Assembly Budget Subcommittee No. 5 on State Administration

Good morning and welcome to the Assembly Budget Subcommitee 5 on State Administration. We will be holding two hearings, one today and one tomorrow, to review the proposals put forward in the May revision. Is this on the right way? All right. Is that better?

Okay.

All right. Again, I am Assembly Member Sharon Quirk-Silva. We're pleased to have you. Just so you know, we will have Members coming and going as there's many hearings today. This is an in person hearing with all panelists testifying in person. Our hearing is informational today and open to all Members of the Assembly.

I want to welcome back our friend here. We will take questions from Members of this Subcommitee after each panel. Public comment will be taken at the end of the hearing and will be limited to one minute. We are going to do a few things out of order. So we will.

We will be hearing item number one and then we will move to which item is that? The veterans. Then we are going to allow our veterans to come up after item number one to do their presentation. And then we will be doing some of that as we want to make sure we don't keep our veterans waiting.

So with that, we are going to begin. And we'd like to ask our panelists to come up for item number one. Business, consumer Services and housing agency. Before we begin our official hearing. We do have two Members. If either of those Members would like to make any opening comments.

Yeah, if we need an extra space, we can be up there on the dais. I know we have lots of people here today. We do want to welcome and thank our esteemed panelists. Secretary Tamika Moss and I will let the remainder of you introduce yourself.

But we know that there has been many testimonies in the last week or so, again, for the public's benefit, assuming we have people watching us out there. This is part of how we do the budget. And we talk about items, we bring back items, we talk about them again, we negotiate back and forth.

So this is the California budget in action. Welcome. Issue number one, and I will let you go ahead and begin.

Good morning.

And pull that all the way up.

All right. Can you hear me? Yes. All right. Good morning, Chair. Good morning, Assembly Members. My name is Tameka Moss, and I'm the secretary of our Business, Consumer Services and Housing Agency. Thank you so much for having us this morning. I'm really excited for our conversation.

We're finally here to talk about the entire proposal, which I'm thrilled about. We are requesting resources to support our 2025 governor's reorganization plan. This is really a culmination of Years of advocacy, hard work, dedication to ensure that state government continually reflects and evolves and strives to deliver services and outcomes that Californians need and deserve.

And I'm really proud of the work that this agency has accomplished. Many of my teams will be here today talking to you about their proposals. And we have navigated an overwhelming amount of policy areas, increased responsibilities and impact. But it's really time to recognize that we have outgrown our current structure at bcsh.

This proposal makes key structural changes to increase our ability to positively impact California across our agency's entire portfolio. The Business Consumer Services Agency will provide effective and efficient consumer protection, business and professional regulation.

BCSA will also be able to provide more direct support to its departments, allowing them to more quickly adapt to industry changes, strengthen oversight and better protect Californians. Our industries and people deserve nothing less from us.

On the other side of our portfolio, the California Housing and Homelessness Agency will provide clear direction and guidance to address to address the entire housing policy continuum from people experiencing homelessness, those renting affordable apartments, to those buying their first homes. Combined with this proposed change is our Housing Development and Finance Committee.

This proposal builds on a structure that will accelerate our progress toward California's housing goals. The Housing Development and Finance Committee will give California the tools it needs to increase the value of state investments in affordable housing, stretching every dollar that we have more for more affordable homes as we move forward.

This reorganization will improve the state stewardship of existing resources, including improving internal processes for administering that funding and holding our grantees accountable for results. Now more than ever, California and Californians deserve the best version of their government.

And this proposal helps to provide just that, be it consumer protection or any of the work we do along our housing continuum. Creating more policy aligned agencies will give each secretary and its staff the ability to devote their time to a narrower policy focus, leading more specialized staff. Policy expertise and outcomes.

Strategic planning and analysis can be dedicated to a single policy area, which will allow us to to have deeper coordination and implementation in this work. We look forward to your questions. I'd love to introduce my colleagues at the table as well. Thank you.

Thank you. Welcome.

Thank you, Madam Chair. Good morning, Assembly Members. I am Gustavo Velazquez. I'm the Director of the Department of Housing.

Pull the microphone a little closer. Yeah.

I'm the Director of the Department of Housing and Community Development. Under my leadership at HCD for the past five years, this Department has provided financing for more than 60,000 new affordable homes. Help local governments plan to accommodate 2.5 million new homes and enforce California's robust housing laws to create more housing opportunities.

I am immensely proud of the work that my colleagues at HCD have accomplished and believe that creating this agency, the California Housing and Homelessness Agency, will provide the right structure to our momentum and our progress towards more housing and the reduction of homelessness.

Creating the agency will provide dedicated leadership and focus on housing and homelessness at the Cabinet level, which will reinforce this administration's work across the entire housing continuum from homelessness to homeownership.

Collectively, these changes will strengthen HCD's ability to be nimble to focus on key areas like data collection and report for better decision making, Administration of Federal Programs, and of course, our very important work of overseeing state law, housing policy and housing accountability.

This will allow the state to give housing and homelessness the ongoing attention that all of these critical issue areas deserve. I look forward to the discussion.

Who are we missing? Welcome.

Thank you.

Good morning. Amy Manisero, Deputy Secretary for BCSH over Admin and Fiscal Policy. Thank you for having us here today. And I'm here to answer any questions you may have on the proposal in front of you requesting resources as part of this reorganization.

Okay. And then we will go to the Department of Finance.

Yes, Megan Tokonaga Block, Department of Finance I did want to comment on the need for resources in the budget year to effectuate this proposal. While one option would be deferring funding decisions to next year, we do believe that resources are required in 2025-26 to effectuate the new agencies by July 12026 as proposed in the reorganization plan.

The budget proposal identifies a number of tasks that need to be completed in the budget year. This includes establishing delegation authority for hiring, procurement facilities, contracts, et cetera. It also identifies organizational change management to support the transition of programs and roles across impacted departments and personnel.

And finally, work by the Housing Development and Finance Committee would stand up a new methodology of allocating resources in a single one stop shop so that the new methodology can be used in subsequent fiscal years. Withholding resources beyond the beginning of the fiscal year would delay the implementation and may hinder success of the reorganization plan.

Charlene Manning, Department of Finance Are those mics on? Okay, happy to answer any questions.

Zero, there you are.

All right, There you go. Welcome. Thank you. Good morning. Paul Steenhausen with the Legislative Analyst Office. I was thinking about your comment last week, Madam Chair, at the Joint Hearing on reorganization. Your comment that the timing doesn't match up between the state's budget timeline, the state budget process and the reorganization review process.

In our view, approving this proposed may revise funding for the June budget before deciding on the Legislature's position on the reorganization itself would be kind of like putting a cart before a horse. You know, the expression form follows function. Well, financing follows function, too.

And so there's even more to consider, though, because beyond just the challenging timing is with the Legislature needing to address this budget deficit, is that this may revision proposal, it's not a savings. It's not even cost neutral. It's resulting in an increase in resources that are needing on an ongoing basis, so an ongoing commitment to the state.

So the statute lays out the process and timeline for the Legislature to consider the Little Hoover Commission's recommendations and on the reorganization. The Administration wasn't able to get that plan to the Little Hoover Commission until last month.

And so now the Little Hoover Commission has that report, is working on it, has it until June 4th, I believe it is, to produce a report for the Legislature's review. The Legislature then has until July, per the statutory timeline, to make a decision whether to accept it, modify it, or reject it.

So given that the review of the plan is in process, the General budget condition of the state and the cost of this proposal, which is $4 million General Fund in the budget year and then increasing to 6 million annually thereafter, we recommend the Legislature reject without prejudice this proposal and the Legislature could instead make a funding decision as part of next year's process, or the Legislature could come back in later in the summer and make kind of an appropriate appropriation based on the Legislature's vision through a budget Bill Junior Or that sort of process.

Thank you.

Thank you. Any comments? Heather Gonzalez Lao here for questions. All right, thank you.

We have a full house as far as ready for questions. We have additional Members. I'll go ahead and open it up to Members and Members, you can introduce yourself as you make your questions.

Thank you very much. Kind of confused. We're getting two for the price of two and a half, it seems here with this reorganization plan, I'm not sure throwing another bureaucracy at a problem is a way to get better performance.

And so as I'm trying to look through this proposed reorganization, which, as has already been pointed out, does not follow the standard process and seems a little haphazard and rushed, I'm trying to figure out, are we going to get better oversight of the billions and billions and billions of dollars we're spending on homelessness programs.

I mean, voters were just talked into, which would be putting it politely, approving Prop 1 in the March 2024 election, which is taking out the Credit card and borrowing billions more. This is on top of 24 billion spent since Newsom took office in 2018.

24 billion that we actually can't track and show results on most of that money. And of course, the Newsom Administration refuses to allow outside audits of a lot of those funds. So my question is really related to this agency. What can it do to ensure the appropriate expenditure of funds?

You have a statewide Homelessness Accountability and Compliance Unit. Is that correct? Okay. And you're asking for increased funding for that unit, increased staffing?

No, we're not.

Okay. So how much are you spending on the Homelessness Accountability and Compliance Unit? Another budget item?

Yeah, I don't have those numbers with me, but I'm happy to have my team.

Well, it looks like $902,000 in 2025 and 2026 through 2027560,000 thereafter. And I didn't get that.

Could you try again?

Zero, I know. It's actually going to get worse.

A cell Member doing my own. But we're to going to focus on the reorganization on this.

Okay. The reason why I'm raising it is that that unit is still in another state agency, the Housing and Community Development Agency, which you lead. Correct? You're. You're the head of that agency Department. So that's your Department. That's your budget. These are your staff. They report to you.

So I would assume that you know what they're doing and how much you're spending. So this is the Department of Housing and Community Development. That agency will still have the statewide Homelessness Accountability and Compliance Unit. zero, no, no, no.

But you're going to set up a separate Housing and Homelessness Agency, but that unit's not going to be in there. So where's that unit going to reside?

We're not moving the Housing and Homelessness Accountability Unit. They will stay in the. So they stay in that other agency we have. So. So.

So that I want to make this. This clear. Assemblymember mess. I can clarify for you. So the Housing and Community Development is a Department within the agency. The unit that you're describing is. Is a. Is a unit within the Department that will all be maintained as a part of this reorganization.

Maintained where? Under the New Department for Homelessness or still be a separate Department? No, no.

It will be maintained with an hcd. It will sit within the new Housing and Homelessness Agency.

Okay, so how many audits last year did they conduct of homeless programs, Homeless contracts? This unit. Because they are the statewide Homelessness Accountability and Compliance Units. How many Audits. How many letters of non compliance did they send out as it relates to Housing First Recipients or homeless shelters? Let's just start with those two types of programs.

Housing first or homeless shelters.

Thank you for that question. I don't have that information with me. We came here to prepared to answer questions about the reorganization.

Well, I have the answer if you'd like me to answer it. It sounds like this unit focuses on reviewing housing permits, building permits of state and local of local government agencies and telling them when they're in non compliance with their housing goals. Is that correct? Is one of the things that they do?

It's one of the things.

So they're going to local government saying you didn't approve enough housing projects. They also apparently do oversight on ADUs that may be somewhat related to providing more housing for people, market based housing. But I'm getting to how many homeless shelters, homeless beds, shelter beds and any sort of developer monies that are going.

You just said that you provide financing for 60,000 new affordable homes and several million units. In terms of oversight.

Assemblymember, we do have that particular item, housing and homelessness funding under our next item. So if you want to hold some of those questions.

I'm close to getting the question the answer because I think I already know the answer. How much actually dealt with housing first funding streams or homeless shelters?

The Housing and Homelessness Accountability Unit deals with the oversight of a multitude of state law and state regulations that ensure that local jurisdictions are planning for their adequate housing need across the income spectrum, including housing that will serve people experiencing homelessness.

I don't have the right information with me right now, but I can assure you that our website.

There is also a new website that the Governor recently announced, accountability.ca.gov has by locality the progress being made for each jurisdiction on the way that these jurisdictions are addressing the crisis of homelessness, including the fact that in the State of California, even though homelessness is increasing by about 3% nationwide, homelessness is increasing by 313%.

Let me cut to the chase. How many staff are in this unit? I know the answer. Why don't you get it on record? How many staff are in this unit that's doing all of this stuff? It's doing building permits, it's doing state housing goals for local government, it's doing ADU compliance.

And of course you say they're working on homeless shelters too, including $24 billion since 2018 of affordable housing or homeless first money. How many staff Members are in this unit doing all this work that includes homelessness Oversight. We don't build any shelters.

How many staff are in this unit? It's a very simple question. I don't have. I don't want anything.

There are three attorneys in this unit. Three. Three staff Members. And you're sitting here saying that this unit is the Homelessness Accountability and Compliance Unit. They must not sleep at all because we're talking about $24 billion. You're having them do granny flat compliance. Local housing targets for market based housing which literally has nothing to do with.

With homelessness. These are million and $2 million homes in some of these communities that are being built for housing targets. I'm looking at how many shelter beds and where are we getting actual homeless services for $24 billion. And you're here saying that you're doing all of that with three staff attorneys?

Respectfully, it's not three Members. I know that much. We have at least a couple dozen people working in the Housing Homelessness Accountability Unit. It's a large unit that includes policy specialists on the state law and attorneys. And not even the amount of attorneys. The volume of attorneys is three.

It's more than your budget request puts in for a third attorney position for a total of three relating to the CPRA Public Records Act requests. And I'm sure you're getting a lot of pra. Something Member.

We're going to get back to that when we get to our item on housing and homelessness. So let's go back to the reorganization. I understand.

The point I'm making here is.

You're not kidding. You're not.

The point I'm making here is you have the Governor promised us that this agency was going to provide focus on homelessness. That's what he touted at a press conference. But when you actually look at where the rubber meets the road, you're doing virtually nothing on the issue of the $24 billion of homelessness funding.

Nothing on homeless shelter beds, which we are woefully inadequate on. But you're doing a lot to review granny flats and to tell local governments how to run their building departments. So I know that you say that it's related, I understand that.

But if you're going to do a reorganization, I think the public is going to want more emphasis in a reorganization on accountability, oversight to make sure that we're getting better results. And I'm not seeing that in this reorg plan. Thank you.

Okay, there we go. I appreciate those comments, but we want to stay focused on the item. And so your concern is there's not enough being done in homelessness and accountability. And if this reorganization happens, you want to see more emphasis on that. Is that correct, Mr. DeMaio? Yes.

So do we have other Members that have questions on the reorganization?

Thank you, Madam Chair. I want to thank you for being here to update us.

You know, I'll go back to where we said in February it would have been maybe more convenient to have had everything initiated around that timeline so that we probably could get to a place here around June 15th where everything sort of threads together at the right time point.

I'm sure there were circumstances that didn't make that target possible. And so I am warm to the Leo's perspective.

I share that very much that I would like to be able to see everything kind of worked out in a way that is going to be able to support the budget that is aligned with what we are presented with, what we need to debate with as a Legislature as far as that reorganization so that we're not sort of especially in a very constrained budget circumstance right now.

You know, every nickel matters. Every dollar certainly matters. So how are we making sure that we are making a responsible decision today based on what we don't know might be the eventual outcome come early July?

It's just kind of a guiding thought of mine as well that I don't know if you have any other maybe knowledge or rationale to share why we should prematurely authorize some of the contracts or authorize some of the positions that may or may not be something that the Legislature ultimately approves after June 15th.

Thank you for the question, Assemblymember. And I just want to acknowledge that the timing is awkward. I completely understand that. I think what we are trying to do though, is not delay our implementation of this work.

To me, we have been working really hard to make sure that we present a reorganization proposal as quickly as we can signaled in the January budget. We've provided informational hearings to this body.

We've tried to, you know, help folks recognize the sort of overview of what we are, what we are proposing in terms of the two agency split as well as now coming to you all since the full proposal has been public since April.

We want to make ourselves available for any additional conversations and information that you all might need to better understand the rationale for why to move forward now. Any delay Assembly Member to me delays our responsibility to Californians to put our best work forward to making sure that we are providing efficiency and effect, efficient and effective state government.

And so months matter. We have an entire change management proposal. We have an implementation process that we want to get to as quickly as possible to make sure that our staff and our programs are not disrupted during this reorganization, but that we're able to advance and ready for. You know, budgets are cyclical.

We recognize that this is a constrained budget environment. And we also recognize that we want to be ready to administer resources when they come around in the best way that we know how. That's why we are so strident about moving this proposal forward now, recognizing that certainly what the LAO has described is a constraint.

But I do feel like we have presented the entire proposal with efficiency, with our best efforts to keep this as cost neutral as possible.

Using existing positions, transitioning those positions from HCD to the Committee, setting up the Executive Committee infrastructure, working with the staff to make sure they understand what their guidance needs to be in terms of the outcomes that, you know, the Assembly Member was talking about. The public expects us to be delivering our housing goals as quickly as possible.

And that's why we think a delay would be challenging.

Okay, it might be at best a one month delay. But you had mentioned something about an effective date of July 12026.

That would be when the agency is fully operational. We would begin setting up the Housing Development Finance Committee as soon as possible, which is really the innovation in this proposal. That will be the one stop shop that Executive Committee and its duties will be starting as quickly as possible.

So for what I know today and what I see in front of me, and again, I don't know what the Little Hoover Commission is going to recommend as far as any modifications. I don't know what the Legislature is going to recommend or adopt or, or want to see change in as well in that subsequent negotiation.

But in best case scenario it might be something relatively similar or maybe with slight modifications to what you've presented that we've had a chance to review starting in April and get a little bit of a Head Start on.

So I'm not fully convinced that something that is not going to be fully implemented until July 1st of 2026, that a 10 month lead time, or maybe even at best in an 11 month lead time is going to be meaningfully different than a 12 month lean time.

I feel that there would still be hopefully sufficient time to be able to get ducks in a row so that you can meet the target for full implementation.

I mean, respectfully, as implementers of state government, I think every moment matters.

It does, it does. For what I know today, for the functions, the departments that would move over to BCSH or sorry, BCSA. Yes. So I see there a approximately 9% reduction in total budget authorization. Is that correct? For Administration. So you're from today's funding level in this budget, you're going from approximately 3.8 million to 3.5 million?

That's correct. Okay, so reduction there what I don't have here because I have a request for new positions, but not necessarily dollar values attached to that. But certainly overall there's going to be an increase to the CHHA to include the agency housing, HDFC and Cal Ich. Although Cal ICH is supposed to be revenue or cost neutral.

That's correct.

Okay, so we've got some new positions here. The other sort of mega challenge that I have here is that you've got additional positions here that are Executive that we, I might, I'm inclined to agree.

We're going to need that level of attention and skill to be able to better administer and oversee all of the programs that we're hoping the state could do a better job for for those outcomes.

And I, you know, if I heard from my colleague as well, you know, if some staffing is insufficient or is doubtful that you can fully oversee the magnitude of review that we need to say, well, I guess we would agree on that, that we're going to need more.

I just don't know to what extent more until I fully see that reorganization plan adopted. But furthermore, I don't know what to extent more if going in advance to item two, we're not actually increasing or we're not, we're not reauthorizing additional funds for you to be able to minister in the first place. And we'll have that conversation.

I do want to see very strongly post may revise, you know, more resources towards our tax credits and our programs that we know are developing and going down the pipeline towards more housing opportunities. But if that ends up being zero at the end of the day, that very much negates any rationale for having more administrative officials. Right.

There's nothing to administer. It's zero. Or I should say there's far less to administer. And so I'd like to see this, this alignment as it moves forward.

It would help me provide more justification for the Executive here as well if I know that there's more commitment, ongoing multi year commitment to be able to have things to administer in the first place. So those are things that I'm looking forward to as this conversation does go forward. But I appreciate some update and clarity here.

I see you sort of training in on what you think you need to have a more perfect system. And I don't necessarily Disagree with that. I'm just going to need to be able to connect the dots a little bit more as my decision time points are coming at me.

Yeah. And. And I just. To respond to that a little bit. Assemblymember. You know, we have a housing goal of 2.5 million homes that we need permitted by 2030, a million of those homes being affordable. And so, in my opinion, we most certainly need ongoing, consistent resources to be able to deliver on our housing goals.

But as implementers of state government, it is our responsibility to steward the dollars that we have in the best way that we can to make sure that we are leveraging every dollar that we are using, every single tool that we have in the toolbox to accelerate and produce housing faster and cheaper.

And that is part of the reorganization and is also about structural reform to make sure that we are removing all the barriers that state government has in its way. We've been in partnership with the Legislature for the last six years.

We've done tremendous work to improve the efficiency of our streamlining, to help local jurisdictions braid their funding more effectively so that they can deliver housing and shelter and all of the things that we expect more effectively. And.

And so regardless of whether or not there are resources that we have billions of dollars in our current pipeline that need to be administered, we want to be able to make sure that the effectiveness of those dollars are our best.

And when resources recycle through as they will, we want to be prepared to make sure that we are accelerating our state's collective goals. And so that, to me, is really the impetus for the leadership commitment, the secretary, the infrastructure.

We need to cement that into state government so that no matter who comes after us, we can't turn our back on the most important issue of our time, which is to ensure that we have housing for everyone who needs it. And that, to me, is what this reorganization is signaling.

I recognize, again, the sort of awkwardness of the timing, but I just really assert that the status quo is unacceptable. Assemblymember. And I think that is what we are really challenging ourselves with, is to give you our best as well as to give California our best.

I really appreciate a very excellent response, and I hear you loud and clear on that. So look forward to continuing the conversation. I think as we're trying to sort of land on this issue.

I appreciate it. Thank you.

All right. I don't see any other Members that want to speak on this item. I will. I will be making some comments. We have now had numerous conversations in this space, and I've said as I said just a few days ago at our last hearing, it isn't that I'm against the reorganization.

The timing is not matching up to what we need in our budget. So even if it had and we had the little Hoovers response and it was on time, there is still an issue of this particular budget which we know across the budget there are major hits in so many areas, whether it's ihss, whether it's transportation.

So there are many, many conflicting areas of where do we prioritize. Generally we're on the same team as far as how we think housing needs to happen in the State of California. But I do definitely feel we need to take a pause here. A month in the scope of two years is not going to change the outcome.

Much of what you say needs to be done needs to be done now, regardless of this reorganization. I mean the intensity, the focus, the streamlining. I did say this in the last Committee. Many of these pieces of legislation have moved forward under the time I've been on housing.

Whether it's streamlining for affordable care or affordable housing applications, these are all things that we know the public has asked. We know developers out there have been very, very frustrated by the amount of times they have to go to different agencies. We have a permitting work group.

There's just so much that has come under this idea of how we move faster. And I think we can all agree we've got to build faster, we got to move faster, we're not going to have these units.

But the items that kind of are interjecting are if we on the one hand have a budget that the Governor has put forward that is zeroed out housing, this just simply does not match with now growing an agency or a standalone agency.

And even though we say it's close to cost neutral, there are expenses here, I see in this particular item on page 6 and 7 close to 20 positions coming on the out years. And again, some of this not even being implemented until 2026.

We will have a new leadership team by then and we don't know what their priorities will be. So again, it's very difficult for me to say let's move forward.

I get the one month gap, which is even if we got the report and we came back in Aug, the idea is some of the same talking points that I've said, which is I don't disagree with this, but I've been on the Housing Committee now for five years.

In the January governor's drop of budget, it's the first time I've heard anything about a reorganization. So I feel like there could have been a lot of due diligence along the way to kind of at least talk to people who've been working in this space to understand and then particularly as we continue to see this budget.

So I don't think it's a surprise, but I don't recommend this at this time. And I'm not even sure, like I said, that at any time, unless we can assure there's dollars in the housing budget. And I guess my one question was, I keep hearing there's billions of dollars out there.

Some of those dollars are specified for very specific groups and they cannot be used for any types of housing. So when you talk about the billions of dollars, we're talking about CARE Court, I'm assuming some of those dollars, is that correct, or can you tell me.

The billions of dollars for the upcoming fiscal year, including this moment, we have about $3.4 billion to administer. Again, this is in the next several months. At the same time, we're asking to stand up this essential infrastructure to make the work of this, the Administration of this Programs better.

$2.25 billion in HomeKey, plus permanent supportive housing for people experiencing mental health challenges. And for veterans, $775 million for the cap and Trade program, the Affordable Housing and Sustainable Communities program. For our Multifamily supernova, which is a combination of four different programs, $382 million competition. Coming up, the Tribal Multifamily Supernova, $54 million.

And also we have $6 million to administer under SB2, the Permanent Housing Local Assistance Program, PLHA.

So again, in total, $3.4 billion that we will be administering at the same time that we would be standing up this essential infrastructure to administer these programs and programs that will be coming in the future for a better system, system that will save hundreds of millions of dollars, but a truly integrated system of affordable housing financing in the state.

And I do appreciate those dollars.

As you know, we have fought hard for those dollars, including last budget cycle where they were taken out in January, put back in the May revise, which is why we're so upset and I'm going to even use the word angry to see that the Governor has decided to zero out all budgets, including the ones you're talking under the ggrf, under all of those that you were mentioned.

And the dollars that you have out are going to be expended within the next. How long? Two years?

One year, approximately.

Okay, so that money's out or will be out. Will be out. But once it's out.

Then what? Well, and Assemblymember, I think that this is why in lean budget times, frankly, and in lush budget times, we have to be super creative about where we're going to get the financing for affordable housing. I spent two decades advocating for additional housing dollars and homelessness dollars in the State of California, and I am not stopping.

Well, I hope you talk to the Governor. But what I was about to say is we have, you know, the Governor has talked about a housing bond VMT mitigation. We have got to figure out how to make sure that. And I understand that you're shaking your head because.

No, because we cannot count on the bond and that's not acceptable.

I understand. I'm simply saying these times require us to get creative about how we are going to continue to support and invest in affordable housing.

Well, I support that.

And I also want to say, Assemblymember, you know, the reorganization is not a new idea. The Little Hoover Commission itself has produced two reports recommending a reorganization that we are suggesting to you all.

So it is not this is not the first go round around proposing to you all our best thinking about how to stand up these two agencies to ensure that they have the leadership and commitment and focus that they all deserve.

And as someone who has overseen this agency over the last year and a half, when I went through my Senate confirmation and I was asked about the mosaic of amazing programs and 40 boards and bureaus, the 12 entities that I oversee every day, I do my best because I am a strong leader committed to our consumer protections and our housing and homelessness goals.

But I assert to you that this reorganization is an investment in your legacy, the work that you all have done to commit to this work for your career, for many of your careers, and it's our contribution to ensuring that it is not in vain, the work that this Administration has done, nor the work that this Legislature has done over the many years to demonstrate to California that we give a damn about this issue.

Well, dollars speak more than words. So when the Governor finds it to put dollars back into the low income housing tax credit, which is the way we finish these projects, then I will say that the reorganization is a good idea. But unless we have money coming in, we're going to stand up another agency with more dollars.

And after two years, when those billions of dollars are out, what are you going to have to administrate? So those who are speaking to the Governor let him know this is a priority. With that, do we have any other questions or comments before we let the public weigh in.

That being said, I respectfully appreciate the hard work. I know that you have been working diligently and I know you want it to be the work that you do to be done even speedier. And I know that you have the best interest in housing Californians. So please don't take my bold comments as a dissatisfaction with you personally.

With that. If you would like to weigh in on this item, please come. We are having less than 30 seconds for per comment.

Can we check outside?

Good morning. My name is Divya Shiv with Housing California. Also speaking on behalf of the Corporation for Supportive Housing, I want to express our strong support for the creation of the new Housing and Homelessness Agency. We particularly support creating a one stop shop for affordable housing.

However, it's critical that TCAC and SIDLAC have a meaningful representation on the new Housing Development and Finance Committee so that funding awards can be coordinated. On the homelessness side, we strongly support the formalized coordination between the agency and the Health and Human Services Agency.

And CHHA should also increase alignment with other non housing agencies that provide homelessness programs to maximize their impact. It is important to keep in mind, as you said, Chair. Madam Chair, that the reorganization plan cannot be a substitute for state investments. Thank you.

Good morning. Mark Stivers with the California Housing Partnership. Good morning. Mark Stivers with the California Housing Partnership. And we very much appreciate your comments about the need for extra funding. We are in support of the reorganization plan.

We think it's good government to have a secretary focused on housing and to have a Committee where regulations and awards and appeals will be made and awards will be made in public with a more transparent process.

And we also think that the sooner we get this done that we can start with the conversations about how we truly integrate the administration's programs with the Treasurer's programs and create the true one stop shop that will save us hundreds of millions of dollars. So thank you very much.

Thank you.

Good morning, Madam Chair. My name is Garciella Castillo-Cranks and I'm here on behalf of the California. Housing. Little short. Gracias. On behalf of the California Housing Consortium. While we are supportive of the overall effort here, we are very concerned that this does not go far enough without the dollars that the Committee has been articulating.

The other thing that we would like to raise. I know that some of the affordable housing community would be in a different situation than chc, but we don't believe that right now is the right time to actually combine TCAC and Sidlac. So simply because until we figure out how the reorganization is going to work.

Bringing those two bodies over does not seem like it's the appropriate time until we figure this out first. So with that, thank you very much.

Kim Lois is representing the California Coalition for Youth. And we are supportive of the reorganization so that we can have the desired attention to our young people who are experiencing homelessness and believe that the ability for ICH to become more like a state agency will allow us to have that attention for our young people. So thank you.

Seeing anybody else? All right. With that. Again, we thank you for joining us and we hope to continue conversations. Thank you so much. Thank you. We are going to go to non presentation items. Just a little variance here in the agenda item. And we are going to be hearing from our, from our veterans, please.

And then any, anybody out there wanting to speak on non presentation items at the same time or if we have any Member who wants to pull anything off, we're first going to hear from the veterans but then after that it'll be during this time.

All right. And Members, I apologize. We're going out a little order. It's p. It's number 43 on your agenda if you're looking for it. 43p. Sorry. Page 42 and 43. Welcome. Please introduce yourselves. We're happy to have you.

Good morning. Thank you. Chair Members, my name is John Spangler. I'm the Legislative Deputy Secretary for the California Department of Veterans Affairs. I have with me today Ruth Wilke. To my right, she's our chief of operations for our Veteran Homes division. I have Monica Mitry in blue, she's our budget officer.

And Carlos Chavez, he's our Chief Project officer for Electronic Health Care Record Project. I've been asked to provide you an overview of the proposals that we have in the May revision. For the California Department of Veterans affairs we have a Calvet electronic health care record which we refer to as Care Project Phase three.

The May revision includes a request for a one time augmentation of $5,225,000 in General Fund for the implementation of a new electronic health care record system. Completing Phase three of this project will provide Calvet with a modern data system that will enable the homes to maintain all health care records and personal health information within one system.

The anticipated completion date is October 2026. Two other proposals, the Veteran Homes deferred maintenance proposal and the Administrative Services staff proposal. Given the existing General Fund condition and projected decline in revenues, the May revision proposes to withdraw these two proposals.

The department's January budget request for $819,000 for General Fund for deferred maintenance expenditures at the veteran homes and $285,000 for additional administrative support.

In our admin Services division, we also have a trailer bill item for federal background checks in in short, California Department of Justice came to Calvet and said in order to continue doing our background checks, which we run through the California Department of Justice, there's a federal component of those uses FBI databases is my understanding.

In order to continue being able to utilize those federal databases, the Federal Government has said the state agency must have specific statutory authority to do so. So that's what that TBL is. It's it gives Calvet the explicit statutory authority to continue doing essential background checks of our employees, prospective employees, volunteers.

I think that's most of the categories, but we need to be able to keep doing that. And the deadline for the statutory change is 12-31-2026. With that, if there are any questions I can answer for the Committee.

Yes. Any additional comments?

Jesse Romine, Department of Finance no further comment at this time.

No comment. And you're welcome to sit over here. I mean you can down on the. Table, but you can move over here.

Sure. Paul Steenhausen again with the analyst office. Just commenting on the Veterans Homes deferred maintenance proposal. We did not have concerns with that proposal to provide an augmentation when it was introduced in January. Addressing maintenance needs reduces the likelihood of facility conditions eventually disrupting the people that live and work and receive services there.

Addressing maintenance needs also mitigates the possibility of having to do more expensive projects later, like when you have a emergency repair when the system completely breaks down or need major capital renovations. So of course the budget condition has shifted since January. Administration is withdrawing that request to generate a budget solution.

As the Legislature assesses the new proposal, it'll better want to understand the potential effects of this may revise proposal to better assess how will deferred maintenance backlogs at Calvet grow. What projects were planned to be undertaken with the January proposal that now will not be.

As a result, is there any risk to health and safety of the residents. So the Legislature will want to weigh the benefits of the General Fund solution against the potential downsides and maybe higher costs down the road for the state as a result of this proposal. Thank you.

Members. Any comments? I will weigh in here. This drawback of really less than a million of dollars seems very, very short sighted in the sense of what needs to happen. I know that there are 43.3 million in and necessary repairs for all the veterans homes.

So that's across the state there had actually been this close to $1.0 million put in the budget and now it's drawn back. It just out of all the areas in the budget, I mean we're literally talking about fixing veterans homes and it just seems very short sighted.

We all know that when you delay repairs, you're going to end up spending more in the long run. So I would highly encourage us to find a way to put that $1.0 million back in. It's very minimal compared to some of this spending that I'm seeing coming through this Committee.

Anybody from the public wishing to speak on this item? All right, with that, where are we?

Any items on non presentation that anybody would like to speak on non presentation items.

Okay, thank you.

Thank you. Chair Members, good morning.

My name is Eduardo Rubalcaba. Good morning. My name is Eduardo Rubalcaba. I'm with AARP speaking on behalf of 3.2 million AARP Members here in California. Not sure if this is the right time to for this budget aspect.

AARP requests the Subcommitee to support Senator Duarto's budget request for the expansion of paid family leave so that it includes family of choice or choice of family. This, this budget request is not going to be coming from the general fund or the unemployment. It would be coming from the disability trust fund.

So this policy change is important because at this time of that the population is aging. There's a definite shift in the traditional family. There's no longer the traditional nuclear family. There are more families without children. And this means that a lot of aging Californians will be living alone without the support that they need.

And they will be required to have their own youth, their family of choice, so that they can receive the care that they need in this tough budget year when difficult changes are being made and programs are being reduced or eliminated.

Approving this budget request to expand paid family leave to include family of choice or the choice of family is a significant program improvement that will benefit the lives of California's family caregivers and their families. And it's also in the interest of our master plan of aging. Thank you very much.

Thank you. Thank you, sir. All right. We are now going to go back to our agenda and go to item number two, which is Department of Housing and Community Development.

Good morning.

Welcome and please introduce yourself as you speak. This is Issue Number 2, Housing and Homelessness Funding.

First, thank you for your patience as we were in the waiting room. Good to see you, Chair, Members. My name is Matt Schuller. I'm the Deputy Director for Administration at the Department of Housing and Community Development.

For this Item, the May Revision proposes no new affordable housing or homelessness dollars but also does not propose solutions that would reduce current funding levels. As you heard in the prior testimony, HCD has $3.4 billion in existing funding that we are working on expeditiously getting out the door.

While the budget does not propose new funding for homelessness programs, funding will still be available in '25-'26 from the six prior rounds of the Homeless Housing Assistance and Prevention Program Grants and also the Encampment Resolution Fund Grant.

The May Revision also allocates $200 million in Prop 35 funds, over two years, for flexible Housing Pool Rental Assistance and Housing Supports. Flex Pools help individuals with significant behavioral health conditions, who are experiencing or at risk of homelessness, enter and maintain stable long-term housing, thereby increasing throughput through the behavioral health continuum.

Further, the May Revision also retains $100 million in General Fund in '25-'26 for the Encampment Resolution Fund grants that was part of the 2024 Budget Act Homelessness package.

Lastly, as your agenda details, in light of the estimated budget shortfall in the state's fiscal condition, the May Revision proposes one housing related solution and that solution is the reversion of $31.7 million in unexpected—unexpended—affordable housing funding from prior budget acts.

This reflects under subscribed funding from the Infill Infrastructure Grant Catalytic Program and the Commercial Property Pilot Program, as well as unawarded 2021 Infill Infrastructure Grant funds that were not projected to be used by the current liquidation deadline. And with that brief summary, happy to entertain any questions that you may have.

Thank you. Any other comments? All right, then we will go to the Department of Finance. No comments? Then we will go to our LAO.

Paul Steenhausen, again, with the—Paul Steenhausen, again, with the Analyst Office. Just one comment regarding the proposed $31.7 million General Fund budget solution related to housing. Certainly, there are tradeoffs and downsides to reverting funds from these three programs.

Given the state's budget problem though and given the fact that these—these grants—have not been awarded, we think it's reasonable to revert the funds as savings. Thank you.

Thank you. Going to Members of Committee. Assemblymember Ward.

Thank you for the presentation today. Starting with that reversion, I'm kind of curious, I remember an earlier overview of all the programs that we funded. This is one of the more cost-effective programs, if I am ballparking it here, around $80,000 to $90,000 per project for infill infrastructure grants.

And I would presume that that is some sort of bridge financing or some sort of, you know, like, sort of, intermediary capital that that made everything pencil out well. So, when we're thinking about how to fund a project, it was one of the more cost-effective contributions that the state could make to project.

So, why do we have such a large balance? Why was this not expended or of interest?

Hi, yes, thanks for the question. Jennifer Seiger, I'm the Deputy Director of the State Division, or the Division of State Financial Assistance at HCD. For IIG, there are various iterations of the IIG program. The two that are proposed for reversion are a catalytic component and then a commercial property pilot program.

We issued that funding through notices of funding availability at least twice for both of those pots of money and did not have eligible applicants. And the catalytic component was split into a large jurisdiction and a small jurisdiction, and it has specific statutory requirements for each of those two applicant pools.

This happens to be the small jurisdiction pot. And despite two NOFAs, we just didn't have folks that were eligible and ready to take that money. And on the commercial pilot, we also ran that through two other separate NOFAs, and we had some uptake, but not enough to cover the entire appropriation.

Was the conditions around the program too difficult for potential applicants to meet?

On the catalytic component, I think for small jurisdictions, yes, by statute, right? And on the commercial pilot, it's just, it was a matter of timing, right? Those funds were initially appropriated at a time when we thought we would have a lot of commercial development activity, and it just didn't—it didn't take.

Yeah, we've definitely seen that trend. You know, I understand that, you know, we had, you know, more than 20 programs out there that were trying to be able to satisfy all the potential different development scenarios out there that we could make contributions toward.

It's disappointing that these were not received well or seen as applicable to whatever the current economics are.

So, I'd like to hear more, maybe at a later time, not necessarily through the Department, but for others out there listening, about why programs like this were not what we needed, because that's going to train us to make better decisions as we're deciding which programs to authorize and fund, and maybe other statutory constraints that might make something a little bit too difficult to achieve.

And if that is all true and everybody is agreeing that's true, I could certainly support the reversion because we could use these resources elsewhere, which gets back to the bigger nut here of, you know, no new funding for programs that we do know work, that are oversubscribed.

When we're thinking about the Affordable Housing Tax Credit, the Multifamily Housing Program, and some of the other programs here that are put into question.

Threading back to earlier conversation too, I want to make sure we're not talking past each other because I know that there have been multi-year commitments that we've made in the past budget years, in FY '24 and '25. So, those funds are not essentially touched.

Are the—those schedule of funds, if they were made on a two or a three-year basis, are they still—they're not reverted, right? They're going to continue to be available for grant?

Yes.

Okay.

Many of them have already been awarded.

It doesn't, it doesn't, sort of, temper, you know, my frustration that we're not continuing to be able to maintain a level of support that already is not enough, because we know that these programs are oversubscribed, and we do need to be able to support more affordable housing development.

And I would like to see more of a multi-year commitment for the state to be able to make.

I recognize the times that we're in right now, and something else is going to have to give, and this is not a small price tag, and we've got to look under more couch cushions and whatever we can, to be able to find something to be able to support that.

It's going to be a priority of mine, as we are making those final decisions about what to do, that we make more of an effort, just like we did 12 months ago, when there was no reauthorization, and the Legislature spoke up very strongly that we must reauthorize at least some of the more effective programs that we're hearing do actually contribute to more affordable housing units being built.

And I hope that we'll come to a same landing point, as well, when our process concludes in a couple of weeks.

And I, I probably have nothing more to say other than just take up everyone's time because zero is unacceptable. And I don't think you necessarily disagree with that. It's just what we have to work with today, based on the Revision.

Assemblymember Haney.

Yes, I would agree with that, that zero is unacceptable, and I think that, you know, this is the position of not just many of the folks on this Committee, but I think the State Assembly and the Speaker have been clear how critical we view these affordable housing dollars, and how much of a priority they are for us.

The speaker has said that housing is the civil rights issue of our time. That requires us to actually invest in solutions and to see just a zeroing out of these, these critical programs.

I think this comes at great concern, not only, again, to all of us in the Assembly, but to people across California who have been clear that housing costs and homelessness are top priorities.

We've passed legislation that requires a level of action on housing and affordable housing and homelessness from cities and counties across the state that requires them to access funding that is not in this budget. And so, I have a few questions that touches on that. We have a letter that we had circulated.

Originally, 38 colleagues submitted a letter requesting $1.7 billion. We've scaled down that letter and really focused on three particular areas that, that I wanted to ask about, as well as something that the Governor mentioned that I wanted some clarity on.

The first is, is the, the, the, the status of the 20% ongoing appropriation in the Greenhouse Gas Reduction Fund for affordable housing construction. I know that there's a—some announcements around the—some—changes to that Fund, and I just wanted to clarify that the funding that will go to affordable housing will be maintained as an ongoing appropriation, based on the total amount within the GGRF and not a smaller amount.

And if there's any clarity you can give. That's especially important to us, in light of the fact that there's a zeroing out here of the ongoing LIHTC funding.

I defer to our colleagues at Department of Finance.

I can comment on that piece. The May Revision did not include a detailed spending plan of the reauthorization of the Greenhouse Gas Reduction Fund. Rather, it identified the Administration's two key priorities being the High-Speed Rail Project and CAL FIRE workload. The remaining funding will be discussed between the Administration, the Legislature, and interested stakeholders, on shared priorities.

We, as the Administration, look forward to developing a comprehensive plan that will include the continuous appropriations as part of that discussion.

Thank you. Again, this is—this is another area of deep concern. Not only are we seeing the zeroing out of the LIHTC funds and the HAPP funds, but then the lack of commitment to the ongoing appropriation in the—for—affordable housing and the GGRF.

I know that's going to be an ongoing conversation, but it also was not something that was called out, alongside those other key priorities, as something that was going to be focused on or intentionally protected. And so, we have a sort of triple, triple whammy there, with all of these things at once.

And the, the, the role of the existing funds is one that I also wanted to zero in on, because we're hearing, in response to the 500 million not being included for LIHTC, 500 million that we asked for, HAPP, that was not included, that there's over $3 billion that is available. Can you give some clarity for us?

I know it was discussed a little bit in the prior Item, but what exactly is included in that and when it was—when it is going to be fully spent out? I mean this is how much of that, if any, is ongoing dollars?

Is it—how much is in this budget, or is this money that was allocated past budget? Will be spent by X date? It's just, it's, it's being touted as, as a reason why we shouldn't be as concerned about the lack of the ongoing funding in this budget.

But I'd really like a bit more detail about what's being included in that.

I—yes, thank you. I can speak to the, the housing dollars, the multi-family development housing dollars and then I can defer to my colleague for the homelessness dollars.

But for the $3.5 billion figure that you've been hearing this morning, that includes what has already been issued, the home key plus NOFA notice of any availability, that's $2.25 billion. We also have a current NOFA that's open and accepting applications under the Affordable Housing and Sustainable Communities Program.

That's for a total of $775 million. We have under review—currently, applications have been received—and we're reviewing those applications for the multi-family super NOFA that includes money through our Multi-family Housing Program, Infill Infrastructure Grant, the CERNA Farm Worker Program, as well as the Veterans Housing and Homelessness Prevention Program, all in total for $382 million.

And then, we have an over-the-counter tribal multifamily super NOFA for those same programs. That would be for $54 million. And then, just a small piece of the Permanent Local Housing Allocation Program, which is run as a competitive program, for $6 million for multi-family.

And in terms of the timeline on all of that and will there be, did we fund—is there any funding for additional rounds of any of those, that is within this budget, or is that all funding that is going to go out in these rounds and then, that's it?

No additional funds are projected at this time.

Yes, except for the permanent local housing allocation.

Yes, yes. That is an ongoing program funded through the recording documentation fees. And so, that is—there are two components to that. One is a formula allocation to local governments that they can use for a variety of different uses.

And then, the small piece that we're mentioning here, is a competitive pot that has more targeted, eligible uses. So, that is continuously.

So, these are—when you're referring to the $3.5 billion, that's in these existing rounds that are sort of some level of allocation or application?

Yeah, they're in some level.

But none of those, those, those programs are funded beyond the $3.5 billion, except for the local.

The PLHA.

So, that would be, at least as far as this budget is concerned, that would be it?

Yes.

For all of that. Okay.

And that's, that's, I just wanted to be clear. That's the, the, the, the reason for the concern, particularly as we're being asked to create a new agency, a department, that would be overseeing our grand and, and overreaching commitment to housing and homelessness, that there's dollars that need to be there on an ongoing basis.

I, I want to ask about the, the Governor mentioned the, the commitment both to the housing bond and also to two particular bills, it sounded like, which is reference to CEQA-related reforms. Is there any more information that you can provide to us about how we are going, he—the Administration envisions us actualizing that commitment?

Will those be—will the CEQA bills be placed into trailer bills? I don't think that they're currently on lists that are under consideration. And then, for the bond, what will be the vision and the process, the size? I know there's been some that have already been proposed and so, we're very happy to hear the support for that.

Of course, that's not ongoing dollars, as there will be one time and has to be passed by the voters. But can you, can you give any more information about those commitments that were made?

Certainly. Thank you, Assemblymember, for the question. The two bills that you indicated are not currently proposed as part of the trailer bill language. That is actually the next item in the agenda, I believe, or maybe two down—apologies.

However, the Governor did intend to partner with the Legislature to include those bills in the budget and that will be part of further discussions, and I am not able to comment beyond the Governor's interest in supporting the Housing Bond. Those are part of further discussions.

Okay. Well, I hope that, as this process moves forward, we can certainly get to a better place than zeroing out what I think is a huge priority for this Legislature, for the Assembly, and, I know, for the Governor, has been over time and is reflected in some of the existing funding and the new housing agency.

And so, without ongoing dollars for affordable housing, without ongoing dollars given to our cities and counties to meet those goals and to confront the challenges around homelessness, I think we are really not fulfilling our responsibility to tackle what is one of, if not the biggest, challenge that our state and our residents are experiencing.

And so, look forward to further conversations about how we can address that, as, as my colleagues have said, as we move forward. Thank you.

Thank you.

All right, let's try this again. Your Department Director didn't seem to have the information. I'm hoping one of you would. Let's talk about the Statewide Homelessness Accountability and Compliance Unit. It's got a great name.

When I saw that, I was like, oh, I'm so glad we have one of those, because everyone in the state of California is upset about what's going on with homelessness. Not the granny flat. I know you have ADU stuff in here, but homelessness, people on the streets, the tents.

The Governor did a fancy little video the other day. He put his hair gel on, he stood in front of the camera, and he talked about accountability, like, 10 times. So, my question is, in this Unit, how many staff are focused on the Housing-First Dollars or compliance on shelter beds? Shelter beds and Housing-First funding streams?

So, I'm not sure what you mean by Housing-First funding streams, but I think probably you mean, like, the HAPP dollars.

Project Room Key. Project Home Key. So, start with those.

Okay, so, so, our homelessness accountability work involves, involves basic, like, making a little bit simple to two streams, right? We have the program dollars we put out, which I think you're talking about right now, and in the program dollars, that's about accountability, right? Like, that, that's about a spending accountability.

You, we—we are giving out enormous sums of money, both through Home Key, now Home Key Plus, as well as through the HAPP dollars. And we need to feel certain that those funds are being spent.

So, how many staff are focused just on that? I know.

Just on that—so, each program has its own staff there.

And so, you know, Home Key Plus has a number of staff that have.

Wait, wait, wait, wait. So, they're not located in this unit?

The, the, there is, there is a homelessness accountability unit, which is—so each program is, each homelessness program has accountability work associated with it. And so, like, they don't all live under one program, but the homelessness accountability unit that is also about ensuring that local governments are, are following homelessness laws as well, that—and so, there is a unit of 30, 30 program staff there, as well as about six attorneys that are supporting that work as well.

Make a point of it. 30 staff are in the statewide Homelessness Accountability and Compliance Unit. Is that correct?

Okay. And you're saying that the programs are doing a whole bunch of other accountability stuff as well.

That's right, absolutely.

Right. We've made a—we've made a really concerted.

I understand.

Yeah. Okay. I just wanted to make sure. Sorry.

But this one is called—this program is called the Homelessness Accountability and Compliance Unit. I'm glad it exists because I don't trust programs to monitor themselves or to police themselves. So, I'm looking at this unit because the Governor talks about holding everyone accountable. He's holding all those cities accountable. I'm hearing from my City Council Members, they're not happy with some of the actions of the state.

And this Unit would be speaking exactly to that work you're concerned with.

Exactly, exactly. But not really, because this Unit seems to not just be doing homelessness and in fact, the expansions are not on homelessness this year. The expansions, and let me read from the Analyses, you're going to hire three staff attorneys. One for Public Records Act requests, is that correct?

And that is specifically because our teams that are supposed to be...

I understand.

...working on homelessness accountability.

But that's not auditing Housing First Project Room Key.

So, the teams that are supposed to be doing the work that you're talking about, ensuring that the, that the laws are being followed, ensuring that the dollars are being spent correctly, because of the enormous volume of public record—Record Act requests that we're getting on homelessness and housing issues—we are having staff be pulled away from that important work to go do Public Record Act requests.

And so, what we're asking for is that Unit be supported by some attorneys that can help, help our teams get back to that important work.

You understand the irony here, that we're hiring a staffer to respond to the public's upset with the fact that they don't feel enough accountability is happening, enough transparency is happening, so they're filing PRAs against your agency?

Absolutely. Absolutely. We're getting it from both directions. Those, those folks that feel we are not being tough enough on local governments, as well as folks that feel that we are overreaching.

So, the second, the second staffer—Staff Attorney—is dealing with defensive litigation. Would that be the cities and counties basically raising hackles about these housing targets that they're required to adhere to? Is that the defensive litigation that you're hiring a staffer for?

Primarily, it is more about compliance with housing laws, such as requirements to streamline developments that serve those existing homeless populations. And then there are also pieces. So, this is an omnibus trailer bill proposal. So, there are pieces of it that are also impacting the ADU work.

And I know that that feels disconnected from homelessness to you, but for us, this is, you know, housing is the solution to homelessness.

I know you lump it all together, but we're talking about billions of dollars in the Project Home Key, Project Room Key. We're talking about homeless camps on the side of the roads. We're talking about the public saying, can't we just at least open up a shelter and get more shelter beds?

And you guys are out there hiring another third attorney position, dealing with codes and standards.

That's right.

And then, of course, you have the contract that you're going to be letting for Accessory Dwelling Units, the ADU, the granny flats. Do you understand that—the frustration and disconnect here where people are seeing homeless camps on the side of the road?

You have a program called the Statewide Homelessness Accountability and Compliance Unit, but the vast majority of what you're doing, there's no evidence to suggest you're doing real accountability on Project Room Key, Project Home Key.

The vast majority of what you're doing is you're going after cities and counties saying you're not issuing enough building permits for granny flats. You're not hitting your state housing targets, which, again, we can have a debate about that. But you know what you should do? You should have a separate program that says Housing Stock Enhancement Accountability.

But when you have a program that says we're gonna hold people accountable for homeless funding, and you have a Prop 1 on the 2024 March ballot for billions of dollars of borrowing for homeless shelters, people feel that the money's going out the door, but there's no one minding the store.

Absolutely. It's one of the core, the core reasons I've been really grateful to take over stewardship of some of those programs and really bring that accountability focus there.

What, what you're seeing here is not a saying that the solution is these additional staff for PRA, but what we are, we have, we have dedicated staff to do exactly the kind of compliance work that you're talking about.

And we want to make sure that they have the capacity to keep their focus there while we meet our incredibly important Public Record Act requests.

But in this year's budget, I want to put a fine point on this. You've come to us for a request for about $1 million, 960—$902, sorry, $902,000. All of it focused on these three staff attorneys that are not to the core lane of frustration that people have with homelessness.

It doesn't make good on what the Governor said in his fancy video a couple weeks ago about, it's time for accountability, by golly, and we're going to start with those locals, but they're not going to start in our own state agency responsible for the billions of funds.

Since 2023 and '24, the entire Department, your Department, Housing and Community Development, hired, 900, sorry, 97 new staff members in the last two years. 97. How many of them went into this Unit? Because I know three of them in this budget year went into the unit, so that's three. Where do the other 94 staffers go in the past two years?

So, so about 30 are in the Housing Accountability—the Housing and Homelessness Accountability Unit—specifically doing some of the compliance work that you're talking about.

30 increased from two years ago?

Yes, and then some of them are also involved...

I thought the whole office was 30?

Yes. The, so the, in that...

How many new people in the last two years are the?

How many new people in the last two years?

I count three this year, but how many last year?

So, 22. So, and again, I think some of this gets to your feeling that the program accountability work is not the same as the homelessness accountability work, but we also brought on 22 staff from the—that are specifically focused on compliance around the Homelessness Assistance Program.

My fellow Deputy, Seiger, has state grants management staff that are very focused on Home Key—Home Key compliance—and they have actually made huge strides in that space and caught, caught things and dealt with things. And so, because we added those staff, we are able to point to many examples where we have made a difference in the compliance space.

But for us, they operate in a few different—we have program compliance staff, and we have legal compliance staff, and they're, they're in, they're in separate categories.

But most of the additional staff, in our past two years, are some form of accountability or compliance, either data transparency, public transparency, ensuring that we're going out and doing site visits and checking to make sure that people's promises are being kept and met. So, a lot of that increase is what's been going on there.

And we're just, we're just saying we have some backlogs that we've noticed in a few places. So, this is in no way a new unit, but this is—we've noticed a few places where we need a little more.

Okay, so my time is limited. Let me just say this.

Let me just say this. In the next year, I'm gonna make it a mission of my office to get to the bottom of what actually is happening in this Unit. I want to know how many notice of infractions, how many compliance notices are sent out for Project Room Key, Project Home Key.

And in the next year, we're going to get these answers, because we can't do this in the span of a budget process. You come here and you say you need three staff positions. We kind of look at it and say, okay, it seems relatively normal. Let's go forward.

We are not seeing the sort of oversight on the billions of dollars being spent and I think that this is not a partisan issue. I think my colleagues on the other side, they want to make sure the money's going to have the biggest impact. They want to get these, these, these, these camps off the street.

They want to get these people sheltered. We're spending a whole lot of money per capita, more than any other state, but we're not seeing the sort of accountability. And so, next year, I want a commitment from your office that we're going to get actual data, we're going to get actual headcount, we're going to get actual workload.

And so, that next year when we're sitting here for the budget, we actually may be in a mood to give you more money because there may be some areas that are not being addressed, but we need to make sure that at least this Unit, which you have a great name on, is actually doing homelessness accountability.

Because I see a lot of granny flat notices going out. I'm not seeing a whole lot of work on the billions of dollars in streets.

We'd be happy to share that documentation with you and all the strides we made in the compliance space.

Thank you. What we are going to do, as we have items 3, 4, and 5, is just do a call out right now if there's any questions from the Committee on—we've already talked about homeless accountability, but trailer bill language. I know you brought that up in your comments.

Or any technical adjustments under Department of Housing and Community Development. Do we have any questions up here from the dais on any of those?

For the public, we definitely are going to get into a time crunch here. We need to close out the first part of this Committee by 12 o'clock, then we will come back after at 1:30. We will be again taking items out of order after we finish this one item, and I make a few comments. We will...

If they're here, because we're changing order, after we finish this item, we will go to the Governor's Office of Business and Economic Development. Are they here? They may not be here. They are here. Okay, so we will do that after we close out this item. Did you... What? Okay. Do you want it? Where?

Okay, if we, if we... Assembly Member, we're going to finish this item, we're going to go to GO-Biz and then, if we have time, we'll get to that one. All right. I apologize for, to the public, we're changing a little bit of the agenda just to accommodate so we can keep some Members here. But closing out on the Department of Housing and Community Development. You know, I don't disagree with the comments made here. I do know that to the public it doesn't seem like we're making progress.

I know that some of the facts out there are simply that we house people or get people off the street into shelters and then we see other people fall into homelessness. And so it feels like there's never progress. I do know there has been progress made, but I also know that many of those organizations out there that are working in the space of homelessness and housing are highly concerned about no additional dollars in this budget.

There are many organizations that are, not organizations, cities that are hosting shelters that are part of this solution, and they are very concerned about what's going to happen in two years, in four years. So the zeroing out of this budget certainly is a concern. Knowing that there's accountability.

I know I would offer to my colleague, Assembly Member DeMaio, I would offer for you to really take some time to meet with Megan. She actually sat down with me and went through their website and showed a lot of the data. It was, I think, very impressive. But I think there is good work being done.

But that certainly means that there's more work to be done, and without new dollars, we could backtrack on the progress we've made. And that's a major concern. I mentioned this last year quite a bit. I don't like the Governor's 100 million encampment fund. We said last year that we didn't see enough data.

We feel that it's a way to move people along. But where? Where are they going? If we don't have new permanent supportive units, if we're not going to be funding shelters in the way that we have, where are homeless people going to move if we have stronger and stronger camping ordinances, as we seen?

And even the Governor said, you know, enforce. I wish that if he was going to move and change and do a U turn, he would have done that six years ago. Because by now, saying, like, I'm done. Local government, you have the tools, you haven't done it.

It's a great thing to say, but the truth is, where are these people moving to? Some of you have been out there on these encampments. Some of the people who work in the space know what it's like. And we all have, know that it's easy to say something, it's harder to do it and...

But I do acknowledge the hard work you and your Department are doing. I know that this is one of the most elusive spaces to work in to get what people want. And what do they ultimately want? They ultimately don't want to see homeless. And there's a lot of people to bear the blame on that.

And it should start with families first, should start with cities. And so sometimes cities feel like they're being picked on, but the truth is they have a responsibility. They have a responsibility, and if we'd all play the role we should, we'd be much further along. That being said, a zero balance in homeless and housing is not acceptable. And it simply will put us right back where we are in two years from now, three years, when these housing dollars dry up. All right, thank you again. I appreciate your hard work. Thank you. We need to invite the public to speak on this. Very brief comments.

Hello. My name is Divya Shiv, again, with Housing California, also speaking on behalf of the Corporation for Supportive Housing. We are very concerned about the lack of funding for affordable housing and homelessness in the budget and appreciate the frustration and alarm from the Subcommittee. We urge funding for the state LIHTC program, which efficiently leverages federal funding to build affordable housing, and the Multifamily Housing Program, which enables the state to serve households at deeper affordability levels.

The May Revision also puts the continuous appropriation to the Affordable Housing and Sustainable Communities Program at risk, which is the state's only significant ongoing funding source for production. Losing it would cause the affordable housing pipeline to grind to a halt. On the homelessness side, we urge the funding of HHAP.

Without HHAP round seven, local providers will be forced to ramp down shelters and services because of the uncertainty around funding even if HHAP is funded in later years, and all of this will cause homelessness to rise. Now, a couple of positive notes. We strongly support the inclusion of the proposal to enable project developers to mitigate VMT under CEQA by paying into a statewide affordable housing program. This is modeled after a bill that Housing California is co-sponsoring, AB 1244 by Assembly Member Wicks. Thank you so much.

30 seconds or under.

Yes. Good morning, Chair and Members. Caroline Grinder on behalf of the League of California Cities. While Cal Cities appreciates previous one time investments for California's largest cities to address homelessness, we're disappointed in the lack of funding in the HHAP program in the May Revise.

As in previous years, Cal Cities is requesting ongoing funding starting with the seventh round of HHAP in this fiscal year. We know our cities agree ongoing funding is key to addressing homelessness in our communities. 93% of our cities have told us they're concerned about continuing existing services in the long term. We understand accountability for state homelessness funding is critical, and we look forward to continuing to work with the Legislature on what those metrics should look like. Thank you so much.

Kim Lewis again representing the California Coalition for Youth. And we share the Committee's concerns about the lack of ongoing funding for homelessness and for housing dollars. The lack of a high school diploma is the biggest indicator that a young person will experience homelessness later on in life, and 50% of chronic adults first experience homelessness as a youth.

And we urge you to include funds for HHAP, increase the resources dedicated to our youth, and that we need dollars to build housing that are specifically for youth. They are disadvantaged in many ways for just being young. They have a lack of credit, rental histories, and earnings, and we really need to ensure that our nonprofit providers can create housing to support them. Thank you.

Good morning. Mark Stivers with the California Housing Partnership. I want to thank the Committee for the very forceful words in support of affordable housing funding this morning. I want to thank Mr. Haney and the all the Members who signed on to the letter to the Budget Committee and to the Budget Chair in support of affordable housing.

The Committee was right on. It is true that we have funding now for some NOFAs, but with this budget, in 2026, we will have no state credits. We will have no Super NOFA round or at least no MHP in that round. And there would be, depending on how the cap and trade funding discussion goes, there could be no funding for the Affordable Housing and Sustainable Communities Program. So we support you 100% in pushing for LIHTC, MHP, HHAP money, and then SHRA and CalHome as well. Thank you.

Justin Garrett, California State Association of Counties. We share the concerns about no additional HHAP funding in the Governor's May Revision, and we urge your support for ongoing funding of $1.0 billion for the HHAP program, which has been tremendously successful and the progress we've been able to collectively do to reduce and address homelessness. Without additional funding, counties will be forced to scale back programs. There'll be detrimental impacts and it will worsen than the progress that we're seeing. And so we really urge your support. Thank you.

Graciela Castillo-Krings here on behalf of All Home, Enterprise Community Partners, and the California Housing Consortium. Just aligning my comments with Mr. Stivers, who came before me, but just to highlight an issue. When the last MHP round went out, it was oversubscribed seven to one. So yes, there is funding right now that is going to go out, but not nearly enough. And when we're focusing on affordability, this is not the cut that we should be focusing on. Thank you.

Good morning. Kiana Valentine on behalf of Transportation California here to express concerns with the Governor's trailer bill language to create a VMT mitigation program. Housing does offer a really cost effective way to mitigate VMT in a lot of cases.

However, as currently drafted, the bill could result in gas tax or SB 1 dollars funding housing development and not transportation projects. And for many of you around the dais, you know, voters continuously approve constitutional amendments to protect transportation funding for transportation purposes. There is a policy vehicle, as was currently mentioned, AB 1244, and we'd prefer to have this conversation in that. Thank you.

Good morning, Chair and Members. My name is Vincenzo Caporale here on behalf of CALCOG. We'd like to... Sorry, we'd like to express concerns regarding the Governor's proposal to establish statewide VMT mitigation. Our concerns center around potential impact that this could have on the existing or emerging regional VMT mitigation programs.

We seek clarification on how this new program will interact with regional ones, ensuring it complements rather than usurps local and regional solutions that are developed with the SES implementation in mind. This would ensure that the program is focused on areas where there is no functioning regional or local alternative. Thank you for your time.

Good morning. Alex Leumer speaking on issue 5 on behalf of Defenders of Wildlife, California Trout, Oceana, Monterey Bay Aquarium, and the California Wildlife Officers, who are concerned about the position reductions for the California Department of Fish and Wildlife, particularly the reductions in law enforcement.

The hardest hit are the fish and game wardens, with 40 warden positions eliminated, which seems to be nearly about a 10% reduction in the wardens. Half of their funding is special funds, mostly fish and game preservation funds, which are paid for by hunters and fisher people.

We agree that the Committee with the Committee analysis, there's been little thought in what these reductions mean to the Department of Fish and Wildlife's ability to meet their mandates, particularly with law enforcement. We urge these reductions are rejected and provide no meaningful relief to the budget, given they are mostly funded with special funds. Thank you.

Thank you. Appreciate it. Anybody else? All right, we're going to close out that item. We appreciate everybody. Thank you so much. All right. We are going to move to the Governor's Office of Business and Economic Development. We apologize to the others. And we will be having you present all three items at the same time.

Where am I on here? All right, welcome. We're pleased to have you here. We are welcoming the Governor's Office of Business and Economic Development. Please introduce yourself as you make your comments.

Good morning, Chair Quirk-Silva and Members. My name is Lauren Greenwood, and I'm the Deputy Director of Legislative and External Affairs for the Governor's Office of Business and Economic Development. Thanks for having us. I'm here to provide an overview of the of GO-Biz's May Revision proposals, the first being our State Trade Expansion Program.

GO-Biz is requesting provisional language be added to allow the Department of Finance to augment GO-Biz's General Fund appropriation by up to 650,000 to meet the federal fund matching requirements should California receive the maximum US Small Business Administration State Trade Expansion Program award.

This is the only program dedicated to supporting California small businesses with expanding their footprint into international markets and is essential to maintain program stability and enhance California's competitiveness for federal trade assistance. I'm also here to provide, to share information about three separate reappropriations, the first being the Containerized Ports Interoperability Grant Program. The Budget Act of 2022 appropriate a 30 million General Fund for the for GO-Biz's California Containerized Ports interoperability Grant Program. 3% was set aside for administrative costs with funding made available through June 30, 2025.

While significant progress has been made with all grants being awarded, this program is ongoing with the final legislative report requested and required by statute by January 1, 2026. GO-Biz requests that these administrative funds in the amount of 700,000 be reappropriated through June 30, 2026 able to close out of the program. The second reappropriation is for the Zero Emission Vehicle Operations.

The Budget Act of 2023 appropriated 2.3 million through June 30, 2026 to the now Governor's Office of Land Use and Climate Innovation Zero Emission Program to convene a working group made up of transit agencies and other public agencies, relevant community organizations, and other parties to create a zero emission roadmap for the state.

The Budget Act of 2024 transferred the zero emissions programs and associated funding to GO-Biz, but did not include the extended encumbrance date of June 30, 2026. This request is to align the encumbrance period with the original appropriation. The last reappropriation is the Women's Business Center Enhancement Program.

The Budget Act of 2022 appropriated 8 million for the Women's Business Center Enhancement Grant Program. 3% 240,000 was made available for administrative costs and the budget act gave three years to encumber to June 30, 2025. While close to ending, CalOSBA is requesting a reappropriation for the administrative funds through June 30, 2026 to complete statutory and programmatic requirements. And then the last piece to GO-Biz's May Revision proposal are withdrawals of a couple programs.

So we are, with the administration is proposing to withdraw its initial proposal 60 million for the CalCompetes Grant Program. The administration is also proposing to revert the 11.5 million remaining in the CalOSBA Performing Arts Equitable Payroll Fund provided by the Budget Act of 2023. I'm happy to take any additional questions.

Thank you. Any other comments? All right, then we will move to the Department... Yeah, we will move to the Department of Finance.

Charles LaSalle, Department of Finance. No additional comments at this time, but happy to answer any questions.

LAO.

Rowan Isaaks, LAO. We don't have any significant concerns with items 10 and 11. On item 12, first of all, for the California Competes Grant, as the Committee previously heard, our assessment is that CalCompetes is generally well structured and effective and one of the more effective economic development vehicles that the state has.

Having said that, the grant portion is a supplemental part of the program. It's an addition to the tax credit, and so the program will still function well even with this, with this withdrawal. The grant has also been funded on a year to year basis previously. So in light of last year's budget problem, a similar proposal was also cut, and we think it's a viable option to solve the budget problem.

Having said that, there are other programs that concern economic development and tax incentives that we view as less effective than CalCompetes that have maintained or received new funding in this budget proposal, which brings into question whether if those programs clear the bar for funding, maybe CalCompetes should also clear the bar for new funding as well.

And then second, on the Performing Arts Equitable Payroll Fund, you know, the awards are very close to being made, and so withdrawing at this time when numerous groups are expecting those funds is something to consider for the Legislature. We do think that if the Legislature is interested in taking a look at this reversion, this is really less of a job creation program and it's really more of a subsidization of employment in the performing arts sector.

And so we really think that, in order for this program to be effective in the long term, it needs to be a continuous program appropriation. And so if the Legislature wants to intervene in this item specifically, it should do so with an eye towards the long term prospects of the program. Thank you.

Can you mention, you said there are other programs that you thought are very, that could be, if you want to say, reverted versus CalCompetes?

So we previously heard the CA RISE proposal and the Natcast Center from the CHIPS Act are examples of programs that have retained their funding in the May Revision.

And I know last year's budget, we were talking quite a bit about, I think it's been renamed, but it would be the blueprint program.

California Jobs First. Yes.

Right. And there hasn't been any change to that program.

Sorry. Jessie Romine, Department of Finance. There's been no changes to that program.

There's what?

Sorry, there's been no changes to that program.

And how much is that program funded for?

I believe we have... Lauren Greenwood with GO-Biz. I believe we have 150 million through 2027. 2026.

Because I know last year we were talking quite a bit about that program. And this year it's not touched, but CalCompetes is. Can you kind of talk to us a little bit about how you came about with that?

Sorry. Jessie Romine, Department of Finance. Again, I think the Jobs First money... Sorry. Sorry, far away. The Jobs First money is actually in EDD's budget. We're specifically focused focusing on the GO-Biz, the GO-Biz side of things here with resources in their budget. And just our review of proposals within GO-Biz's budget itself, we identified the CalCompetes as a pullback in our efforts to really balance the budget given the challenging condition of the General Fund.

All right, we'll go to the Committee Members. Any quick... Assembly Member Ward.

Thank you for the testimony today. You know, I kind of, my question sort of align in the budget solutions. You know deep concern for touching California Competes when I remember the Subcommittee reviewing it. Really celebrated I think its impact and the ability for job creation and retention. And you know, I think related to the blueprint effort that we also were very curious about, but mindful I think in that discussion that we were potentially focusing more the blueprint's efforts on emerging or future technologies or new innovations rather than maybe some of the core issues that we agree are a part of that blueprint too.

When we're thinking about housing or childcare or other workforce development support that was needed, and so disappointing that we're not seeing any really response to that or ability to sort of move dollars and priorities around within from that blueprint discussion. But we'll keep that discussion open minded.

And you know I would like to see more information that looks for some of the other programs that are out there. If we're going to lay $60 million of question out here is there a better bang for buck. Appreciate the tax credits are still proposed to be maintained in there as well, and I know the impact that those have. But for the grant program, you know based on the outcomes that grant program has been able to support.

You know, is there something, other programs out there that are more or less effective? I look forward to that information. And you know, deep concern about the cuts to the Performing Arts Equitable Payroll Fund. You know, given that that was something initiated years ago, and I believe this is on a reimbursement basis. Is that correct?

So we have put the word out there that we're going to be partners in supporting this very important industry. They're out there doing that work, supporting those jobs, and about to submit for reimbursement, and then we're going to pull that back away. And so what are they supposed to do?

And they have of course endured a lot of rollback from federal support that's out there right now. So this just incredibly adds injury, insult to injury. I guess that if this is the state's pullback as well that they would be seeing. I certainly don't want to see that as our role in their demise, and I would like us to be able to continue to think about other solutions so that that is not something that needs to be on the table. Has GO-Biz...

Can you talk a little bit about your engagement on that program to get people to begin to qualify for those grants? These are unspent funds from some time, so what has taken so long to be able to fulfill our commitment under previously adopted legislation?

Sure. So this program was established by SB 1116 in 2022, but it was created upon a legislative appropriation. So the 2023 Budget Act in the later half of that year then appropriated the the remaining funds from the COVID Performing Live Arts and Venues Program that was previously administered by CalOSBA. As far... And then Tara, Dr. Gray.

Sure. Thank you, Assembly Member Ward, for your question. You are correct. It is a reimbursement program, and it really aims to reach the smallest of the nonprofit performing arts organizations under $2 million and helping them hire and retain employees.

So the fund reimburses a portion of their payroll costs on a quarterly basis using a tiered reimbursement schedule where the smallest organizations receive the highest percentage of reimbursement. So respective to the timeline, through a competitive RFP, CalOSBA identified at California for the Arts as the Program Manager in the fall of 2024.

Our grant portal opened March 10 of 25, closed March 19. We received 413 applications from 38 Senate districts and 68 Assembly districts. So we were in the process of completing the final verification of documentations before turning applications over for final approval. Grants would be awarded on a first come, first serve basis. And GO-Biz is actually acting as the fiscal agent for this program rather than using an outside entity. Final point I'll make is the 413 applications represent a total demand of over $40 million, 40.9 to be exact, for the program.

Of which only about 1/4 are authorized, so that would otherwise be expended pretty quickly. I just, I do not like budget solutions that pull the rug out from any of our constituents after the fact. Sounds like these jobs have been created. There's, they're counting on us coming through on our commitment, and to do that afterwards is going to, you know, potentially close the doors of some of these important community organizations.

And so let's go back to the table if we can and think about something else that is on a going forward basis rather than have to go back to previously enshrined commitments that people are counting on reconciling at the end of the day. So thank you for this update for the information. It's a hard pill to swallow, but I want to continue to look for other solutions that might, you know, supersede seen this proposed solution.

Thank you. And I concur with my colleague here. Any other questions regarding any of the items under GO-Biz? We're going to kind of put them together. State Trade Expansion, reappropriations, or budget solutions.

All right then we will go to the public.

Good afternoon Committee Members. My name is Richard Falcon with Teatron Agua. I'm here to urge you to keep the 11.5 million performing arts equitable payroll fund in the state budget. I recently returned from a convening with. Latinx theater companies across California and the message was clear. This fund is essential to our continued recovery and sustainability.

In Sacramento, local companies are still reeling from Covid and the federal arts funding. Cuts that have taken place. Many throughout California have already closed. This fund doesn't just support performing artists. It strengthens California's creative economy which creates jobs, tourism and community well being. Please protect this vital investment. Thank you.

Thank you.

Hi, Madam Chair. Eduardo Martinez here on behalf of Actors Equity. We're the national neighbor union of representing more than 51,000 professionals in the live. Arts here again today to ask you. To please reject this cut to the equitable paper payroll fund. This is the third time we've had.

To come to the Legislature to ask you to maintain these fundings. After the Governor signed the bill in 2022, the Legislature has been the one to insist on the funding and then restore it last year when it was. Proposed for elimination of the May revise. I really want to thank Assemblymember Ward.

This money was days away, potentially from. Going out the door. Days away. And so there are many nonprofit performing. Arts companies throughout the state that are. Desperately waiting for this money. Let us get this money out the. Door to provide some relief to these.

Theaters and then we can come back and have other discussions about how to support this sector. But we really need these dollars. Thank you very much.

Hi, Darby Kernan, representing the Roberts Enterprise Development Fund, REDF. I'm only up here because the LAO brought up Cal Rise as a budget solution. It was in the January budget and we want to let you know.

Cal Rise is an important program that supports employment social enterprises, which are businesses, private businesses that hire hard to employ, formerly homeless, formerly incarcerated. Those people, as the economy gets tougher, are going to get pushed out even further. And having businesses to support these individuals is critical. They go on to get union state jobs and other jobs.

So we would highly disagree with the LAO and recommend you don't touch the Cal Rise in the January budget. Thank you.

Hello team. My name is Andrea Faria and I am the producing artistic Director for Western Placer Arts Association. We are the only nonprofit children's performing arts program in Lincoln exposing children to the performing arts at a young age. It makes them better public speakers, it gives them higher GPAs. Across all socioeconomic backgrounds.

It gives them higher self esteem. It makes them more inclusive, better able to express their emotions. I can't tell you how many parents have come to me in tears telling me that their kids have not been able to find sports or clubs. They were unable to find their place.

But they come to musical theater and finally they're able to find somebody that celebrates them and for who they are. It's a bunch of places for kids to be celebrated. It's a place that, that kids can go and be themselves.

And then they grow up and they become patrons of the arts and they become people who give back to their communities. And we don't come to be in the nonprofit community because we want to be millionaires. We do it because we have a passion for the arts. And so I can't.

I can't explain to you enough how much we need this part. We need this in our community. It's nothing but positive stuff that happens. And so I just. I beg of you to continue to support the arts in our area. But thank you guys so much.

30 seconds or under, please.

Good morning. My name is Keith Rydell. I'm the managing Director of Capital Stage Company here in Sacramento, California. The governor's proposal to cut all of the funding for the performing arts equitable payroll fund absolutely cannot happen. This grant will be a lifeline for Capital Stage. This is an existential moment for our company.

We continue to feel the effects from the pandemic. Audiences have still not returned to pre pandemic levels. Earned income has not met projections. And just since 202025% of Bay. Area theaters have closed or suspended operations. A staggering statistic. And in the past two years, Sacramento has lost one of three of our small professional theaters.

The closure of any arts organization has significant impact on our economy. The arts industry contributes 7.5% of California's GDP. In the past 10 years, Capital Stage has paid over $7 million in wages, taxes, and benefits, employing hundreds of artists, designers, and staff. We see upwards of 21,000 people walk through our doors each year, many of.

Who support restaurants and other local businesses in our area. Research shows that for every theater ticket, people spend an average of $35 per person above the cost of their ticket on other services. Parking and food and drink being the two major ones. Theater creates empathy, and we need more empathy in this country.

Thank you very much for your time. Thank you.

Good morning. My name is James Ellison. I'm the artistic Director of Celebration Arts.

Good. Oh, there you go.

I'm the artistic Director of Celebration Arts. And we need to keep this funding for the arts because we just created jobs. We did recently create jobs. We're one of the small organizations, but. We are the premier black theater in Sacramento. But we don't just do theater. We do everything. We do music, dance, and we uplift the community.

We uplift our youth. I was one of those troubled youths. That got into theater and got into the arts. And because of the arts, I'm here now running the theater. And now I've changed. I've been a changed person because of it. And if we get those funds, if.

We get those funds, those jobs that we have, we'll still be able to keep them. So now we're supposed to be not having those jobs. So I do ask you guys to please continue that funding and let us keep those. That 11 million.

Thank you.

Good morning. I'm Jennifer Lane. I serve as Policy Chair of California Arts Advocates, our statewide arts and culture advocacy organization. I urge you to reject the governor's elimination of funding for the performing arts Equitable Payroll Fund.

This proposal comes at a very troubling time of deep cuts to state arts funding, including over 70 million of previously approved investments. And this proposal will be devastating for our sector. Performing arts is a powerful economic Engine, producing over 250,000 jobs statewide and thousands of downstream jobs. It is a jobs creator and retainer.

I want to reiterate that the Equitable payroll Fund is already well underway. These funds have been committed. They are not unspent and demand exceeds supply.

And as of today, we have close to 250 organizations that have signed on to a letter opposing these cuts and including the California Federation of Labor Unions, Cal nonprofits and the California Travel Association. So let's finish what we started and reject these cuts. Thank you.

Thank you.

Good morning. My name is Shawn Fenton. I'm the Executive Director of Theater Bay Area in San Francisco. We support over 200 arts organizations across the greater Bay Area, the majority of whom are small orgs with budgets of under $2 million a year.

Last week, Aurora Theatre in Berkeley, despite being the incubator of a recently two time Tony Award nominated play, also announced it is shutting down operations. Without this fund, too many other arts organizations in the Bay Area and across California will definitely close. These aren't just abstract numbers. These are our colleagues, our friends, their livelihoods, their jobs.

To reverse course now would not only be devastating, it would waste the months of time and resources already invested in standing up this program of already promised relief. Please keep this program intact and funded. Thank you very much.

Hello, Assembly Members in 10 words. Why should you Fund the PAPF? Because music is the universal language that can heal us all. My name is Maud and I'm the founder of Music Landria, one of the orgs that will be forced to close without this funding. We're the largest instrument program in the United States.

We've provided over $3.5 million of free access to music instruments. We're also the only all ages music venue that's alcohol free in Sacramento where young musicians can come play live, build. Family like bonds, heal and grow. I know how stressful your job is, especially working through all this budget stuff. And music is a great way to unwind.

So I'd love to invite you to. Come and visit Music Landria while you're in town so you can see, hear and feel the impact of our programs and why the arts are worth funding.

Thank you. Say that. Say that name again one more time so we can all go visit tonight.

Please do. We have a show on Thursday and we're called Music Landria. Music. Music Landria Alexandria, but Music Landria.

Okay, thank you. Thank you.

Morning, Madam Chair. Dylan Hoffman, on behalf of the Center for Employment Opportunities, I want to align our comments with REDF in support of the California Rise program. It's absolutely vital for employment social enterprises like ours who provide workforce development training for the formerly incarcerated population. So appreciate the funding for that. Thank you.

Thank you. Anybody else speaking? I know we have semi Member Matt Haney who wants to make an additional comment.

Yes, well, I want to appreciate everyone who came in and shared their comments and also shared the letter with us. I just wanted to underscore that this would be disastrous to see these, these programs cut.

In particular, want to note the Performing Arts Equitable payroll Fund, where there's already been some of these funds that have been spent or planned to be spent and places would have to close and people would have to lose their job.

I can say that I've spent a lot of time over the last couple years looking at what we can do to support some of our downtowns across our state that are struggling. We visited 10 of these last fall, 10 different cities.

And the consistent theme that came up was that if we're going to get people to come back into our cities, to come out to our restaurants, to our bars as tourists, to live in our cities that are still struggling with a lot of vacancies, that the arts have to be at the center of it.

And so these organizations really have an exponentially positive effect on so many different aspects of our state, and it's a relatively small amount of money.

So, Madam Chair, I really hope that we can do whatever we can to restore those funds because it's just critical for those organizations and also so many positive effects that come as a result of that. So I just want to underscore, I know that my colleague from San Diego also agreed with that in his comments.

Thank you. And we do have another Assembly Member that wants to make comments. But I do want to add, this is the budget process, exactly how it should work, which is sometimes we go in order and then we hear from the public, there's a response, and that's what's happening here. Assembly Member Gibson, thank you very much.

Madam Chair, and thank you for allowing me and the speaker. Allowing is opening up to other Members who don't sit on these subcommittees to come in and weigh in, especially during this very, very critical time as we go through our budget process.

So again, thank you for allowing me to be here, the speaker, for opening up the gates to other Members to be part of these committees and also the dialogue and the discourse. Former Chair of the Arts and Entertainment, Sports and Tourism.

I certainly understand your passion and certainly believe in the arts and the creative economy and why these arts. I mean, last year we had, you know, a tsunami storm just trying to maintain and budgets were cut and then money was restored to some degree and how important this is to local levels and as well as our communities.

And so thank you very much for those who've testified and you articulated your particular point and why these funds are absolutely necessary. And I want to align my comments to my colleague, both from San Francisco as well as San Diego. We need to do everything we can.

This is a drop in the bucket in terms of our overall budget. Right. And how these funds can really change people's lives and, and help. And it's not by which it's not adding to the economy, it's adding to the creative economy, putting people to work.

It's creating an avenue not only for our local performers and artists, but also those on a national stage as well. And so this is very, very, very important. And thank you very much for elevating the importance of why we need to make sure that these funds are in fact remaining into our budget.

And also I chair the Select Committee on the Ports and Goods Movement and certainly around, you know, zero emissions vehicles as well as containerized ports. We have to do everything we can to making sure that our ports are as vibrant as possible. We tout and we brag about being the fourth largest economy.

But we also need to make sure that we continue to be very, very competitive to making sure that we can have bragging rights. We don't want to lose our footing in terms of where our economy is at. And we know and realize that our ports are in fact, the lifeline of California.

And we need to be really making a significant investment into all of our 12 ports.

I toured all of our 12 ports and came out with a legislative report why our ports are needed and why our ports need to have a continuous stream of funding to making sure we're competing with Panama and all the other different ports outside of California and they want our business.

And if we're not making a significant investment into our ports to making sure that we stay competitive, then we shoot ourselves in the foot, not only to the jobs, but also our overall economy. And so I just want to go on record to saying that because that's very, very important.

And as we continue to deliberate in the space about our budget, that we continue to one, make sure that our, that our, our arts are maintained and also making sure there's no funding cuts in that regard.

And also we increase our funding to our ports and our goods movement in order for us to continue to maintain California's footing and being a real trailblazer in this space. So thank you very much, Madam Chair.

Thank you, Assembly Member. Again, I concur with my colleagues. And if we've made a promise to organizations to Fund and then we pull it back at the last possible moment, that's not how we want to do business in California. So I definitely feel that we have to find a way to keep those funds in the budget.

And I know that in a tight budget it's always hard to say no. But if we've already moved forward with notifying and so forth, I think that's a really poor way to operate with that. We thank you for being here. I apologize to everybody. I know we're moving things back and forth around the agenda.

One of the things we're trying to do is make sure we can keep some of our Members here. So please forgive us. We will be next going to the Department of Cannabis Control. We will finish this agenda after lunch.

So those of you who are here for other items, we will come back at 1:30 to 2:30 or 2:15, I believe. Okay. About 2:215. And if we don't finish everything, we will carry some of this over tomorrow. As you know, it is agendized also for another hearing for tomorrow.

So I'll repeat that we're going to do cannabis now. We will finish up after cannabis, take a break, come back at 1:30 to go through more items. But we will conclude at 2:15. So 1:30 to 2:15 and then tomorrow, whatever remains, we will take tomorrow's agenda items plus remaining items that we don't complete today. All right.

With that we want to welcome the Department of Cannabis Control and please introduce yourself as you make your comments.

Good morning. My name is Christina Dempsey and I serve as the Deputy Director of Government affairs for the Department. I'm going to be as brief as possible so that we can move on to.

And let me just interrupt just to let you know, we will be combining items 8 and 9. Yep, thank you.

I'll speak to both of them briefly and then allow as much time as possible for discussion and public comment.

The cannabis proposals included in May revision focus on strengthening and sustaining the state's ability to address illegal cannabis activity while also being mindful about cost pressures that can disadvantage the legal market and make it harder to displace illegal activity.