Senate Budget and Fiscal Review Subcommittee No. 4 on State Administration and General Government

All right, the Senate Budget and Fiscal Review Committee, Subcommitee number four on State Administration and General Government is called to order. We're holding our Committee hearing here at the State capitol in room 113, which ask all Members of the Committee to be present in room 113 so we can establish our quorum.

Please note that although we do have a lengthy agenda today, there will be no discussion items or presentations. And therefore, anyone wishing to provide public comment should make their way to room 113 as soon as possible. As we begin, let's establish a quorum. So please call the roll.

[Roll Call]

All right, as we begin, I want to thank the Members of the Subcommitee for their service, their curiosity, their stamina over these last several months. This is our. This is the 12th hearing of budget Subcommitee number four. And we have covered an innumerable number of issues. The work of ours.

I know this personally because Digital Democracy at Calmatters says I am the most talkative Member of the Senate. And when you dig into the data, it is almost entirely. Almost entirely because of this Subcommitee. We have gone through so many diverse issues. It is like a Jeopardy game.

In many, in many, many hearings, we're taking up what seem complete as completely disconnected issues. But I really appreciate the Members of the Subcommitee for really digging in, problem solving, collaborative, bipartisan way to try to craft a budget that will work for the people of California.

So thanks so much to the Vice Chair and to Senator Smallwood Cuevas, who I know is on her way, and to the staff of the Committee and of the Republican caucus for their creativity for all of the long nights, early mornings, the illnesses, the stress, the changes, the weighting, all of it, as well as the deep, professional, thoughtful, complete, complex analyses in order to bring the values of the people California has expressed through their Legislature to life in the budget that has to is challenged, but represents the most important set of legislation that we pass.

And so thanks very much to the staff. So, Arvar, our votes today do reflect the issues that are within the purview of this Subcommitee. They're just a portion of the actions that are connected to the legislative budget agreement that the leadership of both the Democratic caucuses announced yesterday.

And that Bill is already in print as SB and AB101. And I note this because this is a consequence of. I know Senator Niello has comments about it as well, but as a consequence of a variety of voter ballot measures and the timing of revenue forecast estimations, what have you we are caught in a situation where in order to meet both the Constitution's requirement that we pass a budget at the Legislature by June 15 and the equally voter approved constitutional requirement that we that the bills be in print so 72 hours in advance without any amendments whatsoever being put into place.

As somebody coming from the local government, I deal with this challenge, this conflict in state law all the time where the emphasis is on notice and transparency that will sometimes then create a sense of theater in public engagement because we will not be making dramatic changes to any items today. We can't because of the 72 hour rule.

And I want to acknowledge that, that we very much encourage the testimony and the participation today because this is not the end of the line for the entire process, most likely if the Governor doesn't sign this version of the budget.

But I also want to be real and acknowledge that the process is not ideal in terms of what any of us would like to see in terms of eliciting and then considering public and stakeholder feedback on the budget.

And so before we proceed to our public comments and our actions on the budget, I want to invite Senator Niello, our Vice Chair, for any overview comments that you might have as we begin.

Thank you for that. And with regard to your rating on Digital Democracy, I've known Senator Cabaldon for a long time and he, he is known sometimes to be a bit verbose, but I will point out that every time he speaks, no matter how many words he uses to express himself, he is expressing himself on substantive items in substantive ways.

And I've enjoyed working with him as chair of the Committee. Also, it we're in an interesting circumstance here because quite frankly this gives me sort of ammunition for the rants that I continually go on on the Senate Floor complaining about the budget process.

It is largely as a result of the Proposition that was passed in I think 2010. We the budget previously required a two thirds majority and during that time and I was by steer the budget on the Assembly side, we Republicans had a third of the votes.

And so we had to be a part of the process and we were. And it was difficult to come to agreement by the end of June. And it was frustrating to a lot of constituents that the budget deliberation, particularly when it was difficult, would go into July.

And when I met with constituents and they complained about that, I said well, we could have settled the budget in June and here's some of the things that would be in it. And they said, well then I wouldn't want you to settle it in June.

So it was an interesting Democratic deliberative process that needed to play out, but it did frustrate people. And so the Proposition that was proposed was to make it a civil majority vote. And ever since then, Republicans really haven't been part of the budget process, at least on the inside.

We've been part of hearings like we are here and so forth. But the interesting thing here is that we will be considering and voting on items which typically is providing input to the actual drafting of the budget.

And the budget's done, so maybe we should have waited until tomorrow to put it in print, but then we would have had to been here over the weekend. So it makes for a very interesting process. And Senator Walden is right, it is because of the constitutional request requirements.

So with that, let's get on with the show and welcome Senator Smallwood Cuevas, did you want to make any introductory comments before we begin with our testimony and votes?

Well, it's been a long time coming to get to this point, but clearly our state is in a crisis on so many levels right now. I just think we are ready to move forward.

We've gotten a lot of information, and unfortunately, it's going to be one of those years where none of us are going to be completely happy with the decisions we're going to have to make because our hands are being tied and the Federal Government is tying the binds tighter and tighter by the day.

So we're here to do the work. We're here to protect Californians. And I think we are putting our best foot forward in light of what we're facing. And we know we have far much more to face. So this is not the end, but I think a beginning of a deeper process.

So I call on all Californians to be patient and to know that we're doing the best that we can under the circumstances.

Thank you, Senator. And one example of the issues that we've been taking up over these last several months, as I think you've been your clarion call that we really focus and invest and make sure they're structuring properly the civil rights Department. And some folks said, well, but why is that really needed?

And I think you reminded us, and your words were very prescient about how critical that is. One example.

And I say that because, although I began the hearing with a statement about sort of where we are in this strange process that we go through, it isn't in any way to diminish the substantial work that we've done here, both in the Subcommitee, but also with all of the stakeholders and those that have participated.

You cannot look through the SB101, AB101 framework or the actions that we're going to take today and not see the substantial how substantially shaped this budget has been by the work of this Subcommitee.

And so the process for the mechanics and all of that and the way the scheduling of the hearings, the public testimony at the end and all of that, I don't think is particularly pretty.

But the content, the substance and all of the testimony and the hearings and the good work of this Subcommitee over these last 12 hearings is, is very well reflected in this document. Not perfectly. There's still a lot that all three of us I know would quibble with, and there's more. There likely to be more negotiations to come.

But many of the key priorities, including on the housing and homelessness side, on the civil rights side, economic development and others, are in this budget. And that's a testament to the work. And then a lot of the stuff that no one would notice.

The issues that no one in the the rest of the Legislature will ever pay any attention to, but they expect that we will, are also reflected in the careful work that the Subcommitee and the staff and the Department of Finance and LAO have done together in order to make sure we get that right.

I want to thank you, Mr. Chair, because I don't think there's been a budget chair that knows the details and gets as much in the weeds as you on every topic.

I learned a lot and this this go around, and I really want to appreciate your thoughtfulness and your commitment and integrity and really vetting and interrogating these topics and issues and pressing the discussion to help us get as close to the best opportunity that we can given our circumstances here in California. So really appreciating your leadership.

Thank you. Thank you both for taking care of the freshmen. Okay, so let's then move to our public comment on any of the issues that are on our agenda, which is almost the full scope of the Subcommitee. So those Members of the public that wish to comment.

Excuse me, please come forward and form a line, hit the microphone, and we will proceed. I'm going to ask that each of the comments be limited to no more than two minutes. So let's begin. Please proceed. Welcome.

Good morning. I'm in Habitat for Humanity, California. I'm Debbie Arakel. I'm the Executive Director, and I'm here representing our local Habitat for Humanity chapters working in 42 counties statewide. And I want to thank you. We appreciate that this is an extremely difficult budget year. And with that, I respectfully would like to share that we're very concerned that the CalHome program is zeroed out.

While the Dream for All down payment assistance program that does not produce any units and is available for higher income earners to purchase some market rate homes is proposed. CalHome is the only program that is 100% lower income, only up to 80% AMI and and it's the only program that actually produces affordable units for Californians to buy.

We can all agree that California has a severe housing shortage. So we urge that with that down payment assistance programs not be allocated alone but coupled with programs that actually produce units. All the DPA in the world down payment assistance in the world doesn't help if there are no units to to buy.

So we really wanted to clarify and urge that there be a dual investment to include CalHome that actually produces units along with any DPA investment. And I want to clarify that nonprofit home developers like Habitat for Humanity and Habitat Homebuyers cannot access Dream for all. Those funds are not available at all. They do not produce any units.

They do not help Habitat for Humanity and nonprofit developers that create supply and they do not help our home buyers. So I appreciate your time and consideration and I very respectfully urge an inclusion of CalHome in the budget allocation. Thank you.

Thank you. Good morning Mark Stivers of the California Housing Partnership. And first of all just a huge thank you to the Committee and its leadership, you guys for restoring the low income housing tax credit money and the money for the multifamily housing program.

This will help us build critically needed affordable rental housing where we have the units ready to go. We are in addition to that we are supportive of the Habitat ask to move some of the money for homeownership into the Calhoun program.

We would love to see the HAPP homelessness money put into this year's budget as an intent for next year if that's at all possible through this process.

And then one technical item I've been talking to your staff about was within the MHP item we would love to add at some point a provision that provides HCD the staff to implement the construction lending Bill that was enacted last year that will save $1.0 million per MHP development.

We think that's a good investment of our time to get a couple people staff in place to do the regulations so we can save $1.0 million per project. Thank you.

Kim Lewis representing the California Coalition for Youth on issue 60 around HAPP and we appreciate the Legislature's commitment to want to Fund around seven we would just hope, hope that as you push forward that there's no disruption in the flow of dollars that are going to our locals.

Because for our young people, our children and youth on the streets experiencing homelessness on their own, we don't have much other resources available to them. And with all the federal disruption and the few federal funds there, we're very worried that many of our youth programs are going to have to close because of loss of federal funds.

So really appreciate that and hope your TBL contains that strong commitment to our young people within it. Thank you, Mr.

Chair. Senators. Dr. Lynn Silver, pediatrician. Getting it right from the start with 100 other organizations. We thank you for the wise recommendation to reject items 50 and 51 that impermissibly raid the cannabis tax Fund to meet DCC obligations.

We ask that you hold fast and not sacrifice the interests of thousands of children who receive childcare or substance abuse prevention as well as local law enforcement to those of recreational jug businesses, however meritorious.

Please reject these and other legally vulnerable requests to use the budget process to repeal the required tax adjustment or to undermine our Cannabis Tax Fund's historical commitment, historic commitment to kids. Thank you.

Good morning, chair and Members. Rebecca Marcus, on behalf of the California Public Defenders Association Speaking on issue 52, strongly support the staff recommendation to reject the expansion of the enforcement authority for all the reasons that were discussed in your previous Subcommitee hearing.

Also speaking on behalf of leading H California, the state's leading advocate for quality nonprofit senior living and care, supporting issue 44 TCAC, the supplemental funding, as well as issue number 61, the 120 million for MAH. Thank you so much.

Good morning, everyone. I'm Darby Kernan. I'm representing REDF, the Robert Enterprise Development Fund. We are disappointed that the Legislature is rejecting the governor's January budget that invested $17 million in the Cal Rise program. As the Legislature is focusing on homelessness and housing, the one thing that works is getting people jobs.

This program works with employment social enterprises that hire formerly incarcerated, formerly homeless individuals and and gets them into the economy. They get higher, they get. For every dollar invested, there's $2.50 that helps the state.

You get people off of assistance and every one of you up here has an ESC employment social enterprise in their district that is working in this program. We would like you to change that recommendation and support the governor's May the January budget of $17 million for the Cal Rise program. Thank you, Mr.

Chair. Members Pat Moran with Aaron Reed and associates Associates representing the Resource Legacy Fund. We support the staff Recommendation not to improve to approve the Cannabis Fund Shift BCP or Trailer Bill Language in Agenda Item 50 and 51.

By doing so, you save $61 million in 2526 and $73 million each year thereafter for child care, youth substance abuse prevention, the environment and local law enforcement. These are the programs that voters wanted the money to go to when they approved Prop 64.

And we also have to note that these provisions also are in violation of express provisions of Prop 64 as well and would probably be litigated. Thank you.

Hi, Good morning. Marina Espinoza here with the California Housing Consortium. Just want to express our appreciation for the proposed investments in the Low Income Housing Tax Credit Program and the multifamily Housing program. And we strongly urge the Legislature and the Administration to maintain those investments in the final budget. Thank you.

Good morning. Committee and chair Claire Sullivan on behalf of the cities of San Mateo, Belmont, Foster City, Redwood City and the Town of Hillsborough in strong support of the staff staff recommendation to provide 118,000,000 in a one time federal one time General Fund for the VLF backfill. We want to express our strong gratitude for your leadership. Thank you.

Good morning. Julie Baker with California Arts Advocates. I'd like to thank the Committee for recommending to oppose the Governor's proposal to revert the $11.5 million for the performing arts Equitable Payroll Fund.

This program came out of a Bill in the Senate and was designed to solve a problem for under $2 million nonprofit performing arts organ organizations to be able to be in compliance with employment laws and keep good paying jobs in the arts.

This program is essential and as it was already opened we know it was over subscribed more than the appropriation. In fact the total number of applications was over $40 million. The arts have faced over $70 million in budget cuts since 2023 and compounded by the federal cuts.

We appreciate the Senate and the Legislature recognize this is not the time to cut the arts for further but invested in the critical need for freedom of expression. We continue to work with Senator Smallwood-Cuevas on funding also our important statewide Cultural Districts program to reinvest in this vital program that supports community and economic development. Thank you.

Thank you Mr. Chair. Members Jean Hurst here today on behalf of the Mono and Alpine County Board of Supervisors, the Urban Counties of California, the Rural County Representatives of California, the California State Association of Counties and the League of California Cities all in support of the allocation of Resources to Fund insufficient ERAF.

We greatly appreciate this allocation and reiterate our interest in resolving this issue permanently. Chair Second, on behalf of the Altadena Library District Special District in the unincorporated community of Altadena, I want to express our appreciation for recognition of the significant fiscal impacts that the Eaton Fire has had on the district through the resources that are made available through for local government emergency loan funding.

I do want to note that the District has experienced about a 40% property tax loss due to delinquencies and deferrals. We are uncertain at this point about future receipt of those revenues. So we just want to make sure that the language does allow for some flexibility in terms of repayment as we manage our recovery. Thank you very much and again, thank you.

Good morning. Orquilia De Borrez, an intern with Carol Gonzalez here to say thank you for including item 11 today on your budget package. On behalf of Long Beach City College, Hispanics Organized for Political Equality, Southern California College Attainment Network and ED Trust west, thank you.

Good morning. Jesse ... on behalf of the Campaign for College Opportunity. Amid a difficult budget year and a future forecast, we thank the Senate for making a dedicated budget investment to establish a higher education coordinating body in the State of California.

The proposed $5 million investment in the Interagency Council will allow the state to maximize current investments in K12 higher education, employers and the workforce. We look forward to working with you all to ensure this coordinating entity is inclusive of and accountable to California students, workers and employers. Thank you.

Good morning. My name is Divya Shiv with Housing California. I want to express my strong gratitude to the Senate and the Legislature for including LIHTC and MHP in the budget to address the affordable housing affordability crisis in California.

I also want to ask that HAPP be included for this fiscal year as when it's included for the 2026-2027 fiscal year. CoCs and service providers must bring down and end their services and they can't rely on the funding which can hurt the homelessness situation in California. Thank you so much.

Good morning. Raymond Contreras with Lighthouse Public affairs on behalf of the San Diego Housing Commission. I wanted to echo the thoughts of Habitat for Humanity in California on providing allocation for Calhoun funding being the only state for funded program for development. Thank you.

Thank you. Mr. Chair Eduardo Martinez here on behalf of Actors Equity, large union of theater actors and stage managers want to thank you for the restoration of the Equitable Payroll Fund very important to our Members. Thank you.

Chairman Nick Romo on behalf of two clients today, Stanford and NATcast expressed their gratefulness for the $25 million for the Sunnyvale Chips facility as well as a separate item, the City of San Jose Mayor Maymahan to express concerns about the HHAPP allocation, about the uncertainty that it would cause as we continue to program homelessness services and programs in the city. We look forward to continuing our discussion on that.

Does anyone else wish to provide testimony to the Subcommitee? All right, again I want to thank we saw a lot of folks today. This was like what happened last week summary from last week's episodes or the last 12 episodes of the Subcommitee.

And it's just a reminder of the breadth of issues but also the profound amount of advocacy that's been occurring on these issues. And as most of the testimony showed, that advocacy and the stories and the data, the ideas are largely reflected in this budget in various ways.

As I've said at the beginning, it's not what any of us, including the budget staff, would have written out of nothing but reflecting the various trade offs and priorities and choices that need to be made in any budget. This is the document that we're going to be moving forward with.

So today we're not going to be taking up any changes or amendments to it. But as I say that unless the Governor signs this, this budget next week and fingers crossed, unless that happens, there will still be additional work to be done.

And so your continued engagement in this process and raising these issues and flags and issues big and small are still important. So thank you for that. I also want to take a moment just before we go.

I acknowledge our own staff, but to say thank you to the staff of the Legislature analyst office more directly, just the quality of the analytics and the advice, even if we don't take the advice every time, it really is very important to holding accountable our colleagues in the Administration and ourselves and having the independent fiscal and policy analysis of LAO and having it be at such a high level of professional competence is absolutely, absolutely essential to the people of California Getting a budget that is, that makes sense, that is real, that has integrity and that's smart.

So thank you to LAO and then to all of our folks, our friends in the Administration, the Department of Finance for sure. These are, these are challenging hearings sometimes. That's our job. The people expect that. I mean, that's why we have two branches.

These two branches of governments exist in partial conflict for the purpose of making sure we get it right. But the Department of Defense has been professional engaged throughout that process. Appreciate that.

And all the other agencies that may come to the Legislature once a year just to get, just to get welcomed and then grilled by this Subcommitee and our colleagues in the Assembly and have done it with, you know, with care, about making sure. Making sure that we get it right. We know it can.

Having been a Deputy Director of the Department, I know how stressful and anxiety feeling it can be for DOF. It's just part of the job, you know, but if you're just running an agency that people don't notice that much, and then you come over here and suddenly they do notice and you wish they didn't. Thank you.

Y' all did well. And we're gonna continue to have challenges, but appreciate your full engagement over these last 12 hearings. So with all of that, we're going to now move to our votes. And for the sake of efficiency, we're going to vote in a few in three different blocks.

So for the first, we're going to take up and ask if there's a motion on items. Let me get a water for my allergy cough.

So our first block is items 1.1.523671315 16A, 16B1921222324253031323536374041434447484049505152585960626365667071737578818586901001031-041051-61091121-131141-171181191-201211-221241251-261271-281301311-321331-34136137139 and 142.

No one has. Bingo. I didn't hear what. All right, Senator Niello. So Senator Niello moves that we adopt the staff recommendation as set forth in the agenda on those items, which I'm happy to reread if anyone needs to hear it again. So it's been moved by Senator Niello. Is there any discussion? Seeing none. Then that's the motion.

Please call the roll.

[Roll Call]

Right. Ayes 3, no, zero. Those issues are out.

Now, we're going to proceed to and ask if there's a motion on items [Items]

All right. It's been moved by Senator Smallwood-Cuevas. The motion is to adopt the staff recommendation as set forth in the agenda on those items. Please call the roll.

[Roll Call]

Ayes, two nos one. Those issues are out. Excuse me. Next, do we have a motion on the issues? Excuse me. [Issues] and 138. It's been moved by Senator Smallwood-Cuevas. The motion to adopt the staff recommendation is set forth on in the agenda. Please call the roll.

[Roll Call]

All right. Ayes, two, nos. None. And those issues are out. Again, thank you, everyone, for your patience and cooperation. We've concluded the agenda for today's hearing. These items will be reported to the full Senate Budget and Fiscal Review Committee tomorrow at tomorrow's scheduled meeting of this of the full Committee. Thank you. Again, this meeting is adjourned.