we were able to connect with these local communities, have these kind of grants in place, and really focus on getting folks out there in the community with the support of the local agencies to do this litter pickup.

So what we're, what we're doing with this request is to provide again that infusion to put people over the top to get them to take those steps, to make those long-term commitments, and you know, once an area can be taken care of, it's much easier to maintain, and so we're looking to kind of apply those lessons learned from Clean California into this much smaller, much more focused program.

Okay. So the only reason why I have concerns is because most cities do a lot of this work. I think that the partnership--just serving on local city councils, right--often the argument is that there is not a good relationship or response time from Caltrans to be able to have that relationship to say, 'hey, clean this up,' especially considering that a lot of the responsibility of where people complain to the public--from the public, I should say--to the cities or in Caltrans territory, right?

It's not necessarily the local cities. Most people think it is local cities, whether we're talking about right off the freeway, going into the freeway, things like that. I don't necessarily think, especially in a budget shortfall, that we particularly need these types of brand new programming versus the fact that so many other cities already have this, and if we're going to talk, there should be more collaboration.

Part two, it should kind of just be standard to maintain, you know, just the cleanliness of, you know, kind of your operations as a whole. So I'm just concerned that we're spending more and more money to set programs up and have somebody monitor them and have somebody, you know, potentially, you know, fulfill them versus just a partnership of things that are currently already set up. Thank you.

Thank you, Ms. Wahab. I think all of you heard that we certainly agree in your core mission of the highways, we also agree that there's a lot going on there, and we look forward to you using your funds as expeditiously as possible because we do have tough times, but we certainly value your innovation and thought of thinking of new programs.

So thank you for being here today. With that, we're going to move on to Issue Number 12. Issue Number 12 is the Capital Outlay Support and transfer authority. For that particular item, we might--looks like we got some of the same folks here.

We're going to have again, Mr. Keck and Mr. Duncan from Caltrans. We also have Mr. Jimenez who is here with us, and Mr. Pollack, who's here as well, and Mr. Moore. With that, Mr. Keck, are you going to start off?

Yes, I will. Thank you, Senator. So this is a technical item wherein we are proposing trailer bill language to clarify legislative intent. Each annual budget act contains provisional language that allows the department to make net-zero changes between fund types within a specific appropriation for Capital Outlay Support.

Recently, we've had interpretation of the language that we use in that budget act that has called into question whether Caltrans has the authority to transfer between annually appropriated budget act items and continuously appropriated non-budget act items. So this is a very important tool for the department.

We believe that there should be no room for doubt because this is an essential tool that we use every year to balance our budget again with net-zero transfers within the same program. We have proposed this trailer bill language to remove any doubt and to allow us to process these net-zero transfers without any problems moving forward.

Do any other individuals have any comments you'd like to share before we--okay. Mr. Jimenez.

Thank you.

Thank you. Frank Jimenez, Legislative Analyst Office this proposal represents a statutory change that clarifies technical budget adjustments that Caltrans makes to its capital outlay support program within a given year. As Mr. Keck mentioned, this authority resides in the annual Budget Act, and Caltrans notifies the Legislature through the JLBC section letter whenever these changes are made.

Just as an example, Caltrans, within its capital outlay support program, may increase federal Fund expenditures and decrease expenditures from state highway accounts to match the various transportation projects that it works on in a given year. So to align expenditures with those projects, as Mr.

Keck mentioned, there is some uncertainty in whether the Department can make these adjustments across all of the funds that support the capital A support program or just those in the Budget Act. So this proposal would clarify that it reflects all funds, as Mr. Keck mentioned, and this is historically how Caltrans has operated.

So overall, we don't find any issue with the intent of the proposal, given that it just provides technical clarity on actions that Caltrans already undertakes. However, the trailer Bill Language that's being proposed by the Administration, we find that it's overly broad and could allow adjustments beyond the intended scope that Mr.

Keck and I have described, such as making adjustments to programs outside the Capital LA support program. So we don't believe that this is the department's intent.

However, we find that the Legislature may want to adjust the proposed language just to ensure that what's being what may be enacted in the eventual budget and statute reflects the intent proposed by the Department.

So a very technical recommendation by our office, but we think it just ensures that there's additional oversight on how the Administration is going about these technical changes.

Thank you. Thank you for your recommendation and insight on that, for us to keep our eye on the ball. Thank you. Mr. Pollock or Mr. Moore, any comments?

No concerns with the recommendation from the LAO.

Okay, thank you. Any Members with any questions or comments? No? All right, thank you. That completes issue number 12. We'll now move on to issue 13, which is a project update. For that we have Jamie Matalka. Oh, and Mark Tollefson. Sorry, I butchered you guys names here.

And we also have a change in the LAO position, and I believe with Department of Finance also. So, gentlemen, would you please, for your mothers and fathers, tell us your proper pronunciation of your names.

Great. Yeah. Thank you. Chair Richardson and Members. Mark Tollefson. I'm the Chief of Staff at the High Speed Rail Authority, and with me.

Jamie Matalka, the Chief Financial Officer.

Okay, thank you. May have to start Having you guys say it first and then I say it afterwards. So who's going to go first?

I'll go ahead and lead out and really appreciate the opportunity to present this morning. We do have a brief presentation for you. I will try to be brief to allow for ample time for questions. But if we go to the next slide, this just gives a broad overview of the high Speed rail project.

Today I hope to kind of give a brief program summary and a project update for you all. We are still very much committed to delivering the Phase One system, which you'll see in blue on the screen. That is 494 miles from San Francisco to Los Angeles Anaheim. Phase two would follow. That's in yellow.

That would extend out into Sacramento and San Diego. As of Today, we have 463 miles from San Francisco to LA environmentally cleared and based on availability of funds, we are focused on work in the Central Valley. We have 171 miles between Merced and Bakersfield under construction and under design. Go to the next slide.

So late last year our board appointed a new CEO, Ian Chowdhury, for the program. Under his leadership, he's really brought a fresh perspective and new focus to the project. We are in the midst of a deep dive, analyzing every aspect of the project to deliver the system more efficiently and more effectively.

Really focusing on the mantra of building smarter, faster and more economically. Really trying to mitigate some of the challenges that we've experienced with the project in the past.

In late January, our CEO kicked off an industry forum where over 400 experts across the field of rail, across the fields of construction, tunneling, maintenance, financing, to really learn how to accelerate delivery of the project as well as refining our approach.

Some of those conversations led to really a focus on how we can continue to move this project forward and how we can actually get outside of the valley into some of the more populated areas of the state, which I'll talk to in a moment. Let's go to the next slide.

So our project update report, which was released March 1, really outline this high level vision of the project. A few things that I did want to note here. So as we build the project, obviously the focus is on the Central Valley right now, the 171 miles between Merced and Bakersfield.

But some of the learnings that we did get from that industry forum, working with private industry concessioners, financiers, is really the opportunity that exists for public private partnership with this project. One of the things that we heard was really trying to get out into some of the population centers of the state.

So what the project update report outlines is this vision over the next 20 years to actually move outside the valley, connecting into Gilroy in the north, connecting with Caltrain, and then also moving southern or in the south into Palmdale to connect with the High Desert corridor, which would then connect with Brightline west, which would go out into Las Vegas, really providing that southwest regional connection of high speed rail.

A few of the highlights of the project update report. Our construction package four is essentially completed. We've created over 15,000 jobs that has produced 22 billion of economic activity. And as mentioned, we have 463 miles environmentally cleared of the system.

That project update is really again, a product of that deep dive that our CEO has launched into the organization, looking at every aspect of the project.

So with that, this summer we hope to or we will deliver a supplemental project update report which will be a new assessment of our scope, cost schedule, our procurement strategy, ridership numbers and sequencing.

There are a lot of opportunities for us to really think about the project differently, sequence it differently, to actually deliver within the dollars that we have. So that's something that we look forward to presenting to you all this summer. As interim updates become available, we will definitely keep the Legislature apprised. Go to the next slide.

This is one of the key things that I really want to focus on. You know, oftentimes, you know, as I took on this new responsibility of high speed rail, I hear from folks, zero, that project is actually happening. Yes, it is happening. You know, if you go to the Central Valley, lots of work underway.

You'll see the stats here. Of the 93 structures that are needed, 53 have been completed, 33 more underway. Of the guideway, 119 miles. Of that initial operating segment, 60 miles have been completed, 36 more are underway. So lots of work happening in the Valley. 99% of our right of way is now acquired.

We're continuing to work on utility relocations. As far as advancing design, we're continuing to look at those extensions beyond the 119 mile initial operating segment into Merced and Bakersfield, that work continues. As well as advancing design on our stations, tracking systems and train sets. In the north, we have environmentally cleared the entire system.

We have completed some of what we call our bookend projects. So that electrification of Caltrain and then down to the south, we have cleared all the way to LA from an environmental perspective, continuing to work to get that final segment from LA to Anaheim environmentally cleared. We expect that to happen this fiscal year.

So as I close, I just want to really emphasize that work continues to happen daily. We have over 1500 workers on sites all throughout the Valley working on the project. We are working diligently to provide those new cost and time projections to you all which are going to be absolutely needed.

And we really look forward to continuing these conversations, particularly as we think about the future funding for the project. Really stable funding is going to be crucial for our continued success and we look forward to working with you all as we move forward. So with that, I will stop. And for any questions that you might have.

Do any of your other individuals here want to make comments before we go to the others? No. Okay.

Yes. Thank you so much. Helen Kerstein with the Legislative Analyst Office. So we prepared a handout which hopefully you either have in your packets or I think the sergeants also passed out a few copies in case anyone didn't have it.

It's also available on our website and I believe also on the Committee's website for those who may be watching from home. I'm going to move very quickly. I know you have an agenda that's pretty full today and there's certainly a lot to discuss. So I'll move pretty quickly.

I'm not going to go over too much in the beginning part of the handout because it's mostly background basically at a high level. The authority is required to provide annual reports that give you guys you all the updates that you need on the project.

This year it was a kind of more slimmed down version that wasn't able to include all of the required elements because they have this new CEO. They're working on updating a lot of what's in that report so that will be forthcoming summer. So I just wanted to highlight a few things.

I think I'm mainly going to focus on our office's comments on this project update report that you that was provided by the authority. If you turn to page 4, we highlight those comments and you can follow along if you would like there.

So I think one of the main things we want to leave you with is that there is a significant funding gap for this project as of the last information updated information that has been provided. So for the Merced to Bakersfield segment, you heard about that.

That's the first initial operating segment of the project based on the most updated information that's available, it looks like there's about a $7 billion funding gap for that segment. So that is quite significant. There isn't currently a specific plan for meeting that funding gap. We also note that there is some risk that that could grow.

We do note that the new CEO is undertaking an effort to try to find cost savings, to try to see if there are ways that this project can be modified so that those costs can be reduced. However, there are also headwinds that we're kind of going into, one of which is federal funds.

The project has received significant federal funds. Not all of those are obligated, and the ones that are not obligated are probably at a higher risk. There's also an assessment that the Federal Government is undertaking of the project currently. And so we don't know what the outcome of that is.

But we do know that during the last administration there was an attempt to take some of the money from this project. So that is a little bit of a risk that's out there. We also note that inflation and construction cost increases could, could be something that could affect this project, certainly has in the past.

And so that's something we wanted to flag. And then also there's uncertainty about greenhouse gas reduction fund revenues. So as I think the Committee knows, this project receives 25% on a continuously appropriated basis of cap and trade dollars. And those vary depending on what auction proceeds look like.

So the funding gap could get bigger or smaller, depending on what those numbers look like. So we wanted to highlight that. We think the Legislature faces some really key decisions, and those decisions are really going to face you, we think, soon. There are two reasons for that, one of which is that funding gap that I talked about.

That's not a way out in the future funding gap. Much of that is a very kind of near term funding gap. The OIG who I believe you'll be hearing from next, they issued a report, for example, in October of 2024 that really highlighted that the majority of that funding gap needs to be secured by June 2024.

So that's the end of this, this next fiscal year, the 25-26 fiscal year to or risk the project schedule. So that's billions of additional dollars that would need to be secured. And we think under this current Administration, it's not likely that the Federal Government is going to be forthcoming with those funds.

So we as a state are likely to have to figure out a solution for that funding gap. We also note that decisions on cap and trade are likely to come before the Legislature in the relatively near future term, too. That program is sunsetting in 2030, and there are currently legislative efforts to extend that program.

So one question we think that will be before you is do you want to continue the current situation where the authority gets 25% of cap and trade funds on a continuously appropriated basis or do you want to modify that in some way? If you turn to page five, couple other points.

One thing we think is really important is to align funding availability with needs. As I mentioned, there's a near term funding need for this project and some of the funding is kind of longer term.

So particularly I think with cap and trade and GGRF, this is a really important thing to consider because that's not a funding stream that is well suited to securitization and borrowing. Cap and trade depends on whatever the auction proceeds are. Some quarters, those are higher, some are lower.

And so it's hard to go to a bond market and say, can you please let us borrow against cap and trade? So really thinking about how that's going to work for this project, I think is going to be critical. And then we do think the Legislature would benefit from additional information.

We do understand that the authority is working on that. But as you're making these decisions to understand, okay, has the cost estimate changed? Have they been able to find savings? What does that look like? What is that gap really and when is it going to going to be need to, needed to be filled?

And then also what are these other approaches that the authority might be considering? We know that they are discussing with private partners some different options, financing options and other options.

So really understanding what those might look like and what the trade offs would be for the Legislature and for the state, we think will be critical before the Legislature takes on those really important decisions about this project and its funding. So happy to take any questions.

Wow. First of all, actually, Department of Finance.

The Members' questions.

All right, Ms. Durazo.

Okay. That's the best you're going to get from us today? Well, first of all, I totally supported the high speed rail for a number of reasons. And then once we got into it, I was very excited. The thought of having this high speed train, especially going through the rural areas of California and connecting us, connecting us all.

The fact that I support it doesn't mean that there aren't some serious criticisms here that I don't know have ever been addressed and I don't know how to address them as we go forward because now we have a new leader, we have new leadership.

And you know, I don't know if this is going to take a hearing on it that's fully focused on the high speed rail so we can get some answers because there are too many issues, too many questions to deal with today in the time that we have.

But you know, in your, on your slide that says new leadership, new focus. I'm just surprised to see that a new focus is, is it a new idea to build smarter and faster and more economically?

I mean, is that a new, is that a new focus of what did that mean in terms of where we were, what our ideas were before this? Preventing cost delays, is that a new idea now that we didn't have before, you know, structuring a project delivery team?

I mean, nothing that you have here gives me the confidence that there is in fact new leadership. There is in fact a new focus. So I'm concerned about that. Maybe we should have had the new leadership here, you know, to answer some of these questions.

So I see in the other slide program summary update and you have all the progress that's been made. I don't know. It's been. How many years has it been since this, how many years over how many years was this done?

I'm sorry, what?

Well, the program summary update, it says, for example, Central Valley, Northern region. Over how many years was that did that take?

Well, in the Central Valley we really kicked off construction around 2013, but the project has been around for quite some time. Early years actually early in the Brown Administration when they were doing some planning. So back in the 90s.

Which raises even more concerns. But let me ask some very specific things that were presented today that was just very, very broad. The Governor's Budget includes $117 million to support 517 positions. What does that mean? Who are they?

Why are we absolutely so hire 517 more people when we don't even have a clear explanation for people we have.

If I could explain it this way, the authority is a State Department, right. So we have a number of individuals that are delivering the program elements and also delivering the state mandated requirements, the accounting, the hr, the human services, the business services.

So all of those individuals are what is the Administration has gone through BCP process over the number of years that it's been around, justified through that process, through the legislative process, through hearings and has come to a place where we're 494 today.

We've got this request here that will get us to 517 with these proposals that are through the Budget act and we're doing our best to deliver the system. I would add also that the management is, is new CEO. Chowdhury has come in in late 2024 with expertise on building systems.

And while you make a very good point that we're always trying to prevent cost delays, it's always been the case. But there is new management here. Mark Tolson has just joined us as our Chief of Staff.

We have brand new Executive team that's been put in place and now with a single goal and vision of building IT smarter, faster and better. So we're relooking at, at everything.

Every decision that's made, been made before to make sure that we're doing, we're following that, that theme so that we can bring back to you more up to date information about how the project, what it's really going to cost to get done and what that schedule is going to be.

And we're only a few months away from that. We're planning to have that update in the summer of 25.

And the 517 positions is from your current to reach 517 or could you describe that, who they are? What do you need?

Well, yes, exactly. So currently today we're authorized at 494 positions.

Now again that includes everything from the CEO, himself, myself, Chief of Staff here, Mark, and our human resource Department, our IT Department and all the different elements of the organization to deliver the project and manage it and make sure we're doing the best, best we can with the limited funding that we've got.

The requests in front of you today will add additional positions to help us on very specific aspects like NEPA assignment helping the local transit agencies move their projects faster as we are the lead agency for transit NEPA requirements. The other one is the IT bolstering the IT office.

And the third one is providing additional funds to help support our Office of Inspector General from a reimbursement mechanism.

Okay, well IT doesn't feel like we're going to do it, you know, look at more economically when we're adding more people. So I don't know how adding more people leads to doing things more economically. So that's a question there. And then can you summarize again the number of construction jobs that have been created?

Yeah, yeah. So overall, We've created over 15,000 construction jobs each week. The average daily workers out on job sites is roughly 1500.

Okay, the next question is on. This was brought up by the LAO. Do you plan to seek, continue seeking the 25% of GGRF?

Yeah, I think stable funding is gonna be critical for our success at the project. So we will be looking to definitely be involved in the cap and trade discussions. That's something that we're continuing to work within the Administration on what that looks like as we move forward and look forward to those conversations with the Legislature.

And is there a particular. Particular use of that funding or is that just gonna be thrown into the pot?

So really, the funding would be to deliver on all of what we spoke about, completing out the Central Valley and hopefully moving out beyond, into some of the more populated areas of the state, into kind of the greater Los Angeles area as well as the Greater Bay Area.

And if I could add to that, too, the funding does help us meet our match requirements on this $7 billion of federal funding that we currently have.

Okay. And then the LAO mentioned about the Fund funding gap, that it's needed more sooner than later. Could you or could you all respond to that? I didn't understand why, because one question is we're 7 billion, but it's 35 billion compared to 28 that we can say we have to some degree.

Why do we need commitment for the additional 7 billion?

I think the rationale here is broken down to the program needs stable funding, and we all know that's been around for a number of years. But I would not say at this time the program has an imminent need for $7 billion, because we are doing a pretty deep dive into what this program is actually going to cost.

And we need to get that information ready and prepared and bring it to you guys for review, consideration, and comment. So. So I would say it's premature at this time to mention a value until we've completed that exercise. Now we know how much funding we have based on the authorized appropriations to date. Right.

We're just under $30 billion of funding. Once we complete the exercise, we'll have the other half of that equation to be able to say what it is going to take to complete Merced to Bakersfield, but also the larger vision of what it will take to complete Gilroy to Palmdale and start connecting to major population centers.

If you could.

Yes, yes, I would love to comment on this. So there are two documents that I would reference with regard to. We do understand they are relooking at their schedule and at their costs. And so certainly there could be some modifications there. But I point to two particular documents that really talk about that.

So in their last business plan, which was prepared in 2024, and I'm happy to provide this to the Committee if it's helpful, but they did have target states to secure funding for the unfunded elements and it does identify that basically that dollar amount as being necessary in 2026.

And that's something that the OIG, who I believe will be up here can also talk about because they actually prepared a full report back in the fall that really highlighted this relatively near term need.

Now there may be a little wiggle room here and there, but in General, like this is not a far out in the future issue.

And part of the reason for that is because if the authority wants to meet their current schedule of the Mercedes at Bakersfield between 2030 and 2033, they're going to need to start entering into contracts and those contracts are going to need to, there's going to need to be money behind those contracts.

And so that's why having identified funding that's been committed will be an important thing, not just, you know, way out in the future, but in time for them to make those commitments to do that work. And so that's why the difficult decisions I think are relatively near term less.

I mean, the other option is if the money isn't provided, you know, there could potentially be some schedule slippage if that doesn't, you know, happen in the relatively near term.

So again, I think the two documents I would point to, which are the most recent ones we have, and again they could change in the summer when we get the update, are the last business plan plan and the OIG's report.

So I just wanted to echo kind of Senator Durazo's comments we've heard about the high speed rail project. I have said this publicly since I was in elementary and the fact that there isn't traction enough to the level that the public desires is problematic. I know you guys have referenced the new CEO coming in late 2024.

It's already three months into the year. And so how much more review do you need of a project that's 20 years old plus almost, right? So the question what, and I'm just going to be very Frank with you all, the public wants to see this done, right?

If not done, why are we spending more and more money into it? Right. I think that this also needs to produce a report and a pretty lengthy report of failures and lessons learned. Number one, timeliness, that is a big, big concern. Number two is fiscal responsibility. Billions upon billions of dollars for what? Right?

And the estimates are still growing and growing and growing and we're going to see them continue to grow. So for example, I'm from the Bay Area, right? And largely when this project is talked about, this project is talked about from the Central valley down to LA, right? Central Valley down to LA. You know, let's take Highway 5.

And the big question is, okay, so what are we doing? For me, if we were doing high speed rail, we would do the obviously the entire State of California and also having drop off points to other metro areas, including in other states, whether it's Vegas, whether it's, you know, somewhere in Oregon, whatever the case is.

I think that there's a lot of commentary on high speed rail. This is an issue that I have not necessarily prioritized as under my purview, if you will. But I think the criticism is completely accurate.

It's completely fair to say that with the decades of effort around this, with the, I'm gonna say continuous change in leadership because it's not the first time we've seen this, right?

Where timeline goals, where is our funding goals, when are we going to complete it and what is the stick if these aren't done in a timely, efficient way. Right.

So if you work in project management, you have clear goals, clear deadlines, clear, you know, tasks to complete, clear line of responsibility as to who is required, who would be a benefit to at least know what's going on and much more. And I haven't seen a real strong, lengthy report about all of that.

And you know, on the Senate Floor for example, it becomes a talking point between Republicans and Dems. And the reality, it's not about that, it's largely that this project has been seen as extremely wasteful, extremely behind, extremely problematic. And where's the value add to the public? Yes, there will be a value add in the vision.

Of course we all believe in high speed rail. Of course we believe in making sure that we're investing in new technologies and competing internationally, but for the fifth largest economy in the world, cannot be able to do high speed rail in almost, say even three decades.

Because if we're talking about mid-90s or so, mid to late 90s to now, we're in 2025. That's 30 years. Right. And we keep asking for federal funds to kind of help us move this along. You know, this was supposed to be a public private partnership opportunity that was going to be extremely successful.

And if you go to other countries, they got it done on their current infrastructure. Right. Which would have been the smartest play and the fastest play. Right. The concept of eminent domain on. On these, you know, having people sell off certain properties for the highest dollar, not the lowest. Right.

And yes, this will create a lot of economic boom in certain communities specifically. But when. And so even right now, we don't actually have, like, you know, we're talking about a pro. A program summary update. Okay. For me, an update is also. Okay. What are the next steps and when are they going to be done?

Can you guys describe that?

Absolutely. I think you make a lot of valid points. I think, you know, when we think about when this started, it just wasn't funded. So program management wise, you know, getting a project going depends on the funding it has, has. And I think that the criticism is fair.

The project should be moving at a faster clip to bring the benefit to the communities that it is impacting. I think the caltrain project that's in play right now in the Bay Area is showing the benefits that can be achieved from electrification of a transit system.

I will say that we are very close to getting what you're asking for. We're working on it diligently right now. We want to bring to you the latest information. We're so.

So when you say we're very close, what does that mean? Because, like, I, I'm. I'm. I don't want the fluffy language of making everything pretty absolutely right. What are the deadlines? What are the next goals? What are we accomplishing in 2025?

Okay, so to start, we want to bring a supplemental report to the Committee to, to our stakeholders in the summer of 2025 to provide an update on what the scope of the project, the cost, the schedule is going to be and how we plan to sequence the work, procure the contracts that are needed, provide additional details on the conversations that we're having with the private sector on being partners for this project and delivering it, and also at the same time, working with the Legislature, working with Governor on how do we keep this project going from a funded standpoint so that we can continue the progress that we're making.

So More conversations, but not necessarily deadline achievable deliveries.

Well, and I would just add that, yeah, as part of that report, there absolutely will be timelines of when we're going to deliver the different components of this project. We are kind of, we've mentioned this deep dive that we're doing into all aspects of the project. Yes, that did kick off with our new co.

Yes, we're three months into the new calendar year. But what we want to do is really look at that full 171 miles segment to really see, okay, where can we make changes, where can we find efficiencies, how do we then go beyond that 171 over to Gilroy and Palmdale? You know, that does take time.

We want to make sure that we're bringing real numbers to you, real information so that you can make informed decisions, just as we're trying to make informed decisions. So I know there's frustration that it's taking time and we don't have that here for you today.

But that report this summer will actually include all of what you're asking for.

Okay. So I'm just frustrated because right now, like what you guys are telling me is a deliverable for you is a report. Right. And reports are just part of like a byproduct of actually the work. Right. So I really want to understand what is the work being done. So. And we can talk about the Central Valley.

And that's my Central Valley colleagues or the Southern California effort for the Bay Area, one of the biggest economic hubs of the State of California, one where public transit is not fully funded and is actually dwindling. One, that high cost of homeownership, you name it, is problematic. What is this deliberation delivering to my residents?

Well, I would say that it's a vision of the future. I think our CEO in his presentation at the industry forum said, you know, if we can align.

So we've had a 30 year vision. But I want to understand what again is being delivered 100%. So please tell me in the Bay.

Area from 100%, we've already achieved environmental clearance. Right. Big step for the project. Number two, we've helped and funded as a partner the Caltrain modernization project and the on the 25th Avenue grade separation where we're, you know, providing benefits both to the pedestrian and traveling public. I think I understand your concern, though.

We're not as much as where we should be.

I get 100%. And I also want to highlight that when you're talking about San Mateo, San Mateo is Not necessarily my district. It's a very active, affluent district. I'd like to talk about the East Bay. What are we doing for the East Bay?

Well, East Bay doesn't come into play until later on in the project phases. Right. We're going the route is San Francisco down to San Jose down to Gilway.

However, there are feeder systems like the ACE train that as a broader picture of the state rail plan, will have connectivity to the whole state once the backbone of the system is built.

Okay, so I just want to flag that. My concern is, for example, where we're focused on San Mateo, but we're ignoring Oakland, right, Which is a very large city in the East Bay, let alone the Bay Area.

And at the same time, you know, if we're talking about affluence, if we're talking about equity, if we're talking about a lot of other issues, I have concerns here. Right, so what is the vision? I don't think it includes an equity model or equity lens.

I don't think it includes, you know, a lens of like, what are we really doing for regular folks. I also want to say that when we're talking about feeder Systems, we have 27 public agencies in the Bay Area that literally can't agree to one thing, right? So what, where's going to be the agreements there, the conversations there?

I am very frustrated with public transit. I'm just going to be very honest with you all. Public transit.

The fact that, you know, we keep talking about a vision, lack of execution, lack of, you know, again, tasks being completed, whether we're talking about on a local level like the Bay Area, where there's a funding problem and the concept that's being promoted so far is just taxation, right?

During a economic, you know, budgetary concern for all of us. And at the same time, there is no true coordination. So even this public private partnership that was supposed to be more successful than just government alone has not yielded a lot of benefits.

So I really want the Administration to hear this, everyone working on this project to understand that the public, regardless of what region of California you're from, is deeply frustrated that we've had a 30 year vision and no execution, no true execution of, hey, these are the phases that we've got at least this part to this part connected and it's already in play.

Right? Where we're seeing high speed rail, if not for the 400 plus miles100150 miles, right? And how fast is that going to go? How, you know, can we see it be done? Things like that So I leave you with this because at the end of the day, reports are nice.

Nobody wants a report unless it has yielded actual action. Right. So that is what we need besides just reports and little updates of, you know, we got this paperwork done and we're going to have more conversation. Nobody's like, people are tired of conversations.

Thank you, Senator. Waha. Mr. Siardo, are you ready? No, I don't have ready up to bat.

No.

Today's opening.

I'm glad I let my colleagues go first because they covered a lot of ground. And so I'm going to try to stop the beating right here and just talk a little bit about. I want to make sure that, you know, the new funding strategy that you guys are talking about, that will be part of the.

When that's the part of the August report. Yes, that'll be part of that summer report. Yeah, the August report kind of comes out as we're getting to the end of our budgeting. And so that's going to give us very little time to, to be considering what is in there.

I had a question about, you know, you talked about $22 billion of economic development or economic benefit from the high speed rail and the 15,000 jobs. The vision of California wasn't a jobs program, it was a high speed rail. What did you take into consideration for that $22 billion of economic develop our benefit?

Yeah, it's our expenditures. It's the government money being spent in the communities around us. And then what that multiplier does as that money has direct benefits and induced benefits around it for other industries.

Yeah.

Once those expenditures are captured. So 13 billion in expenditures produce that economic activity.

Right. So you're talking about economic activities. Staying in hotels, eating it, local restaurants, Both.

Right. The direct purchasing, salaries paid.

Salaries paid. Just actually the taxpayers pay the salary and then the workers give us a little bit of that back in the form of our taxes. They pay taxes. So we're kind of generating. That's a self generated thing. It does have something. But where are the workers coming from?

Have you guys done studies about, are they all from Bakersfield and Fresno or Central Valley area or do we have to get workers from out of the area to be able to do some of these jobs?

It's both. It's mostly from our local regions. But because the project size and how many workers are on site and how much construction is happening, there is outside states bringing in individuals to help with the demand.

So we have, we have workers from out of state. So we have an unemployment rate up here. It's like 5.7%. Maybe it's a little lower now.

And we have to bring workers from out of state, which means taxpayers have to give them a per diem, which means they come in, they work for however many days they do, they get a per diem, they have to stay at hotels.

So I'm starting to see why we have a bright line that's going to be doing a high speed rail between Rancho Cucumber Munga in Las Vegas at about, what is it, 50? I think it's $55 million a mile. And these, what we're doing costs $260 million a mile.

So when you're looking for those benefits, the cost savings, we should probably be looking at making sure that we hire people that can actually drive home at the end of the day and pay for their homes here in California because our houses are super expensive now and people need to be able to benefit from a project that is roaring through their valley.

So that's one of the things that when I look at statistics like that, I want to make sure that the local people are benefiting from this. You guys have a problem and it's a PR problem. It's self generated. And it's not you guys. You guys are the cleaners. Remember the movie Pulp Fiction?

The cleaner, the guy comes in and cleans up the mess. That's you guys. The problem is everybody already perceives this as a giant boondoggle. And I don't know how you're going to change that around. So in your report in August, there's going to be a lot of questions being asked of you.

I hope you have the answers for them because for the last four years that I've been dealing with this, certainly the progress hasn't been. I was supposed to be riding the train four years ago when I was on the City Council in Murrieta in 97, that's when we were talking about the route.

It took 10 years to figure out the route when we thought, awesome, they're going to have a station right here in Murrieta someday. Well, I thought I'd be able to go to like the ribbon cutting for that.

No, somebody's going to have to go on my behalf, maybe one of my great grandchildren, because I won't be able to. I won't be there. We want this project delivered if we're going to have one.

California is very difficult to deliver just because of all of the different regulations, the labor regulations that we have, all of these things have compiled to make this almost an impossible project. And it seems like we just keep going down the road because we've already gone this far. We just got to keep going.

And I've seen projects like that at my house. At some point I just have to pull the plug on some of these projects. So, you know, you guys have a monumental task.

If I had a choice between your job and the job that Caltrans was offering us, cleaning up litter on the side side of the highway, I'd probably take that one because I don't know how you're going to get out of this.

So anyway, kudos to you guys for stepping up and trying but I remain very skeptical of the future success of this project. And at some point we have to decide once again when we're doing budget priorities and we're spending $1.0 billion on DGRF funds to try to keep this thing going. And one last question.

Maybe finance can answer it. We have the we we've allocated all the money out of the bond funding, correct?

Matthew Macedo, Department of Finance. That is correct. The remaining bond funds were appropriated back in the 2021 Budget Act.

And there's still bond funding available for whatever they're doing for this year.

That is correct. We appropriated them, but the actual selling of the bonds is still taking place.

Okay, nobody's buying the bonds? Okay, thank you.

And then, Senator. Chair, if I may just respond quickly.

Very quickly.

And Senator, we're happy to follow up with some of those job numbers as requested. And I will say that we just celebrated the 15th anniversary of our pre-apprenticeship program in the Valley. We're having another graduation next week with our Selma training center.

So, there really is that emphasis of getting jobs. Two people who are kind of in the alignment of the project, but happy to follow up with you on those numbers.

Well, gentlemen, regarding the project, the two gentlemen speaking in the second row, I think you've heard a lot from Members of the Committee. What I've heard of now, my going on three months of being Chair of this Committee, I think there's three areas that are coming to light that going to need additional information on.

One is high-speed rail. One is the implementation of Prop 36, and I think the third is having a discussion regarding all of corrections and the workers, and what's from their perspective is happening. From my perspective, gentlemen, not a happy camper. You mentioned that your CEO is giving vision talks at seminars.

It might have been nice that your CEO gave us the courtesy to be here today. Three months on the job and no disrespect to you gentlemen, but it's really not acceptable. We've had secretaries come to this Committee and we would expect the same of you.

So, as the Chair of this Committee, if the CEO doesn't want to come by, when you report, then that will probably be a problem. Second of all, I'm going to request that we not wait till August. It's my understanding you presented a report in March.

Why you need eight months to give us the answers to questions that people have asked you for 20 years makes no sense. It's just not acceptable. And if I have to choose between Medicare, Medicaid funding, education, I'm not voting to give you a single dime. That's my perspective right now.

So, I got to tell you, I think most people are up to here. I also have been hearing about high-speed rail for 20 plus years, and many of us put a lot of our own reputations on the line by supporting this program. I've been to other countries and have seen successful high-speed rail.

So, why in the world, between all of your leadership and all the people working, you guys haven't figured it out in 25-30 years is just not acceptable. So, what I hope that you can take back is that you are losing the confidence of legislators who need to fund your program.

And when we no longer have confidence, that means you see a result that you're not looking for. So with that, what I'm going to ask the Committee staff to do is all of the questions that the LAO asked, all the questions that members asked.

When you have your report, we're going to want an answer, and we're going to actually want a briefing before that report because we want to make sure you're going to come here with the CEO and actually answer the questions we've asked you, because this is not acceptable in any way.

And if I were to vote to support funding for your program today, as I said, I would say no. Figure it out with what you have. And we got bigger issues that we're facing right now. So, we look forward to you coming back. I'm not sold on August.

I'll be looking at June because we'll actually be recessing in July. And as Mr. Seyarto said, if we're going to be able to do our job from a budget perspective, we actually need those numbers.

How you came up with arbitrarily August of eight months to give us a report on what you've been doing for the last 20 years, I don't know. So, my hope is going to be that we would do it before the break, which is mid-July.

So, I would suggest that the pencil start sharpening and we get going because this is not good. Not a single member in this Committee was felt, you know, pleased with the progress thus far. So with that, we're going to conclude Issue Number 13.

We're going to move on to Issue Number 14, which is the Department overview and continuing establishment of the Office of the Inspector General of High Speed Rail. We have before us Mr. Ben Belnap and Amanda Millen, both from the Office of the Inspector General. And we have our remaining individuals here to support us with our lifelines. Who would like to go first?

I will. Good morning, Chair Richardson, Members of the Committee. My name is Ben Belnap, Inspector General of the High Speed Rail. We have before you a BCP, and it's been faithfully summarized by your staff. I'm not going to go into that. I've been asked to focus my remarks on our recent work.

In addition to reviewing the accuracy of the Authority's reports, we performed a comprehensive risk assessment of the project and identified five operational reviews that we want to complete during this fiscal year. And we've actually completed and published three of those five reviews, each of which focuses on a different aspect of the Merced to Bakersfield segment.

The first review, published in October 2024, concluded that the estimated $6.5 billion funding gap on the segment would need to be filled by the summer of 2026 if the segment is to remain on schedule.

We also found that the Authority's assumptions and stated level of confidence regarding receiving federal funds to fill this shortfall were not realistic. We then recommended that the Authority provide state lawmakers with a clearer, more robust discussion of its funding needs and available options in its 2025 project update report.

Our second review, published in February 2025, concluded that the Merced to Bakersfield segment would not likely be completed as currently envisioned within the authority's 2030-2033 schedule envelope. We had four reasons for that. First, the Authority's internal tracking documents indicate that the segment schedule has slipped by approximately one year.

Thus, in the first few years of the creation of that schedule, one-third of the schedule's contingency has already been used.

Our second reason for concern was that the Authority paused for reasons it believes are entirely valid, certain procurements, such as the train set procurement, whose timely completion are necessary to stay on schedule, and third, again for reasons it believes are entirely valid but that nonetheless impact the segment schedule.

The Authority did not apply for federal funds for the segment in the most recent grant cycle for its major source of federal funding, a grant cycle that the Authority identified was critical to remaining on schedule.

Fourth, the portion of the segment actively being constructed in the Central Valley, commonly referred to as the CPs, continued to have risk of construction delays from disagreements with third parties.

Although the Authority indicated that it believes our conclusion regarding the unlikelihood of achieving that schedule envelope is premature, it generally agreed with our recommendation to provide an updated, quantitatively assessed Merced to Bakersfield schedule when it has successfully implemented various change efforts underway.

Our third published review delved deeper into the reasons and potential solutions to the project's long standing problem of third party delays.

We found both internal and external factors contributing to these delays and made a series of recommendations to the Authority to help resolve these problems, including that they work with state lawmakers to adjust state law to better position them in their negotiations with 30 parties. The Authority, the Administration, and individual legislators have expressed a willingness to explore, and some have even proposed specific statutory solutions to this problem that has continued to negatively impact the project.

Finally, I want to add that to be clear, these reports and their conclusions were a call for course correction, not course abandonment. Project funding plans can be clearer. They need to be more clear. They need to be more robust. Project schedules can and should be updated with the best available information and statistical techniques.

And long-standing problems causing project delays can and should be exposed and resolved. State lawmakers created the Inspector General's office for these very purposes. And my dedicated team is prepared to help in any way we can. And with that, I'll answer any questions you may have.

Thank you. I'm going to ask if members and those who are giving responses if we could try to stay to about a couple minutes, as we have some additional hearings and things that are coming forward that people have to get to. Before we go to members' comments.

I'd like to welcome the Hayward Youth Commission, who's here today to see real government and work. You guys came in so quiet. I'm impressed. I want you to know that you have an excellent representative here in Senator Wahab. She's actually considered one of the younger members of this great distinct body that we have of 40 Senators.

She works quite hard, diligent, reads, asks questions, holds even her colleagues accountable, not just those who are here to present to us. So, you've actually, you're lucky. You got a wonderful member.

And if you can hang tight a few minutes when we take the next issue, if you would do me a huge favor, if you want to come forward real quietly and quickly, we'll take a quick picture with your representative so you can do reports and say the incredible experience you had. Is that fair? Is that fair?

All right, you guys are good. Okay. Any comments from our LAO?

Comments. We didn't have any concerns with the budget proposal, and just here to answer questions.

Thank you. Department of Finance.

No concerns.

Great. Members, you'll. Not yet, not miss. No, no, no. Ms. Durazo, you wanted to wait, so now you're going to wait.

Thank you, Madam Chair.

I really love you. You're one of my favorites. Okay. Miss Durazo.

Yes. Thank you, Madam Chair. Mr. Attorney Inspector General, I just wanted to ask, in terms of the report that you expect to fill on the procurement and contracting. Will this report focus on wages and working conditions in the manufacturing supply chain that we will count on in particular, for example, the train sets?

So, I believe you're referring to in our work plan. We plan on doing a review of procurement. No, I would not say that that is currently scoped within that review.

Okay. Will you include it?

I will consider it.

We've raised, I have raised the issue of procurement time after time after time after time with both the high-speed rail as well as, you know, other public transportation projects and programs. So, I don't understand why it wouldn't be included.

I will look for a nexus between what you've brought forward today. State law does require me to consider any requests from Members, and I will do that, looking for a nexus between that subject and what you propose. Thank you.

Thank you. So, my concern is the fact that the expenditures are definitely outpacing revenues overall. And we have seen this consistently. I think this is one of the concerns that we have across the board. Thank you.

In regards to the three reports that the Chair mentioned that you guys are going to bring up, my definite concern is that what are we going to do to specifically kind of talk about the oversight that we have seen?

We had the conversation in the last folks that were here and then what is any stick model that we're going to be pursuing if things aren't completed or deadlines are not met?

May I ask a question?

Yes.

When you say oversight, are you talking about legislative oversight from the Administration or internal to the?

Internal. You know, if the Inspector General is taking a look at this and we're trying to, you know, kind of establish this office as a whole, we do need, you know, we keep hearing that we're going to have reports, we're going to have these conversations, we're going to have this. The Inspector General.

What is the main goal that you guys are trying to establish? Because I think that there's a lot of confusion, a lot of complications, a lot of excuses, and so people are frustrated. I just want to see what you guys are trying to focus on.

I'd say there's two main goals, and really, this comes right out of the statute that created my office is transparency. We want to make sure that the Authority is providing you accurate, timely information. And when they're not, we're going to call it out. We already have. And the other is accountability.

And I think that's where your question's going, more than the transparency. That accountability comes in when we present information, there's going to be internal recommendations made to the organization, things that they can do on their own, and we will continue to report when they don't follow up on those things. And you'll know that.

And then there are recommendations directly to the Legislature. And those are times where we're saying, hey, this is something that you can do to either help the project or hold them accountable.

Okay. And then for the recommendations, let's say that you guys make recommendations internally to the, you know, organization, if you will, and they don't. What happens then?

Well, we don't have enforcement authority over those things. They certainly have. They've been tasked with running this project. We've not been tasked or positioned to step in and start doing it ourselves. So, we're going to use first the power of persuasion and logic. After that, we're going to use the power of pen.

We're going to write about why they have not implemented our recommendations and what bad effect that has caused. And then we'll ask the Legislature, the Administration to step in and pull what levers need to be pulled to make that happen.

Okay. And so my frustration overall, I'm just going to be very honest, is that when we create an office of the Inspector General to any of our departments, right? We've seen this in CDCR, we've seen this in a number of other departments. There tends to be a lack of enforcement, obviously.

And oftentimes the reports are, you know, we suggested this, we're still waiting to make sure that they implement this or they reduce this or whatever the case is.

And I sometimes don't understand if we are putting an office of Inspector General, kind of set it up for whichever Department, whether it's CDCR or High-Speed Rail or whatever the case may be, what's the point if there is no stick, right? So there's, hey, we're reviewing everything you guys are doing.

We are, you know, funding another office. We are spending money here and there for recommendations that many of us know just naturally there's problems, right? And again, a lack of enforcement is my biggest concern. So, you don't have to answer that.

But I will just say when we are setting up these offices of Inspector General across the board does not matter which Department. I question how much value add we are getting if there is not an enforcement and some type of mechanism to say, hey, these are the recommendations and here's the forced follow-through.

So, just flagging that. Thank you.

Mr. Seyarto

Hi, I just wanted to welcome you. I was on the panel last year that interviewed everybody and we knew this was going to be a difficult job because you are the little last ditch effort to try to salvage this.

And your job is to provide sunshine on this project so that we can see what's going on or what needs to be done or if it can be salvaged. And so, you know, I don't.

I appreciate the report you gave today because it sheds light on what's going, you know, what the condition of this is, and some of the hurdles that are going to be coming forth. One of your statements was, you know, it's not. These are difficulties that need to be overcome, but it's not an end of the project.

So, there's a lot of people that are really on the end of the project part, and you're going to have to talk people off the ledge if this is going to be successful. But in order for you to do that, we're going to need the information on that gap between $55 million a mile and $260 million a mile. In how much it costs to build and why that is.

So, hopefully in the future when we get, hopefully, reports that come in sooner from their side on what the plan is, because right now the plan is not impressive to a lot of legislators and including a lot of my constituents, they're kind of done with the project.

So, you're their lifeline and hopefully you can continue to help guide them a little bit, including to the conclusion of it, if that's what it needs. You know, I'd like you to keep an open mind for that.

If that's what you need to tell us, that's the hard truth, then that's the hard truth we're going to have to hear. Thank you.

Thank you. Mr. Seyarto. I'd like to make two requests of the Committee on the Record. One, that Miss Durazo's request of the Inspector General be done in writing, that he would do as she requested to do the step study or have the study or report inclusive of the procurement items.

And number two, that all of the items from the Inspector General's report would be provided to the CEO of the High Speed Rail, and that we would expect answers to those questions in 30 days. With that being said, that concludes Issue Number 14. We now have Issue Number 15, which is the motor vehicle account for condition.

I'd like to, while those individuals are coming forward, the students of Hayward Youth Commission, if you'd come forward and put your backs towards us, and then we'll have them take a picture. Looking this way. For Issue Item 15, we have Bowen Peterson and Matthew Macedo.

And again, Members, if we could try to stay within two or three minutes.

Good morning, Madam Chair and Members. Bowen.

Pause a moment. Actually, if you'd stand up there. Yes. Sorry. Face that way. We'll stand up. And if you want to stand with your folks, with your great young people. Yes. This is a little impromptu. I haven't done this, but you know, hey, it's not every day we get great young people coming to participate in government.

Yeah, that's right. Tell us when you're ready. Before you take it. Tell us when you're ready. Woohoo. Good job, you guys. I was a little shocked. You want another one? Okay, last one.

What is that? 123.

I'm sure I'm going to get a text in 30 seconds from Senate rules saying I just disobeyed some rule. zero, well, that's right. Senator Wahab from Hayward.

I just really appreciate all the kids coming over. This is maybe boring to some of you guys, but I also want to highlight how important it is for everyone to participate in our government, have their voice heard.

Whether it's local issues like housing and, you know, sales tax and things that really actually affect your families, or it's even conceptual ideas like high speed rail and kind of future visions. The work that you guys do today really actually puts you guys on a good path to moving forward. So very happy that you guys are here.

Very happy for the staff that are just bringing all the kids here. Again, thank you so much.

With that, we're going to go to issue 15, the motor vehicle Account Fund condition. Are we hearing from Mr. Petersen first? Okay, go ahead, sir.

Morning, Madam Chair, Members. 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 being the annual $71 vehicle registration fee and $32 CHP fee. Expenditures themselves are expected to total 5.2 billion, with CHP and DMV expenditures of about 3.2 billion and 1.4 billion, respectively.

Since the May revision, revenues from 2324 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.

The budget proposes a one time solution of $166 million from the Air Pollution Control Fund and House Gas Reduction Fund in 25-26 for the purposes of offsetting the California Air Resources Board Mobile Source Program within the mva. I'll be happy to answer any questions you may have on the subject.

Yes, Frankie Mendez with the Legislative Analyst Office. Overall, we find that the administration's proposal is not unreasonable. However, there are a few considerations for the Legislature. First, this proposal relies on a backfill from the Greenhouse Gas Reduction Fund.

And we note that auction revenues within the current year have been coming below projections, so that raises some uncertainty in whether those funds will be available for its existing commitments and this new one being put forward in front of you all.

Second, this represents a one time solution which provides the Legislature additional time to seek an ongoing one and a permanent solution will be needed. However, developing this will not be easy. This is a long standing issue where expenditures have outpaced revenues.

The Legislature could reduce expenditures, but that could have service impacts to those provided by DMV and chp. And the Legislature could also increase fees. However, that represents an impact to households and businesses that own vehicles. I'm happy to answer any questions.

Thank you. Any Members with questions? Senator Wahub.

Okay, so I just wanted to highlight that I do have concerns about the growing expenditure, but I also want to flag that I'm not interested in seeing vehicle registrations go up. This is a big, big concern. Even for, for example, older cars, people are paying several $100 a year.

I will highlight that years ago, I remember when Schwarzenegger was running for Governor and this was one of his promises that he made to the public and he dropped the vehicle registration fee significantly. I will highlight that. That is a big issue. Right. People make monthly payments all the time right now, high monthly payments to their utilities.

Several $100. Right. For apartments, let alone single family homes, people are paying so much for just groceries. Several $100. Right. Literally just for one person, people are paying hundreds and hundreds of dollars across the board, let alone the rising rents as well as these junk fees that we are seeing across the board.

And it's not right to just again, put the cost on the taxpayer. It should be, tighten your belts, figure out what to cut, where is the bloat and why are you guys spending this much money? Right.

And so I want to flag it over and over and over again because it is not appropriate to keep just increasing the cost to regular taxpayers. So thank you.

Thank you. Mr. Siardo.

Yeah. I want to talk about a little bit about the MVA and the relationship with CARB and funding for CARB. Because if MVA is running low and they're funding CARB, maybe CARB needs to Fund itself or find other sources instead of robbing from MVA for all these years and maybe they should pay that back.

So can you explain that a little bit about why CARB is so dependent or why they felt that that was an appropriate use of MVA funds to Fund part of their operations?

Certainly, and that could be taken under consideration. However, in the past, CARB's funding out of the MVA was imposed because of the fact that it is directly tied to emissions from vehicles.

So therefore, CARB ended up getting an appropriation out of the MVA to do its mobile source program, which is to develop, implement and enforce laws, regulations in order to limit Those criteria, pollutants and greenhouse gases, because that's at some point that.

Because it's spread amongst everybody and they're trying to control people that are polluters, that becomes a tax. And, and, you know, the bottom line is if MVA is suffering and money is going over to CARB and, and CARB has some, you know, frankly, CARB has some dubious programs. They're extremely expensive for the public.

And, and, you know, our MVA funds were meant for, you know, enforcement, you know, CHP and making sure that people are safe out there.

And so that's one of the things that I will be looking for in the upcoming budget, is that those transfers stop and CARB can figure out on its own what it needs to do its job, but not from the MVA funds. So that's it. Thank you.

Mr. Rozzo. Yeah. Just a quick question is my understanding, and if you could clarify the percentage of the amount that goes from the MVA to DMV. It's 30% of their. Explain that 30% CHP is 60%. CARB is 6%. Could you explain that some more? Because it's not like CARB is getting.

Yes, of course. I do want to just reiterate. So out of the total registration that people are charged, there is $103 of that that goes direct to the MVA, and that is for the $71 registration fee and $32 CHP fee.

It is broken up based on expenditures, where DMV itself has the 1.4 billion in expenditures, CHP has the 3.2 billion. And with CARB having the 183 expected expenditures in 25-26, if I may add.

Senator, Matthew Macedo, Department of Finance. I think you may be referring to the overall amount that people pay on their registration renewal that you get in the mail. I think 30% of that goes to DMV. Just a rough calculation here with just the MVA, DMV gets about 27% of this.

So I just want to clarify for the record, all of the fees that one pays on your registration renewal do not go into the motor vehicle account. Only $103 gets deposited into this account. Those two fees are the registration fee and the CHP fee.

There's the transportation improvement fee in the vehicle license fee that are based on vehicle value, and those get deposited into some other accounts. And one of the things that Dr. Wahab referred to was Governor Schwarzenegger reducing some of that. And that specific effort was focused on the vehicle license fee, which is transferred to locals. Eventually thank you.

If you could give us a report of the total amount that people are charged, all the buckets that it goes to, and who's getting the money, that would be very helpful. I agree with Mr. Ciardo. He almost fell out of the chair there. I completely agree that CARP needs to pay for itself.

And if they're going to use the analogy of emissions, then ships could use it, trucks could use it. Everybody could come after using the MVA Fund in order to achieve our 20350 emission goals. And if we're having a shortfall in Mva, it should be able to focus within the Department of its Original origin.

So look forward to that information and joining you, Mr. Sierto, in that effort. That being said, we have concluded issue number 15. We'll now move to the last issue. Again, Members, if you could help me to keep this down to a minimum because we still need public comment and was hoping to adjourn by 11:15.

Issue number 16 is the delay of implementation of AB3, which was a trailer Bill Language. The Members coming forward to speak are Mr. Gordon and Mr. Scott from the DMV. And which one is Gordon and which one is Scott? Your Gordon.

The old one's Gordon, the young one's Scott.

All right. We heard from you earlier today. Did we? I don't think so, no. All right, it was someone else.

I apologize.

You said it. Okay. With that, Mr. Gordon, please proceed.

Well, I'm going to pivot to Mr. Lee here to talk about the, the budget impact of April.

zero my goodness. After, for all that.

Okay, so thank you, chair Members. Yes, we'll keep it brief. So the trailer bell delay is implementation of AB3 and we're going to delay it from 25-7-1.

Could you move closer to the mic? Thank you.

Yes, sorry. So the trailer Bill will delay AB3 from 7-1-25 to July 1 of 29. The implementation of AB3 requires DMV to make changes to its core legacy systems and to provide for a new court order, license suspension and new license restriction at all costs.

We're trying to avoid touching the core of our old 50 to 60 year old systems as much as possible. And given that DMV's existing IT workload, programming for AB3 cannot be completed by the July 1st date. We're also working on our new DXP system. It's been three phases.

We've finished the OL portion, we will have the vehicle registration portion finished by the end of the calendar year and then we will begin the deal phase. At the moment, there's no cost recovery function for approximately $600,000 for the implementation efforts.

And as we're kind of looking at priorities within the mva, not only this Bill, but other legislation that we can delay to make sure that we still balance the MVA with that. If you have any questions, let us know.

Anyone else like to add anything? No lao, no Members. Any questions or comments?

Nope.

All right. The only question I would have is, if I understood you correctly, you asked for four years.

25 to 29, correct. 25 to 29, correct. That's a little long. It's. So with the AB3, obviously it's impacting vehicle code 23109. We're going to finish the DL phase of our DXP project the next two to three years.

So we're trying to make sure that we push out as much legislation so that when we finish dxp, we can only have to build it once and not have to touch our core systems.

Okay. All right, sounds good. Dr. Wahab.

Senator, thank you. I just wanted to ask a little bit about your, you know, upgrading of your it. Can you explain a little bit more what's happening and what year it's in?

Well, we have multiple. Great question. Good to see you again, Senator. We have multiple IT projects running on simultaneously and in addition to process improvements and so on. So as we were talking about, you know, reducing expenditures with the Department, we've been targeting every facet of the Department.

So part of it, some of the stuff is process, some of the stuff is just systems, Some of the stuff is system stabilization, and some is systems modernization.

So what we're talking about specifically here is moving from legacy, homegrown, often very isolated platforms onto a common platform, as we discussed last time, onto a Salesforce platform as a service. So we're probably halfway through our modernization of those. I've been here since 2019. We've been aggressively moving from these legacy systems to this common platform.

So I would say probably over at the halfway point of legacy modernization. But as you know from your IT background, there's a lot of stuff that was built up over many, many generations. So we put occupational license, which is one part of our business. How many years?

How many years to what have you guys been doing this process? We started probably in 2019. That's when I started, let's call it 2020 to make the numbers round. So we've been working on this for five years.

Okay, so this is the same thing that I said last year as well. And with all the departments modernizing it should not take this long. Right. And processes and mapping that out. And I've done it. So I'm going to be very clear. It's you model the as is and the to be in regards to process. Right?

To seeing what is really required versus what what is. You know, we've done it this way for decades and so we're going to keep it this way. Right. Versus efficiency. The reason why I brought it up is because I think last year it was stated that it's already been several years for modernization. We're seeing another year.

Technology also goes obsolete the longer we wait, especially if we're using these out of the box efforts as well as just, you know, trying to put it on the platform of Salesforce or whatever the case may be. I have deep concerns about this because the whole point of transitioning to newer tech models is cost savings. Right?

It's to be faster. It is to be. And I will tell you this, when I renew my registration or my license or anything on the DMV portal, they have a systems browser issue. So Google Chrome, which is my default, if you will, it will always say unable to log in. There are some issues there.

I use a MacBook, but Safari will work. This should be the most first line of testing, right? Does it work on all the browsers? Clearly it does not. Right. Number one.

Number two is the fact that when people are a type A and want to renew ahead of time, instead of the 30 days for any type of renewals, they should be able to do so whether it's 30 days or 60 days. Let's get that done, right?

You guys get your money faster and the person can walk away without any lapse of registration or anything like that. But besides those little things that make the consumer happy, it should not take six years to implement technology. Regardless of how many systems. This is one Department.

The main portal that needs to be prioritized is obviously your website and all of the features that you guys want to do on that website. Database, right? Redundancy and much more. And the fact that the more I go to the DMV website and that there are delays there, there are, it's down, it doesn't work.

It doesn't work on a certain browser. I don't see the benefit if, if it's not working the way it should be. So I just want to flag this again. We are putting money into project managers, engineers, system admin, you know, the whole nine. And it should not take six years for an upgrade. It should not.

So, and it should be done in parallel. Max, a year and a half to deploy, maybe two if you guys are moving slow and statewide while still having your current legacy system parallel, just in case there is a failure on the new system and then the removal of that legacy system. Right. So Max again, two years.

Being generous. Three, six is ridiculous. Thank you.

Well, thank you for your comments and I'd love to see if you can shoot me what errors you're seeing. I'm a Chrome user and I, you know, our primary browser is actually on a mobile device and it is Safari. And they work.

You know, from far as I can tell from the reports, I deal with customers all the time. They work flawlessly. But I'd love to see the screenshots and shoot them over to my office. Be happy to make sure we close those gaps. Thank you.

Thank you, Mr. Siardo.

Thank you. Last year, AB3 was passed with pretty much unanimous approval by all of the legislators. One of the very few things that we all agreed on because of the safety aspect of it and part of AB3 was a license suspension.

And with your program, it appears that we're not going to be able to be doing this until 2029. I would ask that the DMV find a way to make sure that we can do the license suspension part of this by July 1st, like the AB3 intended. This is to stop dangerous activity out in our communities.

We can't wait four years to do it. So if you would be so kind as to be able to try to get back to us with a plan with that for how the DMV can do that.

I think there's gotta be ways to be able to suspend licenses in maybe a unique database or something while you guys work on this other bigger issue and transformation. So that's all I have to add for that. Thank you.

Thank you, Senator. We'll be happy to share with you the work that we already do to suspend licenses. We have a very robust process called in Driver Safety Unit. Be happy to walk you through all of those details to be waited to be implemented. I understand that.

Point well taken. Got it?

Yes.

All right, thank you. That concludes issue number 16. We are now moving towards public comment to. To ensure that everyone has a chance to be heard. Please limit your comments to one minute. Thank you. And let's begin.

Members of the public here, good morning.

Yes, good morning. Mayor Richardson and Members of the Committee, thank you for having us today for this hearing. My name is Maria Spencer Nyder. I'm with Platinum Advisors. And today I'm here on behalf of the California Association of Port Authorities who represents all 11 California public ports.

We strongly support issue 10, the Cal State request for ongoing resources for the freight policy team in the state budget. We appreciate the positive comments that you were sharing during this hearing. So thank you for whatever support you may share on that issue. Thank you. Thank you.

Madam Chair. Members Dan Cha, on behalf of the Port of Long beach, echo the comments of my colleague. Very much support that item. Port of Long beach has long advocated for such a function or coordinating function within state government.

So we're very appreciative of this coming to fruition and very much appreciate our work, close working relationship with CALSTA and the freight policy team.

To your comment earlier, Madam Chair, we also welcome the conversation, the coordination to be much more comprehensive than it has traditionally been, which has been more of a siloed approach, focused on, you know, single issues. Issues.

Obviously, given the import of the state and the need to maintain our global competitiveness, the conversation should be broadened to include economic development, the jobs that ports create. So very much appreciate your sentiments, ma'am.

Thank you.

Chair Richardson and Members, Michael Pimentel here on behalf of the California Transit Association, speaking more broadly to the Cal State budget.

As these budget hearings continue to advance, we do want to uplift the importance of moving forward still with the investment in public transit that was made in the budget act of 2023 and that afforded a multi year investment in public transit capital and operations.

We'll also uplift for you that we are working with the coalition of stakeholders to advance a new request for still additional resources to help transit agencies address their recovery needs. Continue to provide critical services. It'll be essential that these services continue to exist.

Continue to provide operations to support longer term visions like the development of the high speed rail system, reduction in greenhouse gas emissions. Thank you.

Thank you.

Clifton Wilson on behalf of this mayor of the City and County of San Francisco.

Daniel Larry and we would just like to echo the comments said by the California Transit Association and we are in support of the requested funding for public transit. Thank you.

Thank you.

Madam Chair, Members, Andrew Antwee which Shy Yoder, Antwee, Schmelzer and Lang here today on behalf of the Pacific Merchant Shipping Association and the Port of Los Angeles, support of issue number 10. We support the governor's proposal to provide permanent funding for the port freight advisory team.

We've learned through recent history during a supply chain crisis that the state needs to take a long view and string together kind of overview, strategy and planning before we hit a crisis moment.

We're very grateful for the PFUB funding the $1.2 billion investments that were made and we think Senator Durazzo's request for a list of the grant recipients is appropriate and we encourage this Subcommitee at the right time to support the proposal.

Thank you for your comments.