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

Good morning. Nice to see a full room here at welcome to Assembly Budget. Sub four, this will likely be our last hearing of the year. Today, we hear from the Department of Finance and the LAO who will provide who will provide an overview of the May proposals. We'll also dig into the proposed regulations for cap and invest, the program and their impacts on the subcommittee.

If the hearing is still underway at noon, we'll need to break and resume at 01:30PM. At the end of all the items, we'll take public comments. As always, members are welcome to ask questions and make comments on any item in the May revision. We have representatives from many, if not all of the departments in the audience, and we appreciate that. For each of the items on presentation, I'll ask each of the witnesses to introduce themselves before they begin their testimony.

Before we begin, I want to thank the Department of Finance and the State Department for crafting a thoughtful and balanced budget. I especially want to thank the LAO for working over the weekend to provide us with detailed analysis on the many proposals included in the May revision. I also wanna thank the members of the public and the stakeholders for coming to this hearing so that we can truly hear the impacts of these proposals. I also appreciate my colleague, Assemblymember Rogers, for being here promptly this morning.

And I look forward to working collaboratively with the administration and the Senate over the next few weeks as we try to land this budget on time.

And with that, since it's our last potentially our last hearing, I want to thank two incredible staff people who also worked long hours over the weekend to prepare for this with the May revise coming out on Thursday. And over the course of the year, do a great job for us in in terms of budget. So with that, our first is the overview of the governor's May revision proposals on transportation, climate change, natural resources, environmental protection, and energy.

And I also want to recognize that we have Secretary Crowfoot here And immediately after their presentation and before we get into questions, we will then go to secretary Crowfoot for the questions that we might have on areas under his purview. And so with that, if you'll introduce yourself and we'll go in whatever order the Department of Finance would like to go in.

Thank you, mister chair. Steven Benson, Department of Finance. I will do a little bit of just a couple of comments on the overview with mayor vision, talk about natural resources, and then I'll pass it off to my colleagues, Eamon Nalebend and, Andrew March.

So the mayor vision follows through with the governor's budget commitment to balance the budget over both the 26-27, and 27-28. So budget year and budget year plus one. And it does that by leaving a positive SFEU balance of 4,500,000,000 in 26-27, and 2,100,000,000 in 27-28. It takes important steps to address what both the administration and the LAO has pointed out as a large out year operating deficits. The governor's budget, these were at about $20,000,000,000 each year.

With the May revision, that's cut more in cut by more than half. So huge strides in terms of reducing the ongoing operating budget. In the mayor revision specifically, we had some updates to the climate bond proposition four proposals. The governor's budget proposed 2,100,000,000 in 26-27 from the climate bond to continue critical projects and programs. The mayor of Vision proposes an additional $148,200,000,000 in 26-27 for some str strategic investments that include acquisition of the 161 acre Golden Gate Fields property.

Will be used to, create a shoreline park and recreational hub in the Bay in the Bay Area, as well as funding for wildlife refuges and, wetlands statewide. Specific to the Golden Gate Fields, the mirror vision proposes a 125,000,000 from the climate bond, one time funding, as a maximum contribution. That would be budget as 25,000,000 within CNRA's budget, $25 million within WCB's budget, and 75,000,000 within the Coastal Conservancy's budget.

It also includes language that allows the Department of Finance to shift funding from this specific project to the respective departments, just regular competitive, grant programs, should we be able to identify, additional philanthropic or non state funding to offset those amounts. We're specific to the wildlife refuges and wetland habitat areas.

Ma Reision proposes 23,200,000, from the climate bond and one time funding, for these projects. We originally, in in the governor's budget proposed oh, no. Sorry. In 25-26, we provide our there was some funding appropriated to get the program started off, And since that work has been has been done, CNRA has identified a number of shovel ready project with stakeholders. And so we wanted to get this funding out there to get those projects going since they're ready.

Moving on from the climate bond, other significant investments, there is for Fort Ord Dunes, 3,600,000 general fund proposed. That would be switching or transitioning to 3,300,000 ongoing. Of that amount, 1,100,000 is general fund, and 2,200,000 is from the state parks and recreation fund. This will provide, the funding to activate some camps or some new campground sites at Fort Ordin Dunes. It's been under construction for a while.

Those campgrounds will provide accessible, low cost coastal overnight accommodations, along the Monterey Coast, where camping, has historically been, limited, and we expect these to be sort of high demand, location. And it opens up access to the beach, aquatic recreation, natural and cultural resources that haven't haven't been previously accessible. And then finally, I'll touch on within the Governor's office of land use and climate innovation.

The May Revision proposes statutory changes to authorize a fee, to be used for documents submitted to the state clearing house for CEQA filings. This will be this funding will be used to support the maintenance of the two.

Right now, there's Sequinet that's used for people who wanna come in and look up Sequa documents in a file, as well as Sequa submit, which is how you submit them. Those are both pretty antiquated and need a lot of work. So this will support maintenance and and upgrade of those and provide some efficiencies and improvements to how those systems work. So with that, I'll turn it over to Eamon to talk about transportation.

Good morning, Eamon Nalband. I'll be going over the, transportation proposals of the budget.

And and you'll need to be a lot closer with that microphone.

Is this better? The May revision proposes investments that will enhance California's transportation system, including additional funding to continue the administration

Hold on a second. Can you hear him in the back? I see some head shaking. No. Some yes.

So it's it's how well you speak in in directly in here just like I'm not doing it often enough also. Yeah. I I tell them all the time to move it to the side and they don't seem to like it. If you move it to the side of of way through and then you can, yeah, then you can get it close while you you can even set it on top of the part paper you're not reading if you want.

But alright.

There you go.

Alright. The May revision proposes investments that will enhance California's transportation system, including additional funding to continue the administration's work in homeless and cam and litter abatement, as well as investments in the generative artificial intelligence that will result in a safer and smarter transportation network. The mayor revision also proposes statutory changes to support planning and preparation for the twenty twenty eight games in Los Angeles. Specifically for the Department of Transportation, the mayor revision proposes $6,200,000 general fund for two years to continue the homeless encampment coordinator workload.

Those coordinators help connect homeless individuals with state and local services during encampment cleanups on the state right away.

27,500,000 one time from the public transportation account to continue maintaining and restoring state owned passenger rail equipment. $40,000,000 general fund one time to continue the special peep special program people litter litter abatement workload in the Clean California program. This funding will support low barrier to entry workforce development jobs and $16,400,000 one time from the State Highway account to fund the vulnerable road users Gen AI project and traffic mobility's insights Gen AI projects.

These projects enable Caltrans to automate and synthesize traffic data to make evidence based decisions that will improve traffic flow and road user safety. The May revision also includes two pieces of trailer bill for Caltrans.

The first proposed proposal authorizes the use of an automated enforcement system on the state highway system portion of the 2028 Games Route network. This will help keep the transportation system clear and efficient during the games and will reduce enforcement workload for the California Highway Patrol. The second proposal increases the cap on the state Route 710 rehabilitation account from 1,200,000 to 15,000,000. The increase in the cap will allow Caltrans to repair and sell more homes.

On the motor vehicle account side of the budget, similar to the governor's budget, the mayor revision projects that the MVA, the operating account supporting the CHP and DMV, will be insolvent as soon as twenty twenty eight, twenty nine with a projected fund balance of 196,000,000 in 26-27.

The May revision reflects approximately a $50,000,000 revenue increase over the governor's budget estimate. This is largely attributable to higher than anticipated driver license fees, vehicle registration renewals, and vehicle sales. Given the ongoing fiscal constraints in the MVA, the May revision limits new spending to necessary augmentations for the CHP and the DMV that will enhance safety and continue the modernization efforts and resource departments for operational cost increases.

For the MBA funded departments, the May revision includes a one time augmentation for the California hyper patrol of $48,000,000 in 26-27 for equipment and operating costs. This is in addition to the governor's budget proposal for 44,400,000 resulting in total phone total funding of 84,000,000 in 26-27.

It also includes one time increase of $3,100,000 to upgrade their wireless mobile video audio recording system and body worn camera system to five g. For the Department of Motor Vehicles for their MVA proposals, the mayor vision includes a one time augmentation of 24,500,000 from the MVA for operational cost increases regarding facilities and attorney general fees.

For the mobile driver's license program, the May revision includes a one time augmentation of $5,000,000 to expand the MDL, project that allows California residents to obtain a digital mobile driver's license or identification card that can be accessed through their smartphone. The May revision also includes trailer bill to remove the cap on the mobile driver license pilot participants. Given the condition of the MVA, the DMV is also proposing trailer of the language for various efficiencies to modernize its department and to reduce costs.

DMV has identified various departmental functions that may be streamlined and or eliminated, which require statutory changes to effectuate. The proposed efficiencies include eliminating driver license courtesy renewal notices and other notices, eliminating the required printing of driver handbooks and modernizing customer communications and specified renewals and updating title definitions and requirements. Lastly, for the DMV, the budget includes $4,100,000 to re relocate at San Clemente Field Office. Additionally, there are some myriad other requests for that are non MVA and other smaller departments.

I have colleagues and department representatives here to talk about those. And so with that, I'll hand it over to my colleague Andrew Marsh.

Good morning. Andrew Marsh with the Department of Finance. I'm gonna touch on some additional California Natural Resources Agency proposals in the water and fish and wildlife space, the California Environmental Protection Agency, the Department of Food and Agriculture, and also give provide you a brief GGRF update.

So first, for the California Natural Reach Resources Agency, building on prior investments for the Healthy Rivers and Landscapes program, the mayor vision includes an additional 25,000,000 one time general fund for the Department of Water Resources to deliver environmental flows, habitat restoration, science, and monitoring to support the requirements of the soon to be updated Bay Delta water quality control plan.

The mayor vision also includes $1,000,000 one time special funds to support the coexisting with wildlife initiative at the Department of Fish and Wildlife to proactively mitigate human wildlife conflict in targeted areas.

For the California Environmental Protection Agency, the mayor vision includes 2,500,000 one time special funds for the Air Resources Board and the office of environmental health hazard assessment to Hazard Assessment to complete critical foundational scientific research needed to support additional actions to reduce cancer risk from acrolein and ethylene oxide. The mayor of the region includes over 200,000,000 beverage container recycling fund for Recycle to advance a targeted strategy to stabilize markets, improve material quality, and expand redemption access for the beverage container recycling program.

To help balance the budget, the mayor of vision includes 9,600,000 of various ongoing general fund shifts for various boards, departments, and offices when the within the California Environmental Protection Agency. These shifts are to special funds that can support these activities. For the California Department of Food and Agriculture, the mayor vision includes 10,500,000 general fund ongoing to maintain critical pest detection activities for invasive fruit flies to maintain program funding in light of federal funding reductions.

Includes 8,400,000 general fund one time to offset lower than inspected fee revenues in recent years for the implementation of the industrial Hemp program. The mayor revision also proposes statutory changes to shift the industrial Hemp program from a state managed program to the federal Hemp program established by the United States Department of Agriculture. Additionally, 7,900,000 general fund, including 2,800,000 ongoing to implement the animal care program and comply with Proposition 12 due to challenges with collecting fees from from various covered entities under Proposition 12.

Lastly, to provide an update on the greenhouse gas reduction fund from governor's budget. To provide some context, the governor's budget assumed roughly 3,770,000,000 in both current year and budget year.

Since Governor's budget, we've had one auction, the February auction. It came in around $240,000,000 below estimates at governor's budget. So given this lower than expected revenue from the February auction, the estimates for current year and budget year have been revised downward from 3,770,000,000 in current year to 3,437,000,000, and from 3,770,000,000 in budget year to 3,394,000,000.

And I'm joined by many, colleagues from departments that can help answer any questions for proposals that I've mentioned here or, the number of proposals that are mentioned in the agenda that, we didn't go over for time.

Thank thank you very much. We'll go to the LAO.

Good morning.

Good morning.

Rachel Ehlers with the Legislative Analyst Office. So, since you haven't had a full budget committee hearing and our office did on Monday put out this, overall budget document, initial comments, which I think the sergeants have passed out to, I'd like to start with just a couple minutes on our overall message on the budget since that's the context for, our our take on the specific environment and transportation proposals as well. So start with the good news. Revenues are booming. They continue to boom.

It's some of the statistics around this are are truly kind of blow the mind. 30,000,000,000 more compared to budget act assumptions last June, $16,000,000,000 improvement since January. This is across the three year budget window. The May revisions estimate of tax revenues for the current year represents a 30% growth from just three years ago. So these upgraded revenues combined with some of the administration's proposals really have helped the state make substantive progress in addressing its structural deficit.

You may remember in January, we talked about kinda $20-30,000,000,000 structural gap. That's now kind of about in half based on the new, updated revenue forecast. But now I'll turn to the concerning news. I've I once heard that the job of a budget analyst is to find the gray cloud in every silver lining. So, unfortunately, along with the silver linings of revenues, we see quite a bit of gray clouds on the horizon.

Despite these booming revenues, the state's underlying fiscal condition in our assessment is not sound. We continue to have a structural deficit, both for the coming budget year, 26-27, as well as forecast for 27-28, even under the governor's proposals. That is that the planned expenditures exceed planned revenues. Really, the only way the budget proposal before you is balanced is by relying on reserves. So under the governor's proposal, both withdrawals from reserves as well as suspended requirements to put money into reserves totals $20,000,000,000.

So during periods of kind of elongated super revenue booms, that's usually the time that you're helping improve fiscal condition. You're putting money into reserves. You're paying down debt. And under this, proposal before you, the opposite is true. We have a $30,000,000,000 wall of debt and borrowing, and we are depending on 20,000,000,000 in reserves.

So this leaves the state in our assessment really poorly positioned for any slip in revenues. And we also view the revenue situation as as pretty precarious. The, we are disproportionately relying on AI driven equity valuations, and they're trading at highs that were last seen at the peak of the .com boom. So there is, risk on the horizon, and and we're concerned that the state's not in a in a good position to be able to weather that.

So in our report on Monday, we have three overarching recommendations for the way the state, could and we, in our view, should proceed.

The first is to maintain the same level of ongoing solutions that is in the governor's framework. That's roughly $10,000,000,000. The second is to rather than withdrawing or or failing to deposit $20,000,000,000 in total on reserves to make a $20,000,000,000, deposit into the reserves. And then third, to set aside an additional 4,000,000,000 to to cover the new borrowing, proposal on the prop 98 side, a settle up obligation that's in the governor's proposal.

So taken together, these recommendations would require the state to identify roughly $24,000,000,000 in new budget capacity or solutions as compared to the May revision.

There are a couple, items that could and that are a good starting place in our view to make significant progress here. The first would be to reject the governor's proposal to set aside nearly $10,000,000,000 in a new temporary surplus holding account. That's part of the proposal to take 10,000,000,000 of these revenues aside and kinda save it for for next year or for budget year plus one. If you instead put that in the reserve, that would be a starting place.

There's also about a just over $1,000,000,000 in new discretionary proposals in the governor's May revision across the budget.

Excuse me. I'm gonna interrupt you. Yeah. Let's let's just go back to that one because I didn't wanna lose that. Yeah. What's the difference between setting aside $10,000,000,000 in the surplus fund versus putting it into the reserves?

I think in our view, having it in a reserve that you can in our traditional reserve structure, the the budget stabilization account, means it's available now for if there's a downturn in revenue. So the way the Governor has structured it is really, to help already commit to pay for expenditures in budget year plus one. The whole structure of the May revision assumes that $10,000,000 will help cover expenditures in budget year plus one that are already on the books.

I think our view is that that should be not committed, but rather in a reserve ready if revenues, downturn or expenditures, are higher than you expect.

And does the does the governor have restrictions on how that money in the surplus account can be used relative to how the money in the reserve account can be used?

The way it's structured right now is that that funding is, set aside to pay for already committed expenditures in budget year plus one.

Sorry. Andrew Marsh with the department. One one note that I would make is the temporary surplus holding account is not a new account.

Go ahead.

Just stay on your microphone there.

It's not a new account that was created for the mirror vision. This was created back in 2024. I just wanted to correct that because Aidan Delio had had mentioned that it was a new account created in the May revision, but this was already something that the legislature and the administration has have agreed to. We're just utilizing it for the first time now in May Revision.

So it's setting a money money aside from this year to pay for pay for expenditures that are already gonna be committed to for next year.

It so it's quite it's part of the the balance over two years. It's essentially shifting excess revenues in budget year to budget year plus one to maintain a balanced budget. Thank you.

Okay. I'm sorry. Go ahead. Yeah.

Yeah. And I and our understanding is that when this account was set up, it was really to reflect the uncertainty in our in volatility in our revenues. If maybe revenues may come in higher, we might think they may come in higher, they may be lower. So let's have this that's why it's called the temporary surplus holding account. It's this idea that if funding comes in higher, we will have it available.

I I think in our view, the use of this where it's already dedicated for existing commitments is a little different than that. And then as I mentioned, there's about 1,000,000,000 in new discretionary funding in the May Revision.

So now turning to the resources and transportation proposals, Overall, the framework is really the same that we presented to you in January, those guiding principles and advice. I'll just give you a few examples of how you could apply it, and how we would view, recommending applying it to some of the the mayor vision proposals.

So as you recall, we recommended rejecting new discretionary spending proposals, especially from the general fund, unless they meet very pressing health and safety concerns or immediate needs, even if they have a lot of merits just given the budget condition. So some of those discretionary, proposals in May that we don't view as meeting that high bar include 40,000,000 for clean California in the transportation space, 25,000,000 for the healthy rivers and landscapes program, 12,000,000 for a museum of tolerance.

Again, lot of merits to some of these activities, but in the case of a budget deficit, any new spending comes at the expense of existing spending, and we don't view these as meeting that high bar.

There are some in here that we do think, would. For example, the, Department of Food and Agriculture, Plant Health and Pest Prevention, that's 10,000,000 ongoing. Even though it's ongoing general fund, we think that that really does meet a pressing health and safety need. You may recall we also talked about options for downsizing or looking at options for downsizing or seeking alternative fund sources.

Again, there's some proposals here where you could think about doing that, raising fees, for example, for some of the parks proposals, looking at using state transportation funding for the homeless encampment, coordinator proposal on the on the transportation side, always trade offs with these types of of, activities and and actions, but we do think it's worth considering.

On the proposition four side, we continue to recommend that you ensure that those expenditures meet your highest legislative priorities. This was a legislative bond. So as was mentioned, the biggest new proposal is a 125,000,000 for the Golden Gate Fields project. We recommend, or acquisition. We recommend you think about whether that is a high priority.

That's quite a lot of, funding, but it is a, a a project with a lot of merits. And then as you think about specific proposals, we just would recommend that you think about not only in the current in the specific proposal before you, but how they might affect future years given what we see as the deficit. So as we talked about at great length last week, the motor vehicle count has a structural imbalance. There's now new spending proposals for you.

Before you, another 73,000,000 from the motor vehicle count just in May. And similar to what we talked about last week, most of that is for ongoing activities even though it's being presented before you as a one time activity. So it's important that CHP and DMV are able to meet their operational needs, but thinking carefully about what that means about the the future.

We would give that same caution on the parks front that there are some proposals before you that that, again, have some have merit, for the for the budget proposal specifically, but thinking about the ongoing deferred maintenance, the ongoing operations, and, and just basic maintenance at parks, thinking about as you're expanding, acquiring different parks, how will the state be able to sustain those moving forward? Those types of kinda long term questions we think would be important to have in front of mind.

And I know you're gonna be talking about GGRF, later in the agenda, so, we'll have additional comments then.

But just at a high level, there's so much uncertainty right now about the GGRF both because of auction revenues, influx, but also because of the proposed regulations, before CARB. So I think our overarching recommendation there is that you start planning for multiple different scenarios revenue scenarios. What would you do if the state had $2,000,000,000? What would be your highest priorities? What would you do if the state had, you know, an additional 500,000,000 coming in above that?

What how would you spend that? That maybe the SB 840 framework that was adopted last year with a different set of assumptions about revenues may still be reflect your priorities, but may not. So starting to think about alternatives at this point. That, happy to answer questions, and my team is here from the LAO as well.

Congratulations on finding some clouds.

Congratulations on the silver lining. Yeah.

The silver the silver lining in in terms of following your role. But I I I wanna take this opportunity to compliment LAO over the course of this year. Again, LAO has just performed a tremendous function for the Assembly. Your analysis, your independent analysis really has given us a different perspective over and over again. And that's that's a view shared not just by me, but many of us in the assembly when we meet in various conversations.

Were impressed with what the LAO's office doing. And so we just wanna say thank you again. And I was being facetious about finding clouds, but that is your role is to make sure that we have both sides of of all of these. We're going to out of respect for all the things that our Secretary Wade Crowfoot has done for us. We're gonna turn to the questions that we're going to ask him.

We may still want to have the Department of Finance to have. So Mister Marsh, if you wouldn't mind moving to this chair so that Secretary Wade could be in that chair. Who? I'm sorry. You're Marsh. This gentleman here, would you mind moving? Alright? I thought you were okay.

You can go down there. That's fine. Right? He doesn't wanna be too close for more questions there. Right?

So, secretary, really appreciate it. We had your Swan Song we had your Swan Song Swan Song testimony here before, so we thought we weren't going to have the pleasure of seeing you again. But we do have you here. So thank you very much. We have a number of questions, but I'm gonna ask just from a starting standpoint, is there anything you want to say, assembly member Rogers, as we, begin this part of, of our testimony?

Yep. Okay. I have a few things, before before we get into that. Well, you know, I'll hold those and let's go ahead and just jump right right into it. So we we have questions and we provided those with you guys in advance.

Now we've had to do it late, so you haven't had much time with them either. But the LAO's office has provided us with, you know, with this overview. And what's the Department of Water Resources role in both in both the Bay Delta Water Quality Control Program and the and these programs here from the water board's perspective? I'm gonna ask both of you. Right?

Now we've had to do it late, so you haven't had much time with them either. But the LAO's office has provided us with, you know, with this overview. And what's the Department of Water Resources role in both in both the Bay Delta Water Quality Control Program and the and these programs here from the water board's perspective? I'm gonna ask both of you. Right?

Go ahead.

Glad to answer that question directly, and and huge thanks for your leadership on everything from Proposition 4, which is providing so much important funding across the state, to your oversight of our budget.

So let me just explain what is a very complicated process at the highest level. So the way I see it, we are on borrowed time to build water reliability for our communities and our economy and to improve environmental conditions in our rivers.

An important component of that is the Water Board updating what's called the Bay Delta Water Quality Control Plan. Essentially, standards for the Sacramento River System, the San Joaquin River System coming through the Delta to protect beneficial uses, and that includes conditions for efficient wildlife and water for communities and agriculture.

The Water Board has is, you know, essentially overdue on adopting this plan, and it's been working diligently to do so. The draft plan that the Water Board has put out calls for a program to implement this this standard update. It's called Healthy Rivers and Landscapes.

What it involves is water agencies leaving water in the river and funding habitat improvements, and then the state in the form of Department of Water Resources, our agency, as well as the Federal Government also making investments in restoring flows and restoring habitat. This is a really important approach from my point of view.

I've been working on it for eight years for a couple of important reasons. One, the traditional regulatory approach that the Water Board would have has essentially, one variable, and that is the flow in the river. Flow is important for environmental conditions and for fish and wildlife, but it's not the only variable that impacts our environment. Important is habitat restoration, for example, and science and monitoring and adaptive management.

This Healthy Rivers and Landscapes Pogram that's before you now, this $25,000,000 appropriation, represents a more holistic approach to implement that regulatory update.

So specifically to your, question, the Department of Water Resources is essentially an implementer of that program of implementation. The Water Board retains a completely separate regulatory oversight.

So on many things, whether it's the Salton Sea, or different projects across the state, actually, we are subject to the Water Board as our regulator. So the Water Board has a regulation that it's working to finalize.

One pathway is this Healthy Rivers and Landscapes Program for water agencies that subscribe to that program and make enforceable commitments for water flow habitat.

The other is the more traditional regulatory pathway for water agencies that are not part of that program called Unimpaired Flow, specifically reducing diversions for flow. So from our perspective, this Healthy Rivers and Landscape Program is really important as an as a new approach to meet that in though that environmental regulatory standard.

But, certainly, we are very separate and remain under the clear regulatory oversight of the Water Board in implementing that program.

You said not part of the program. So it that the regulatory agency the Water Board's going to to do that. People who are part of the program, are they going to be exempt in any way from Water Board regulations?

Absolutely not. So being part of the Healthy Rivers and Landscapes Programs requires that those water agencies specifically sign up to Enforceable Diversion Reductions as well as investments in habitat. So at at one point, this Healthy Rivers and Landscapes Program was called the voluntary agreements because water agencies, the State and Federal Government came together voluntarily to propose this new way.

There is nothing voluntary about the Healthy Rivers and Landscapes program. It is an enforceable program of implementation.

Great. LAO, do either of you have anything you want to add to these comments or a different view?

Sonja Petek with the Legislative Analyst Office. And our office actually recently released a report going over, this very program. And we would agree that there are some definitely some potential benefits of this program in that, the Water Board on its own does not have the ability to require, habitat projects. So, from that perspective, this program could offer that benefit that it would increase flows to some degree, and it would also provide habitat projects.

We have some other comments about the proposal before you specifically, but if you wanted to I don't know when you want us to make comments about that.

Yes. I want you to make comments about them if they are you know, if you think they are significant issues that we should yes.

Okay. So first, I would say that in the context of the general fund condition and the comments that my colleague, Miss Ehlers just made, we do not find that this proposal meets the high bar for meeting health and safety needs.

The second point that we would make is that the Water Board has not yet adopted the updated Bay Delta Plan. So in some ways, this proposal might be a bit premature.

The board has indicated it might adopt the plan sometime this fall, but we're still not sure about that. They've been trying to update this plan since, this part of the plan since 2012.

So the fact that, you know, we don't know exactly when it's gonna be adopted. And then the third point that we would make is that in the funding plan put forward by the Healthy Rivers and Landscapes Program participants, it implies that the State had fulfilled its funding commitments already, close to $1,500,000,000. That may it it some of this depends on how funding and habitat acreage is counted.

So, for example, you might have a multi benefit plan that provides flood benefits, but then some of the acreage associated with that plan might also be able to be counted toward this program.

So there's a little bit of, I think confusion, at least for our office about what specific funding and what specific acreage is sort of being counted as the State's commitment to this program.

So our recommendation is that, before agreeing to commit additional funding to the program, the legislature would really benefit from some clarity on what has the state already provided, and then what is the magnitude of what the state will be expected to provide over the eight year term of this program?

We certainly understand that the administration can't say, well, we're going to be requesting x number of dollars this year, x number this next year. But I think the legislature at least deserves to know, is it going to be roughly $25,000,000 every year that they're requesting for eight years? Or is next year gonna be a $100,000,000 like, what's the sort of magnitude of what will be expected of the state, going forward?

Thank you. Would you like to respond to this? Because LAO doesn't very often actually recommend that we reject a proposal. This is your opportunity to defend.

I appreciate that, I would start by reminding us that just over 3 years ago, 6,000,000 Californians are underwater rationing. And had we not had big storms six weeks later, we were actively preparing for over half of Californians to be underwater rationing.

That was at the same time that our salmon populations plummeted from already unhealthy levels. So we are on borrowed time. We have made investments, and the legislature has supported hundreds of millions of dollars of investments in early implementation in expanding habitat, restoring habitat, and getting flows back in the river. We have to continue that.

I completely recognize and appreciate the the fiscal challenges that we have. I would argue that our water reliability and environmental balance is not a nice to have. It's a have to have. So from our perspective, this funding continues early implementation that is already on the ground. This program is complicated but not unclear.

We have specific legally enforceable commitments for specific numbers of acre feet that get put back in the river or allowed to flow through our tributaries and our main stems of the river and specifically the number of acres of habitat restoration both, by watershed but also by type, spawning habitat, rearing habitat, etcetera.

So we would be glad to sit down with the LAO and of course, you know, you all deal with so many issues and complexity. It's understandable that, clarification could be beneficial.

But I can I'm very clear. We can explain down to an acre foot of water and an acre of habitat restoration what we've accomplished as a result of early implementation and what we can accomplish with this $25,000,000.

Can you, how about future implementation cost?

Yeah. So it's a good question that we have made investments based on, estimates per you know, that we had many years in the past around how much funding it would take to secure a certain amount of environmental flows and habitat. Like everything, those costs have escalated.

So what we have, thankfully, we have out we have secured the majority of environmental flows that are required under the Healthy Rivers and Landscape Program, and we're well on our way with Habitat.

We can break down with specifics how much more funding is needed, but we believe that the that easily the majority of funding that is required for the Healthy Rivers and Landscapes has already been secured.

Can you get, can you identify what how much money has come from non state sources to complement this?

Yeah. I don't have that number off the top of my head, but it's important point to make that water agencies are required through their own rate payer revenue to invest in habitat improvements. I believe they are required to invest over $500,000,000 in this Healthy Rivers and Landscapes Program, but we can get you the specific number.

So you identified that you would be able to provide the past numbers. Right? Just don't have those with you available at this point in time. Does anybody else from Department of Finance have that information?

So specifically to what the states provided is that the state has provided through with the support from the legislature $560,000,000 directly for Healthy Rivers and Landscapes. Department of Water Resources has been able to leverage additional funding to help meet the state's goal.

But I think one thing that I would encourage the legislature to think about is this isn't a funding commitment. So as LAO noted that it appears that the state has met its funding commitment.

At the end of the day, this is not a funding commitment. It's a defined scope requirement for the State and the other parties in the Healthy Rivers.

Say that again, it's a what?

Defined scope requirement.

So it's a requirement that we provide a certain number of acre feet of water and that we provide a certain number of acres of habitat. The MOU that was signed back in 2022 outlines assumptions about cost or estimates, but as Secretary Crowfoot noted, those costs have escalated exponentially.

So if we were to think about it of that we've met our funding commitment, that would not meet the spirit or the actual goals of the program where we were putting water back in the rivers and also providing new habitat.

Did I see did I see a comment there?

I might just make one comment that I haven't made yet, which is it could seem like the path of least resistance is to abandon this, Healthy Rivers and Landscapes approach and just leave it to the regulator to do what the regulator has done.

The challenge with that is that approach when advanced eight years ago, very clearly, identified draconian water cuts to water agencies across the state, the Sacramento Valley, the San Joaquin Valley, the Bay Area, the Greater Los Angeles and Southern California.

So this third way that we have identified again, an enforceable program under the oversight of the Water Board, is critically important because it can restore the environment. It's based on robust science, and it can build water security.

So I just wanna be clear that our failure to implement Healthy Rivers and Landscapes and diverting to a traditional regulatory approach would have major impacts on the water reliability across the state for water agencies.

And this $25,000,000 gets us started, but only started on that effort.

Yes. And I'll say, again, we have been involved in early implementation because these are no regrets investments. More environmental flows into the river, more habitat just makes sense. We need to do it to restore our environment. This helps us get, get started in the first year of implementation.

We, the draft plan, that the Water Board have put out has Healthy Rivers and Landscapes as a program of implementation. We anticipate that we will be in a position, come 2027 to be implementing this.

An important part of this funding is to stand up the science program. Scientific monitoring, transparently shared, that shapes adaptive management. It's something we haven't done in water management in California, but we need to do given the dynamic changes driven by climate change.

LAO, you look like you had a comment.

I was just, Sonja Petek again with LAO. I was just going to add that this particular proposal the whole program doesn't ride on this particular proposal. So the legislature could consider waiting to approve additional funding until it has a bit more information about what the funding commitments might be over the course of the eight year program and, in particular, because the, Water Board hasn't actually officially adopted the updated Bay Delta plan. So rejecting this proposal doesn't mean that you're rejecting this program.

Thank you. I'm gonna read this a fairly long question that we have for you, but I'm gonna read the whole thing because you guys have read it. We've read it, but the public hasn't hasn't heard it.

Healthy Rivers and Landscapes appears to blur the traditional distinction between regulator funder, and implementer. Historically, the State Water Board established and enforced water quality objectives while project proponents and water operators for responsibility for compliance.

Under the Healthy Rivers and Landscapes Program, DWR may simultaneously help fund, coordinate or implement projects attended to satisfy the Bay Delta objectives. And you've identified that eight years ago, that was not a very effective solution. We had great difficulty sort of, I think, standing up and saying, hey, we wanna make those kind of cuts.

So the question though is, how are the institutional safeguards maintained to preserve the board's independence and public confidence if we're in this sort of working with this voluntary regulatory side of it.

Can you help us with that?

Yeah. It's an important question, and it's one that has a very clear answer. The State Water Board retains its absolute authority as the regulator under the Porter Cologne State Law. It is required to enforce certain standards that it updates through this plan update. The Healthy Rivers and Landscapes Program is a program of implementation.

It will be monitored throughout its eight year span. There is a very clear process for identifying whether this specific required investment of acre fleet back into the river and acres of habitat has a biological outcome towards the recovery of imperial species.

If it does not, there is a very clear regulatory backstop. So we don't start again in a big long multiyear process. The Water Board can then implement that traditional regulatory approach.

And in fact, before the end of the eight years, there's an assessment period which we call sort of a red light, yellow light, green light, where we understand if these investments of flow and habitat are having their intended outcomes, great. Green light, we look at expanding or extending it. If it's a yellow light, it's a little unclear, then it's in a holding pattern.

And if it's a red light, meaning it's not moving in the right direction fast enough, then it's a faster pathway to to the regulatory approach.

As I said, the easiest approach would as as government would be to continue to do what we've done for the last several decades. The challenge is it hasn't worked. Our Fish and Wildlife need help, and our communities and economy need water security. So that is the this approach.

But rest assured, and like I said, on the Salton Sea and the Department of Water Resources operating a State Water Project, it is very clearly subject to state law and the regulatory constructs that the Water Board enforces.

You make a convincing point when you talk about this is a way to get habitat restoration, not just flow changes. So that is compelling. But this is a one time request for monitoring money and monitoring is going to have to go on. How do we handle using one time money for a ongoing monitoring program?

Well, I'll share and then I'll turn it to Andrew. This funding, this I think it's $3,000,000 of the '25, is really important to set up the scientific program. So that is certain fixed cost or essentially initial costs. So from our perspective, year one of the eight year program is really important. We have certain flow commitments that we have to achieve in year one, and we have to get going on the scientific monitoring.

So, yes, there will be monitoring, you know, resources needed later. But from our perspective, this is an important initial investment.

Andrew March, Department of Finance. That's exactly right. So we view this as as funding the first year of implementation of Healthy Rivers and Landscapes in anticipation of the Water Board adopting the updated plan later this year.

Additionally, we're under no illusion that this is sort of fulfilling the state's commitment. As we noted earlier, we haven't met our acre or or water requirements or our habitat requirements yet, which will require likely hundreds of millions of dollars from the state to fulfill those requirements.

But this is, important funding to continue the momentum of the previous funding that the states already committed and continue that commitment that we've made.

What would be the consequences if we follow the LAO's recommendation and just waited until more information was pulled together, etcetera?

My concern is that the Healthy Rivers and Landscape Program would end before it had a chance to be successful. As as I shared, this has this program of implementation has enforceable commitments that begin on year one.

If, as we anticipate, the board adopts its final plan coming off its draft plan earlier this year, those commitments begin this coming year. If we are not able to hit the ground running and achieve those commitments, two things could happen.

The Water Board under this under its regulatory oversight is doing essentially an audit function, I believe six months into the program starting.

So that's by middle of next year to understand if assets committed are there. And then on an annual basis, it does a review, and its regulatory authority allows it to cancel the program and divert to the regulatory the traditional regulatory approach if it finds that the program is not being implemented. So I'm not here because I wanna make your life more complicated. This is $25,000,000. You have much larger issues.

But I can tell you, I have spent more time on this program than I have on any single project over the last year, last eight years because I have watched water conflict between environmental advocates and water agencies destroy our water sustainability.

And this is a third path. And I feel with, you know, all the integrity I can muster in this job, this is the path forward? So this $25,000,000 is really important.

It's a small amount of money, but it gives us the momentum moving into this program that we desperately need.

I appreciate that, and I appreciate your patience for the program. $25,000,000 is a lot of money, but a small percentage of this huge budget that we have. But because we have such clear recommendations here from LAO, I think it was very appropriate for us to spend the time on these questions.

I wanna give LAO any final thing that you would like to say about this, everything you've heard?

No. This is well, yeah. I guess I do. I think that if the legislature were to wait to approve this funding, I don't know that it would, cause the end of this program.

For example, the legislature could wait to see if the board, in fact, does adopt the updated plan this fall. Also wanna put the $25,000,000 into context. It was estimated that the program would have direct implementation costs of approximately $3,000,000,000, of which the states some of the state's initial investments add up to about $1,500,000,000 if you count some of the funding that goes to multi benefit projects.

So I don't know that, pausing and considering this proposal slightly more deeply would cause the end of this program. So

Thank you very much. Any members have, Assemblymember welcome, to Assemblymember Lackey and Assemblymember Wilson.

Thank you, Mister chair. And I would just like to know, I came in on part of this conversation. So I don't know if this was discussed, but I just want it on the record from me. So I have the distinct pleasure of representing District 11, which includes all of Solano County as well as, the Solano County Water Agency. And having been a local leader for 14 years before coming to the assembly, majority of that time was spent serving on the Solano County Water Agency.

And, our County has a very a significant concern, with the Bay Delta Plan and how it impacts our waterways, which is why we've been, supportive of the Healthy Rivers and Landscape program, because we think it does, you know, counteract this, you know strict unimpaired flows and pays attention to the larger context. And that's critical for us because we don't it's how our water gets to us through Lake Berryessa versus all the other folks get their water from multiple sources.

We we only have a singular source. And so I'm very supportive of the $25,000,000 to make sure that is doesn't decrease because that's what my community is strongly advocating for.

So, don't know if you guys discussed that at all before I got here, but I just wanted to be on the record that it is something that my county, including my water agency, is strongly supporting. Just to ensure that we don't have a plan ultimately adopted that negatively impacts drinking water and you know, human beings that live in my county. Thank you.

We didn't specifically say it that way, but it certainly has been alluded to in terms of the conflict. And that really brings us to at least well, I just saw. I'm gonna let these folks before I summarize here.

Yeah. No. I just I wanna thank the secretary for being here and for advocating. I think, Mister chair, you made a comment that resonated with me as well about trying to change the paradigm. And I recognize that the water insecurity is, perhaps not an emergency until it is.

And we could very well be sitting here a couple years from now remembering that we could have been starting on this. And it does really appeal to me the concept that we could find a different way to manage our water to reduce that tension that you mentioned between water agencies and the environmental community that's working so hard to do restoration projects.

So I wanna thank you for the comments on it. I wanna thank my colleague for her comments on it as well, and I'd be supportive. Thank you.

The question that I have, it might really help get to the point that I think some of the points that the LAO is talking about. What if this fall that they don't come up with the plan and we stay locked in political gridlock, like we have been locked in? What happens then?

Well, first, I would say we are very confident the water board is going to do what it has said publicly it will do, which is finalized by the end of this year. It has put out its plan very clearly. It has been through a really robust public process. And secondly, as I shared these are no regrets solutions. Habitat is needed for the recovery of these fish.

We need to get more environmental flows back into our rivers that frankly also pushed down into, the delta for the benefit of of communities. Scientific monitoring is needed. So this from my perspective, this would not be a stranded investment. This would be one set of continued environmental improvements.

But I will tell you that it is our clear expectation based on every signal that we have that we will be held accountable on January 1 to begin this Healthy Rivers and Landscape Program.

And we need that scientific monitoring program in place. We need to continue the momentum moving forward.

Tell me what happens if gridlock continues though, and the plan and the standards and the plan are not adopted.

Well, I would say if I mean, I'm a little I appreciate your question. I'm a little cautious of hypotheticals, but I would say that if the Water Board does what it really hasn't done to date, which is decide that it throws out its plan and and moves with a purely traditional regulatory approach.

I would say that this funding, I mean, we'll be at a bit of a crossroads around how to implement the funding. But, again, there's three things that this funding funds, environmental flows, habitat restoration, and scientific monitoring. Those are important improvements under any regulatory construct.

Thank you. Appreciate that. Assemblymember?

And just to know, I think part of the political gridlock is around the level of opposition. And so I think supporting and investing in a program like this early gives a nod the legislature, giving a nod that we consider this as a factor and important and would help folks who were in the complete opposition and fighting this every step of the nail. It gives them a nod. And so I think maybe it might lower the temperature.

And I don't know if the secretary agrees with that analysis, but I would say.

You know, as LAO pointed out, we started back in 2012 trying to come up with this. As the secretary has pointed out, we've been in gridlock for such a long time. And so the question is, do we start down this third row?

And I will say since 2012 as a local leader, I've been fighting y'all.

It's, well, it's exactly. And so this is a welcomed novel way of trying to do it. And at the same time, the question is, do we do this now when we're that close to adopting the plan or do we wait? And I think I'm hearing the secretary very patiently say, no. Don't wait because you don't have anything to lose.

I think we do have a recognition from the LAO's Office that it's a lot more than $25,000,000. It's 1 and a half billion dollars that ultimately, you know, will be state responsibility. So it starts us down the road, in terms of doing that. But, there is great frustration with the stalemate that we've had, which is great frustration with the opposition from some people out there in terms of trying to move forward. And we have a real political challenge.

So I think the secretary's addressing that political challenge with a great deal of patient, more so than they probably normally see even. And LAO was pointing out that this is an intractable problem and challenge for us. And so that that's where it meets. And so this was really very healthy. But I'm going to let everybody have a close on this thing.

And go ahead.

Yeah. I'll just highlight and underscore and clarify. The state has already committed $1,500,000,000. So that's not on the future. That's what the state is already in on.

Right. So we're down the road on this. And I think if you read our report, you know, we do see a lot of benefits of this approach. I think what we're highlighting in this context is, you know, given your overall budget framework and some of the new information is coming out, I think we have some fundamental questions about, well, what are the expectations for additional state commitment, and what is the state role as compared to the local role as this moves forward?

And and those are some kind of big questions from a fiscal perspective as well as a program outcome perspective.

If the state's in a fiscal position where it can't meet that commitment, then what? So trying to have some greater clarity around where are we going from here as we have already started down this road, and the state has already put in quite a bit of money from the from the state budget.

Thank you. And we've kicked this one probably, as much as we can here or given time and etcetera. So I'm gonna let you close, secretary.

I'll just be super brief. We have gained real momentum on a pathway that promises to build water security for our communities and improve the environment. And I've been working on California Water for twenty years, and I can tell you that there hasn't been an opportunity like this.

That's why the Governor and Legislature have made that those big investments to date in early implementation of the program. There's no regrets to getting more flows in the river habitat, built to all towards these shared goals.

From my perspective, we need to demonstrate to the water board that we continue to maintain momentum on funding our commitments. And then we fully anticipate our commitments, coming due on January 1. So this is an important down payment.

Great. Thank you very much. And with that, we're gonna move on to Golden Gate Fields Acquisition.

And secretary, are you moving on or are you staying for these?

This is one, I'm passionate about too. So I'm glad to answer any questions.

Happy. Let's go ahead and let's just jump right into it. You may need Department of Fin. They're here. They come with you to help.

So we have some specific questions. We'll make sure we get on record, and then I'll turn it over to everybody else. What's the acquisition gonna cost per acre?

Cost per acre?

It would be a $175,000,000 divided by 161.

That's that's what I've been doing. So it's a little bit over a million dollars an acre. Right? Okay. In terms of just the BCP states the expected total cost of the acquisition be a 175,000,000.

Trust Republic lands anticipate securing 50,000,000. What's the breakdown of the 50,000,000 between those two sources? Phil philanthropic funding and Trust Republic lands. How much is Trust Republic lands and how much is it going to be philanthropic funding sources?

Well, I can tell you this. And just to give a little context on on the project, a paragraph. Big projects are clearly possible in California. Klamath Dam Removal, the world's largest wildlife crossing in Southern California, the LA Historic Park, which was a huge investment in open space in the middle of Los Angeles. This 161 acre opportunity is another one of those big transformational investments, which is why the administration is is really supporting the work of the community and trust for public land.

Trust for public land is really focused on on raising as much philanthropic support as it can for for the park. It doesn't have a a a a clear, committed number at this point. We anticipate that it it can raise upwards of $5,000,000 or more. So our focus is, as the Newsom administration through this revised budget, is proposing an amount of money that we believe essentially gets us puts us in a position to succeed.

I think we although it it remains to be seen really through the fall what what amount of money will be raised by philanthropy.

Okay. Great. So we we we we just there's a leap of faith here that there's going to be a set of $50,000,000 going to come. State received and then has the state received an independent appraisal of the property? And how does the proposed acquisition price compared to the appraised fair market value under the existing zoning, environmental constraints, sea level rise projections, etcetera?

So Yeah.

Is this on? Yeah. Yeah. Yeah. Great.

So the appraised oh, thank you, Jen. I'm Amy Hutsall, executive officer of the State Coastal Conservancy. Good morning.

Good morning.

Bennett and members of the committee. The appraised value is 175,000,000. An appraisal was completed a month or so ago, and we have completed an independent review of the appraisal. And the appraisal package is now at Department of General Services.

Could you give me that appraised number again?

$175,000,000.

Okay. Great. And you alluded to other big projects that have been out there. What what kind of criteria do we put in to say, hey, this big project, whether it's a wildlife crossing or this or what what's the criteria that says, hey, this is the time the state should move into a city and decide to buy up, you know, a 106 66 acres. You wanna help me with that?

Well, I would almost turn to my colleagues who lead the Wildlife Conservation Board and the Coastal Conservancy. There's there's no scientific formula for exact exactly when and where. Part of it is opportunity based. So we clearly have our shared priorities, expanding outdoor access for communities and expanding concert conservation through 30 by 30. Those are both well established through the legislature and the governors.

And then we, as agencies, are always looking for opportunities to actually make progress on those.

So has this gone through the wildlife board prioritization ranking, etcetera, you know, like other competitive, you know, in other words, did this go through the competitive process and this is the one that has emerged?

We're currently in the process of reviewing the app good morning. Jennifer Norris, executive director of the Wildlife Conservation Board. We are looking at the application and reviewing this. Of course, we support the governor's priorities, and we're bringing this through our process, but we're still in the middle of that process as we speak. Right, Amy?

Yes. We've received grant applications from the Trust for Public Land and East Bay Regional Park District. We have reviewed reviewed them at the Coastal Conservancy. We are very supportive of moving the project forward to our board. And in terms of meeting priorities for the Coastal Conservancy, it just you know, it ticks many boxes in terms of public access in a heavily populated area on the shore of San Francisco Bay, Bay Trail completion, opportunities for habitat restoration, wetlands, and open space.

Yep.

I mean, I just drove by it on my way here. It is an iconic spot, in San Francisco Bay. Amazing views. I think it could be, you know, the Crissy Field Of The East Bay Shoreline.

So in in summary, you're saying that this would rank very high in a competitive process. It didn't necessarily go through a competitive process, but in your estimation, it would rank very high. It is

ranking very high. And, they did submit a grant application, a month or two ago.

Great. Thank you. Any other yep. Similar number.

Yeah. No. I appreciate that. So this was not proposed in the January budget. It is, an an addition in the May revise.

What has changed or what, from an urgency perspective, why is it being considered now? Especially given that

it's been

working. It isn't yet Great question. The process.

Yeah. We have been trust for public land, East Bay Regional Park District, the state agencies, we have been in discussions with the landowners, for a while, but, really, it took getting to a completed appraisal that made it through the independent review and trust for public land entering into an option agreement with the landowners with time frames for close of escrow in transfer of the property to East Bay Park. So in January, we were not quite there.

And then

the pulling in of private investment or or raising of the funds for this, does the state putting a dollar figure in the budget as a backstop impact the negotiations and impact the funding to be able to acquire the property use using non prop $4?

Yeah. I think the 125,000,000 of prop four funding demonstrates the, commitment of the state and gets the funding gap down to an amount that is reasonable for Trust for Public Land and East Bay Parks to raise from philanthropic dollars, private dollars. East Bay Parks also has funding in a previous measure they did that's designated for Golden Gate Fields, and there are other local and regional public funding sources.

So if the state puts in the money, walk me through what public access could look like in the future.

Yeah. I think the there is a section of Bay Trail that goes alongside the racetrack now. East Bay Parks built that many years ago. But this provides an opportunity for a really community driven park planning process. That was a lot of p's.

With the engagement of the cities of Albany and Berkeley, I mean, even the cities of Richmond and Oakland that are at either end of East Shore State Park, the involvement of tribes, and going through a planning process. About twenty years ago, there was a master plan for East Shore State Park that included looking at Golden Gate Fields. So going back to that master plan involving many of the people involved with that and refreshing it, based on, the community interest today.

But I could imagine some wetlands restoration, open space, active recreation, trails, you know, that a 161 acres in a very urban setting if there's a lot of opportunities.

And I would just briefly add for those of us who've been to Crissy Field, I see this as sort of Crissy Field for the East Bay. That was a that was a military base that had hardscape up to the shore, and now it's obviously built built in a sort of natural sort of natural integration with the bay, but a lot of a lot of access and recreation as well.

I think we're committed to it being a community driven process, but also because WCB and the Coastal Conservancy are involved, it you know, I I have confidence it would have those sort of nature based solution features that are gonna help us address storm surge and sea level rise and restore coastal habitat, which is one of the most imperiled, ecosystems, that that we're working to restore.

Yeah. So I I think what I'm looking for and I think what I'm hearing from it is if taxpayer dollars go into the the project, there'll be a certainty that taxpayers will have access to, recreation, to other opportunities on that that land.

Yes. When when the state what WCB or the Coastal Conservancy or another state agency puts funds into an acquisition, we, have a deed restriction, that lists the purposes of the acquisition. And, you know, we will negotiate with Trust for Public Land and East Bay Parks on those exact purposes. But it is going to be a set of things like park uses, public access,

short road.

Habitat restoration will be a requirement.

Yeah. Yeah.

Sorry to interrupt.

Yeah. Go there.

Yeah. It it just to be clear, and I don't mean paying exorbitant fees for folks to be able to access it as well.

East Bay Regional Park District, I mean, they have been around for almost a hundred years established during the Great Depression. And, you know, their parks are jewels of the East Bay. And, I think at some of their parks, they may have fees for, like, parking, but I have never seen exorbitant fees at East Bay Parks.

Right. Yeah. I'm just checking because this is a $125,000,000 that could go towards other areas that are under parked, which I think is my last question, which is, I think, does the state look at what access folks have to parks in their communities? I I I get this is a big urban area, but what we also find is that in many areas that are poor, that people have less access to natural areas to parks.

And and we have to be able to sell this to our colleagues who represent many of those areas as well that this is a good use of the Prop $4, especially recognizing that the 125,000,000 then ends up costing the public more because bonds have interest that we end up paying on them.

Yeah. I'll just share that we agree. You know, we need to identify and expand open space where there's a lack of it. And so, certainly, that's our approach, and it's kind of a portfolio approach.

You may have heard that the governor or know that the governor on on Earth Day announced the creation of three new parks in the Central Valley specifically because we don't we don't have that many parks in the in the Central Valley, state parks that is, as well as as an initiative to add 30,000 acres of land into existing state parks, including many in rural areas.

The really interesting portion of this interesting aspect of this is low cost or very low very low cost or no cost acquisition because we have conservation partners that have preserved this. So we're very focused, and it's very much of a portfolio approach. So it's it's open space in urban areas that have high populations as well as in more rural areas.

Thank you. I I want to point out that people on this budget subcommittee very clearly recognize how precious these prop $4 are. We are in a real era of limits in California. We're gonna be cutting all kinds of things. So this is really precious money.

And we have an unusual thing in that, like, as as was pointed out, wasn't in the January budget, but now it has has come up. If this is if this is going through the competitive process and emerging as number one, we have $600,000,000 allocated out of prop four for the competitive process to do this. Right? This one's sort of moving, you know, without but I'm trying to find out. It it it hasn't actually gone through the competitive process.

If if it has gone through the competitive process, we don't need to doubt to add, you know, we don't need to designate an appropriations for it right now. If it hasn't gone through the competitive process, the question is, why not have it go through the competitive process so that we're sure this is the best expenditure of this $125,000,000? Because I tell you, for the last two months, our office has been inundated with everybody around the state has designs on this prop for money.

And so that's where where my caution is is why this project, How does it, you know, so you say it ranks high, but did it go through the competitive process and come out as number one or as one of the ones that you get some of the $600,000,000 or, you know, or did it or do you just assume that, you know, this is a request that's come in? You say, hey, it's a high ranking project, so we want to do it.

Do you need an appropriations to do this wildlife conservation board and and Coastal Conservancy.

So it went through I mean, they submitted a grant application. We don't rank projects against each other. It's an on it's a rolling grant application process. So we identified it as a priority. We do not have sufficient funds in our f y twenty five twenty six appropriation of prop four or in the amount that was in the January governor's budget.

There was just over 30,000,000 of coastal resilience funds for the conservancy in the January budget. So we could, you know, say it's high ranking, but we would not have the funding at this level to put into it without this, appropriation.

But combined with WCB, what's

Well, I would just say on WCB's perspective, we recognize this is an important project. We have been tracking it and following as they've been developing their purchase agreement and recognizing we're we're gonna wanna put money toward this project at some point in time. The timing was uncertain. We've sort of gotten past that at this stage. I think I think we're in less of a position where we need this allocation.

We could find the funding for this project, but I do recognize there's a broader need. So but it in either case, it's from the same pot.

Go ahead.

I think it just would add that, part of it is is a timing thing. So there's there's a window by when the option has to be exercised. And I think given the magnitude and the potential benefit of the project, there's a an interest in prioritizing it high, making sure that the state sort of maximum possible contribution is available for the project so that this opportunity to exercise the purchase option and to close escrow doesn't slip away because we didn't have it budgeted correctly.

And I do want to just, emphasize as well that it is a maximum contribution, the language in there. We we've heard there's a lot of interest from a lot of different parties in this property, and we truly do hope that folks will go and and talk to people.

If you've got relationships, you've got interest, if you're trying to minimize member prop four impact, go talk to people. Drum up the interest. Get the support out there. We can reduce the amount of prop four that's necessary.

Sure. That's nice. But but but but I also know once we identify a 125,000,000, it's very unlikely we're gonna raise more than 50,000,000. Right? You know, in in in terms of doing that.

If the wildlife conservation board could do this now, why do we need to do it with an appropriations? Couldn't the wildlife conservation? But you say we have to move fast. And I and I get that that sometimes happens. An opportunity shows up.

Wildlife conservation board could step forward in combination with the, Coastal Conservancy, to to be able to do this. All I'm trying to do is protect all the other people in the state that are coming and and there are many, many that are coming saying we want these prop $4.

And we're just sort of very quickly coming here May revise on Thursday, and we're coming here hearing, should we really quickly suddenly jump this project in in front of all of these these requests that are out there and stuff. So let let me hear this, and then I'll go to assembly member Wilson if you don't mind. Yeah.

I would just say two things. One is it's not it the the Coastal Conservancy needs an additional appropriation, and it's the combined funding of WCB and the Coastal Conservancy. So there's actually a material need, for the change. But then I'll also share that big transformational projects that, you know, we take for granted now, huge state parks or things like our kids will take for granted like Klamath Dam removal, required legislative and governor intervention at certain times to actually activate funding very quickly given time limited horizons.

So I mentioned the LA Historic Park in Downtown LA or the Wildlife Crossing.

Those were instances where those and Klamath. Those projects would not have gotten done had they relied on navigating the the usual processes. Sometimes leaders have to come together and move quickly to get big things done.

Great. I'm

sorry. May I add? I just wanna I wanna make sure I clarified. It's always the case that if we we we could come up with the 25,000,000, it would be from other projected spending for this year. So in a sense, it's one or the other.

I think the value in signaling now that this investment is being made or could be made, It does actually leverage other money, and that is fairly common in acquisitions where we will say we're interested in funding this much, and that allows, philanthropy and for groups like Trust Republic Land to go and say, we've got this much. Now we need the match, or we won't or we'll lose that state money. So there's a bit of a both of those things can be true.

Great. Thank you. Assembly member Wilson.

A couple of things. So first of all, happen to have East Bay Regional Park District within my, with my within my district. They are an amazing organization and do amazing things within the community. And to the point that you noted, you know, majority of their stuff, you can access freely. That's part of their mission, right, is they want the community to access public spaces and especially those, from disadvantaged communities.

So I'm not concerned about that. But I also was part of Prop four And that conversation and us intentionally adding language around disadvantaged communities Had me concerned about the project. In particular, this particular project, there are several parks and recreational facilities nearby. And to my colleague's point, it's not a park poor area. So this is not that much of a disadvantaged area, and it's not a park poor area.

So that's concerning to me. At the same time, I recognize it's kind of a once in a generation opportunity to buy this, particular land. And I get the secretary's comments around using all of our resources at the government level so we can activate funds, quickly to be able to take advantage of something that's coming. But that also means that we have to, on the flip side, make sure that we're investing in these park poor areas and in disadvantaged communities.

That this this doesn't go like we go here and then we treat the regular process normal, like, as if we didn't just make an investment in a park rich area in a non disadvantaged community by all the metrics.

I know there's some neighborhoods nearby, but I'm just saying, like, that hits all the metrics. So I think, you know, I get the point. And I wouldn't go so far as say supportive of it, but I get it and not not supportive of it if that could be a that could be a position. But I just wanna make sure we as especially this committee, who are, you know, overseeing Prop four, allocations that we are mindful of what we're doing here.

And I think that means that there has to be some adjustment there.

The other thing too, the chair's point in terms of saying that we're going to invest, was it a hundred and seventy five? No.

Hundred and twenty five. '25.

And the other 50 comes from I would prefer there be some language around matching that is not just an up to because if it's an up to, there is just gonna be this race to here and there.

That is it it is for every resources raised from these groups or whatever, then they can draw on state resources of an equivalent of some amount, not equivalent, like, one for one, but of some amount to really drive that coming from the community, but also recognizing that the way our budget works, you have to have this Max in so so that you can take full advantage of the price.

And so that would be something that I would feel more comfortable with, but I'm not negotiating that as a chair. Just noting my thoughts and and offering it for discussion.

Great. I appreciate that. Certainly, this is a great project and nobody's disparaging whether it's a great project or not. But I think what you're partially sensing is that prop four was very much a creature of the assembly. It was not supported by the administration in terms of going forward with it.

And so there's a real I feel a real responsibility to the people in the assembly who have sets been sitting there anxiously trying to get some part of of prop four and having so so much demand. It's it's almost unlimited. So great project.

I just demand, but opposition from the administration on how we wanna use it.

Well, yeah.

I know the I was I

was I was trying I was trying

to be guest. Wanna say that. Not just demand, but it's a resistance.

Yeah. So so so there is so so now now basically, the administration come and say, hey, this this, you know, this is this this is a good project. And we have to think about and this is money that can be used for other things and doesn't mean this project doesn't go forward. Because if we didn't do this, you could still you could still have some combination coming from the Coast Conservancy and WCB to help. And it may not be a 125,000,000.

It may not be officially designated, but there's some things. So, again, I've I've we're only raising all those things to to sort of highlight that. It's a good re it's a it's a good proposal. It's a good use of money. I think we have partners that that say that.

But is it the best use of the money? What's the opportunity cost of doing this versus versus not doing something else? So it takes me there's one important question I have. Who owns the land now?

The STRONAC group. They they, I think they own other horse tracks in The United States.

Okay. Canadian company.

Uh-huh. Well, that that has all kinds of complications when you when you when you when you raise that. But but okay. So I think we've expressed we've expressed our concerns there. LAO, I think rightly asked is that does is this is this our priority use, you know, in terms of going forward?

But I want to let LAO do you have any comments about this?

Yeah. No additional comments. We would just note that these this is an allowable use of the the prop $4, but it's ultimately whether you prioritize this project.

Great. So it it's this is one of those projects we'll we will just keep going back and forth trying to get information, have letting you continue to to make the case for the for the project and and us continuing to try to evaluate this relative to the other requests that are out there. And and some of those requests are going to come in another year.

And I would point out that's one other complication just like on the first item that we just heard, getting it done while you're here, has some value in that the continuity of of going forward with the voluntary agreements. This one will have the complication of you won't be here, and the administration won't be.

We'll have a new administration in in terms of moving this forward and stuff as we go forward. But because you said because you said this is one that's really important to you, I always love to give you the opportunity to close.

Well, just all important points, and I always make it a point to thank you for your leadership on proposition because that is, that is really a difference maker on so much that we're doing in the agency. And I wanna share that we are tracking in real time our, how we're achieving that commitment to 40% of the entire $10,000,000,000 bond going to disadvantaged and severely disadvantaged communities.

And the good news is we're tracking really close to that, and it's my commitment and and it should be the, you know, next person in my seat's commitment to exceed the 40%. So on the on getting, the bond working in in underserved communities. So just appreciate your consideration.

We do think this is a once in a generation opportunity, and it's time limited.

Thank you very much. Really appreciate that. We're gonna move on to the salt what's it? We're we're we're we're gonna move on the salt and sea item. We are going to move over.

We're gonna go to transportation, and we're gonna pick the pace up here. Those were two bigger items that had significant need for us to have these these questions. But the games route network, Caltrans, and the clean California litter abatement program are the two items we'd like to discuss right now.

We're gonna go to transportation, and we're gonna pick the pace up here. Those were two bigger items that had significant need for us to have these these questions. But the games route network, Caltrans, and the clean California litter abatement program are the two items we'd like to discuss right now.

I don't know if we have anybody from the administration here, but I'm gonna start with well, is is he coming? There we go.

Here they come. We we don't need long listing of the details. We we we need your rationale because we wanna get right into our questions if we can. Right? Okay.

So go ahead.

Oh. Keith, introduce introduce yourself

and give us the rationale for your proposal here.

Sure. Sure. Keith Duncan, Caltrans I'll hold it up here. Good morning. Happy Tuesday.

Keith Duncan, Caltrans budget office. In relation to the Clean California proposal? The Clean California proposal and the games route Yeah. Network. We have

a few questions about that. Yeah.

Well, if it's okay, we'll start with the Clean California. The intention, we wanna build upon the success from the, one time, or limited term funding that the legislature approved back in 2021 where we're able to, supplement or support additional litter abatement, and for, when it comes to just cleaning up our our highway system.

The request here is for $40,000,000, and the intent is to, invest in contracting with what we refer to as our special programs, crews, and this is for, like, back to work programs and, job opportunities. So we'd be contracting out with entities like the, Butte County, office of education that has statewide, offices to be able to pick up litter. We're looking about 60 crews, which offers about 600 job opportunities for that.

And and LAO has a reject recommendation, and can you give us your rationale for that?

Morning, mister chair. Frank Gimenez with the Legislative Analyst Office. In the context of the current budget picture, we recommend that legislature reject this proposal given that it doesn't address, a high state need. Also, I'd like to point out that the legislature has been pretty active in this space already providing 1,200,000,000 from the general fund to support the Clean California initiative.

Over what period

of time? I believe Clean California has been around since 2223. So it's over over a four or five year period.

Great. Thank you. So LAO has had a a very clear standard for us that we've asked them they've they've suggested and we have agreed from here to apply, which is, does this really is this a need or a very nice to have? So certainly, when we say, hey, something is something we question, it doesn't mean that it's not very good for California. Who wants to say you're opposed to litter abatement?

Right? We wanna do litter abatement. But is this does this meet that high bar? And LAO says it doesn't meet the high bar. We're gonna give you an opportunity to explain to us why does it meet the high bar.

Yes. Knowing that since the conclusion of the Clean California program, we continue to get inquiries. I'm members of the legislature, constituents across the state. Litter is a continuing problem that we try to address knowing that this, this provides us the opportunity to do the that added litter abatement. We have core litter that we do pick up, but we continue to get increased demand when it comes to we need more litter pick up, we need more litter pick up.

And that's why we see this more as a need So in that regards.

So is this a one time investment or is

this safe? One time investments. So

just like we spent $1,200,000,000 and that was sort of not ongoing, now we have another 40,000,000. Should do we need an ongoing budget program for litter abatement?

Given the current condition of the general fund, we'd looking at just the one year just to be able to achieve the these goals, be able to pick up the litter to dress litter needs but staying within the

But those litter needs are gonna continue Yes. Down the road. Yes. Okay. Assemblymember, did you look like you're getting ready to say something?

Partly. I I think that there is an issue related to litter, and we hear about in our community all the time. My and particularly in my area, a few you know, Highway 12 is a main street for most for most of my communities for at least three. And and so there is an issue that this program traditionally had been used to do litter abatement and things of that nature. And so I appreciate that.

But back to whether it's a need right now given where we are in terms of deficits, I have to agree with LAO. And one of the things that we found as a local leader, and I still see sitting in the position I have now, is enforcement of our dump trucks, things like that, having covers on. So I think it I think it might be better.

I think the if if you were telling me that we were gonna spend some money on enforcement as it relates to littering, I did a bill on dumping and all that kind of stuff and what that does when you're in a wide windy environment like Sustin City. I think I would be more amenable to it, because I do think it's the the source of the litter that we need to invest resources in versus the pickup if we're in a time where we are now.

Of course, if we had additional resources and we weren't worried about a deficit, I'd be like, yes. This is an easy yes. But given the fact that we don't have a lot of resources, I think time it would be better spent on getting to the source of littering versus this.

Any other members wanna comment on this item? Alright. I'm gonna jump to does does any do any members wanna comment on the games route network? Alright. Alright.

I I wanna just very quickly ask these questions. What's the total funding needed to complete the network including already appropriated funds?

In total, I think we're it's close to about 370,000,000, give or take. We currently have, roughly a 160,000,000, committed right now within the shop, the state highway operation protection program. We have the, current year appropriation that was approved as part of the budget about 17,500,000, and then we're estimating about 200,000,000 in addition to that is, the overall need when it comes to completing the construction and all the other, necessary requirements when it comes to getting the Gamedrop network stood up.

So you need 200,000,000 more. It's 370,000,000 total? Yes.

Roughly 200,000,000 more. The final costs are still we're still under design, finishing up the design phase, so the cost may change slightly. And we'll continue to seek alternative funding sources such as federal funds as well as local funds when

it comes to What what transportation funding sources do you think will absorb these cost?

James Moore with the Department of Finance. I think just that's part of the discussion that we're having right now with the games organizers and with the Federal Government to see which fund sources can cost can can fund those costs. I think the $3.75 is the total cost, but a lot of how much the state is gonna pay is subject to discussions with the Federal Government.

The trailer bill that is proposed as part of the mirror vision also includes, fine revenue from the automated enforcement to go into a fund to offset some of the cost of the games around network. And so how much new funding from state accounts will pay of that $3.75 is is still We

don't know yet. Unclear. Okay. Great. We're gonna move to the homeless encampment coordinators with with Caltrans.

I'm gonna jump right to the LAO report and go ahead. Give us your quick quick version.

Yes. So the department was required to submit an outcome report for these limited term positions. They've received general fund augmentations over the past several budgets. That report was due in January and hasn't been provided. So we recommend that the legislature withhold action on this proposal until that outcome report is indeed provided.

Also, these augmentations for these positions have been provided over the past several budgets, and it appears that this is part of the Caltrans' you know, regular activities in terms of maintaining and operating the state highway system. And there could be a rationale to fund these positions with state transportation funding instead of the general fund.

However, we would advise the legislature to consult with legislative council on if these positions would be eligible for state transportation funding since there are some restrictions on the activities that, those dollars can support.

So where's the report?

Assembly member, we can get you information related to the report.

We are able to get you to the microphone, please.

Hello. Assembly member of Danny Yost, legislative director for Caltrans. And the report is going through final vetting at the moment. We will get you information. We can get you information that you need to help support this proposal as well.

Any any any members have comments about about this program? Right. Yeah. I think I think it's hard to to deal with this when we have a report that was supposed to be due in January, and here we are in May, and we still don't have that report. I think that that makes it more difficult to do this evaluation, so it would be helpful to get that information.

But I do think the case being made by LAO that this is an ongoing part of the cost. It's not like we're gonna do this one time and then it'd be over with. It's gonna continue to be a problem and and we should investigate trying to do that. We're gonna jump down to the DMV as MBA proposal that is out there. And this is a significant this is another significant hit on the MBA after we already talked about a big a big significant hit of 60,000,000.

So you've got a you've got an uphill uphill advocacy in front of you here. Someone let you give us your two minute version as to why you should get $73,000,000 more in one time expenditures.

So I can give you a quick overview. Is that what you like? Sure.

a friend from the overflow room, so just give him a second to

I had

get to Sure. Take your time.

Okay. So, good afternoon, chair and members. So, again, my name is Lee Scott, chief budget officer here at the California DMV. Here today to discuss a focus that have been revised proposals intended to do three things. First, maintain critical customer services and field office operations.

Do you view serves millions of Californians every youth for our field offices, online services, and contact centers. Several of our requests are necessary to maintain safe facilities, void service disruptions, and ensure Californians continue receiving timely services. Second, we wanna continue modernization efforts. And third, we wanna remain fiscally prudent in our taxpayer dollars. Most of our proposals are gonna be on field office replacements, looking at new leases, operational cost increases, expanding the mobile driver's license pilot, and looking at increasing our reimbursement authority.

Any questions we can ask for you?

Sure. We we had these efficiency cuts being made. And now with with with these programs, we're turning around and asking for money to make up for the deficiency cuts. That's I mean, if the efficient that's that's what the efficiency cuts were supposed to be to sort of say, hey, find ways to squeeze down and and and do it better. And then we're doing it with a program that we know has a structural deficit in it and going to be a problem.

So we're straight we're we're draining all the surplus out of a MVA account to backfill the efficiency cuts. I'm I'm having a lot of trouble with with with this as being a good long term move for us. We've not had the willingness to take on the challenge of the MVA structural deficit. And we fortunately have because of some recent revenue increases that were not expected to have built up some reserve there. And we're using all the reserve right now this year, 60,000,000 and now 73,000,000.

I I this is this is one that we're gonna we're gonna have to look at, I think, really hard, going forward. LAO, do you wanna have comments about this?

Yes, chair. Go to Xinjiang with LAO. As the department also highlighted, people just show

Stay on that microphone. You don't have to look at me. Alright?

Alright. We will deliver some overall remarks on the condition of the NVA and the department's collective proposals. As, the department highlighted, the total demand for one time spending from the NVA adds up to $73,400,000 for the May revision. Under normal circumstances, these proposals' approval will be justified given that they meet basic department needs.

However, the MBA balance is sufficient this year and only barely sufficient or is only barely solvent, in the twenty twenty seven, twenty eight budget year, and approval without addressing the MVA structural imbalance, would limit the MVA's ability and flexibility to meet any unexpected origin cash demands or needs, of the departments.

And it would also elevate the account's future insolvency risk. Given all of this, proposals also represent ongoing department needs even though they're onetime. And we would recommend the legislature to consider the department's urgent and immediate needs against future pressure on the NBA, and we would also recommend the legislature to be prepared to address the NBA's structural imbalance.

So the LAO's evaluation is that these are essential needs that need to be funded.

These are department's basic needs based on what they based on how they were described in the Okay. Budget proposals.

Alright. Members, any any questions or comments?

I have a comment. Yeah. I think it's important that members and people, who are listening understand the history of the motor vehicle account used to be used to solely fund the highway patrol. But all of a sudden, that funding became aware of other people who want a piece of the pie. And so now we're we have diluted this fund to the point now that it's having a hard time to be sustained because it's being shared.

What's being asked for here are operational costs. Right? This is not a program that would be nice. This is to be able to do their job in a safe and efficient manner. It's also $40,000,000, which is a lot of money, but not in comparison to the other things we've been talking about today.

These environmental

programs,

right, which are worthy of consideration. But why are we so concerned about a request to fill an operational need for a department that provides safety and security every day. I think this should not be that debatable. This should be something that we understand we've got to do, and this is not the place to save money. It's just not.

And that's all I have.

I don't think that there's a suggestion that we shouldn't fund essential needs. I think it does when we do do this and we drain account almost down to zero and we know we have a structural deficit next year, it I think it is important not for us to say we have a problem and we need to find a way to get this fixed.

My point is, chair, with all due respect, we've created this problem by diluting this fund.

So then how do we fix it? That's the question. The question is, how do we fix this? So you're you're saying we created this problem.

My suggestion is not at the expense of the California Highway Patrol's operational costs.

And nobody nobody here has suggested suggested do it.

I'm sure they don't.

Thank you. Let's so does anybody else have anything on this? Right? Alright. We're gonna we're gonna move on.

And LAO has done a great job of identifying a number of things about all of these various proposals. If we had more time, we'd go through each one of those, but it's important for us to get onto the cap and invest regulations that are out there. So we're gonna move over to sure. Yeah. And so, it's important that we move on.

So let's go ahead and get board member comments about this as we as we're in this transition. So I have Assemblymember Wilson, Assemblymember Rogers, Assemblymember everybody needs to make their comments about these about these board items.

Thank you, mister chair. And I do have to run to another meeting. But when looking at the cap and invest program in GGRF as a whole, you know, I'm concerned, that

Oh, we're we're doing cap and invest next. Right now, we're doing member member closing comments on the budget proposals that we just were through. Okay?

do you mind if I just make my comment on that part?

Okay.

Okay. Go ahead. Just just as a in general, and what we're gonna talk about next, because I do have to leave, is I wanna make sure it matches what's being done matches what the legislative intent was. And I think there's been a disconnect in that. In particular, as it relates to transportation, I'm hoping that we have an opportunity to learn, because I will be watching this video later, the impact that the adjustments have made on TRSIP programs.

And so I hope that our discussion later will include that. But I appreciate the discussion on the on the first part that we looked at in terms of all the projects. And I'll go back to the Golden Gate fields. I do think California should be able to do big things. We're the fourth largest economy, and so we should leverage that in a lot of ways to do big things.

But we can't do that, while disadvantage disadvantaging others. So I appreciated the comments from secretary, from the secretary in regard to our percentage as it relates to disadvantaged and underserved being, almost 40% in that and making sure that that whoever is in that position, that that continues. That's extremely important.

And then also, noting what we just heard from our the DMV about operational needs, I think it is important to fund it, but we can't continue to let our motor vehicle account be insolvent or be on a verge of insolvent insolvency. So we, as this committee, need to make sure that we are considering that before we get to our next budget, year and and trying to address that in cooperation with administration.

Those are the only comments I have. Thank you to the chair.

Thank you. I appreciate that. I'm gonna make a comment here. We have lots of challenges in front of us. It is hard to overestimate how big these challenges are in terms of structural deficit we have.

And we can sort of make hay with any one of these issues, but we will have tremendous political, difficult decisions to make ahead of us. And we can all sit there and and talk about this favorite program or that favorite program, and we're the great defenders of that program. I would offer our responsibility is to point out where these challenges are and where our most difficult political decisions are.

I certainly don't want to have the implication that any of us are saying cut the highway patrol account. And that I think just because we're pointing out we have a structural deficit in the MVA and we need to fix it doesn't mean we're saying we wanna cut that.

And nobody no one person gets to say they're the defender who stops a cut in the highway patrol. Nobody up here suggested cutting the highway patrol, but we are suggesting we have a problem and we can keep just kicking it down the road and not making hard decisions or we need to start making hard decisions. And so with that, I'm gonna turn to my other colleagues for their general comments about this, and then I'm gonna close with my general comments about the budget overall.

So this is budget may revise comments overall that you'd like to make. I mean, I have more on Okay.

Great. Assemblymember Rogers.

Yeah. Thank you, chair. I have plenty of comments on the budget may revise overall, but I'll confine them to our subcommittee for today. And, really, I just wanna talk about two different, things. One of which is, continuing to push on offshore wind and making sure that the communities that have those projects proposed are able to build the infrastructure to be able to to support that.

Improv four, we did the first allocation of 250,000,000 to the California Energy Commission last year. I I would push and hope that we can get the other 250,000,000 that was earmarked in prop four, out the door as well to continue the commitment to make sure that those communities are able to continue to move projects forward. Those dollars are not part of these tough trade offs that we're talking about. Voters have voted on the dollars where they want them to go in that specific instance.

That is money that is earmarked earmarked specifically for offshore wind.

So I don't know what the justification is for sitting on an allotment when we could continue to move those projects forward. So I wanna mention that. The second is we have in the analysis, the timber regulation and forest restoration restoration fund, the the terper. This is one of the the things I brought up before. It is one of the pots of money that I generally hear from both the environmental community and the timber community that that fund is not being used appropriately.

And we should continue to push not just to get the vegetation management projects out the door, which is important, but also that recognizing that that fund was originally created with the intention of getting timber harvest plans approved faster, that there's a CAL FIRE specific position to be able to do that at least up in my neck of the woods that still has not been filled. It's been a couple of years. So I wanted to make sure I got that on the record.

And then the final one, there is, for CalRecycle, SB 1113, from a number of years ago. It extended a pilot program that was helping to build infrastructure for CRV programs in, specifically in rural communities.

There are 10 counties that have taken advantage of that program. I represent three of those rural communities. The program specifically would allow for, nonprofits and other groups to assist in the CRV program. The sunset overall for the legislation was extended, but not for counting for convenience zones, which effectively makes the program ineffective or or not usable in rural communities.

And so I want to highlight that as well because that seems like a simple thing for us to be able to fix that sunset on that specific portion of the bill that applies to rural communities.

Sunsets on 01/01/2027. And there's really no explanation for why only the the specific portion being used by rural communities sunsets while the rest of the program continues. So I think that we can fix that as well. It seems pretty noncontroversial, but I want to make sure that was on the record.

Thank you very much for getting that on the record. I'm gonna go ahead and and make these comments, and I'll turn over to my colleagues. And we've had lots of careful deliberation this spring about these budget items that are in front of us. There are a few that I think really stand out in my mind. Clean trucks and buses, the HVIP program needs to be funded in addition to the light duty EV program that is out there.

I think that the the truck industry is right at a tipping point in terms of electrical electric vehicles moving forward and trying to jump start. That's important. Home hardening, we've had many conversations about. My colleague, Assemblymember Rogers and I and Conley in particular have been very focused on the home hardening. Helping low income Californians have access to fruits and vegetables at the farmers markets and with the California nutrition incentive program.

It'S Been a very, very valuable program. Heat pumps and incentives to reduce emissions, in indoor air pollutants in homes, with heat pumps is something that I think we should have, some funding for. Local food assistant purchasing program, connecting farmers to food banks, maintaining positions and proposals for the elimination of the departments in CNRA and Cal EPA. I think we should reject those and keep those positions. Restoring funding for transit, fulfilling our commitments on SB 125.

The transit agencies plan for that money. They made those plans and, for us not to follow through, puts them in a real bind. Electric landscaping equipment, I think, has been a very, productive and successful program statewide. Had a chance to look and make sure that the dollars were were being spread around the state and they are. And then finally, helping small businesses comply with state goals to the California green business, program.

Those are all things that I I think we should have, some significant conversation about in terms of trying to move forward. Do my colleagues over here have any comments on budget? May revise?

Yes. I think it's exciting, but it's also very discouraging to see that the state does so well in many aspects, but as so challenged on many other fronts. Primarily, I mean, our revenues, as you heard, are doing quite well. When we've increased 30 over the last three years, that's something to to be cheerful about, be encouraged by. But, unfortunately, our appetite to spend exceeds it, And now it becomes a competition.

Now it becomes a competition for who's legitimate and who's not. And, I mean, this is my twelfth year, folks, and I I will tell you that in every year I've been here, we've increased our revenues. We're good at raising and and being economically strong as far as generating income. Where it gets very challenging, it's only been in the last few years that we've been in deficit, and it's because our appetite is beyond our ability to fund.

And so I just want it to be known that when I brought up the, the CHP situation, it's clearly in jeopardy, or we wouldn't it wouldn't be on the discussion piece.

It's not about taking credit. It's about making sure that certain expenditures are worthwhile and rise on the priority scale. And in my opinion, it shouldn't be a political thing on public safety, but it's become that. It has. And I just want everybody to know that it's important that we do express what we see as priorities.

We're elected officials, and we're human beings. And we have our own life experiences, and those life experiences are what shape our perspective. And so it's really important that we feel free to do that, and I'm thankful that I'm getting that opportunity right now. And I I just want everybody to know that these decisions are hard. I mean, I know that the political fervor is not behind my party in supporting the environment.

But I will tell you, we we want clean air. We want clean water. But how do we express that? It becomes very gray. And so in these discussions, there are certain things in my mind that are clearly rise to the level of priority and certain issues that just don't.

And so I I feel the the burden, and I have felt the burden for the last twelve years in trying to be honest and trying to be clear on what the priorities are from my district and from my area. And so I appreciate the fact that you all are spending your time paying attention and seeing what we see as priorities because this is a difficult time. We have overcommitted. And so now we have to figure out what's really an overcommitment and what's not.

And it is that simple, but it's not a simple process.

So I I thank you for indulging me.

Assemblymember Gallagher.

Yeah. Thank you, mister chairman. I'll just keep my comments right now to the May revise because I understand we're going to get in g g r f next. Is that right? Correct.

Because that is a serious issue also. I think the fundamental issue that we're dealing with here is we are playing with borrowed money. And I think the LAO report makes that really clear. Like, it's just we are, you know, one fiscal downturn away from, say, a $100,000,000,000 deficit. And so we can't act like we have all this revenue for the long term.

But that's what we're doing with this budget. That's what the governor is proposing because he's gonna be gone here pretty soon, and it'll be somebody else's problem to deal with. So we, as responsible legislators, need to reprioritize and recognize what the real fiscal situation is, which is not great. And we're looking at out out your deficits, big ones, and we need to start prioritizing. It's budgets are about prioritizing.

And I think my concern is is that we're still trying to fund everything and anything and everything without saying, hey. What are the fundamental things that we need to take care of in government? And, you know, right now, people's cost of living is out of control. Things that help actually lower the cost of living, those are things we should focus on. Infrastructure that we need, you know, for the future, One of those is clean drinking water.

I think that should be a priority, you know, but doesn't sound like it is under this governor's revised budget. And we're and we're funding things that I think are, you know, not shouldn't be as as huge a priority. So we are going to have to get serious here and not act like, you know, we've got all kinds of money to to fund everything, and we have to make sure that we fund the things that are most important to California.

And so I I I hope that we get to that point here. Thank you.

Thank you. And really appreciate recognition of how difficult these these decisions are. All of these things all these priorities end up competing with one another. And we do need to do a better job in terms of the structural deficit that that is out there. I will end with this and that is, unfortunately, at the national level, my perception is we've given up in terms of trying to balance a budget.

We have given up in terms of being responsible in terms of spending. We haven't balanced the budget at the national level since 1995. That's both both parties have not been able to pull that off. The last time we were able to do that was in 1995. We now have a national debt that exceeds our our GDP for the year.

That's, always a signal of a of a great power starting to, lose its economic bearings and foundation and always a sign of decline that comes in after that. We haven't been responsible there. It's difficult, but it's the sooner we end structural deficit issues here in California, the better off Californians will be in the long run even though there will be short term pain. And with that, we're gonna move over to the overview of the California Air Resources Board cap and invest regulations and possible impacts.

So if we'll have people approach and I'm gonna start with our introductory comments, mine and then those from the the other members.

Right?

Thank you very much. I'm gonna I'm gonna start off. This is I think really important and something that's one of the major issues that I've been focused on since I've arrived here. And I view the whole GGRF funding, the whole Cap and Invest program that we that we call it now, as its major goal has been to reduce emissions, to protect disadvantaged communities in particular that have the most impacts, the most serious impacts.

But for us to do our job in terms of meeting and playing our role in terms of the whole global climate change effort. So we should be focused on decreasing emissions. And yes, there are impacts as we move forward. But I've been asked over and over again to sign onto various areas to try to increase GGRF revenues moving forward.

And I haven't done that because in this role I think we really have to focus on the primary responsibility is to decrease emissions. The secondary goal is to take the revenue from that and use that revenue to help us decrease emissions. We've gotten far afield from that particular area now.

And I'm particularly this year, with what's happened between January and now, I'm really disheartened with CARB's rhetoric about this. CARB is actually using the language of saying we're providing $4 million in the industry through the MDI, the Manufacturers Decarbonization Incentive. We're providing the climate credit.

We're taking it from $8 billion to $10 billion. As if these programs were designed to try to raise revenue to help these people. I mean, to help these industries. These were communicated not, with almost a complete disregard, I think, for the primary role, which is emissions. And it's, I think, concerning because it's the legislator's role to appropriate money. It's not CARB's role to appropriate money.

And we do that through the Budget Act. We did this with statute SB 840. And I think I feel like CARB's sort of gone around that process with this. So CARB could have proposed budget process to us, and we could have had, you know, a healthy discussion about whether we wanted to fund SB 840 like it was appropriated. But these proposals do two things.

I think they duplicate the tax credits and incentives that we already have out there for the industry. Right? And at the same time, they take away our ability to vet what's the best move. Should we have $2 billion over five years? Should we give that to climate credit?

Or should Californians say, hey, we want $200 billion to spend on wildfire prevention or some other program. But with CARB's, the way CARB allocated resources, CARB actually took that away from the legislature. And I am objecting to that and think CARB should think twice about that before the CARB board actually tries to, before the CARB board actually votes on whether to accept this proposal or not.

We need to lower utility bills in California. But investing wildfire prevention is one of the ways to lower utility bills because we decrease the liability and the amount of money that the electric companies have to spend. A 10 cent a year discount per person is cutting out $200 million of wildfire prevention funding.

The legislature last year through the transmission funding financing investment, we said that the best way for us to lower electricity bills is to reduce cost and lower the drivers of those costs so we can get a better return. We said that cost of living is really an important issue. We look at the highest cost in California, and it's housing. And yet because of the CARB proposals, we're going to defund the affordable housing program part of GGRF.

The high price of gasoline in the country, we're gonna face that for the next few months because of the ongoing conflict in the Middle East. Now is the time to invest in transit. Now is the time to invest in zero emission vehicles to lower those costs. Yet we're cutting our investments in transit. We're cutting our investments in ZEV vehicles again when we have these rising prices for gasoline.

So I hope those CARB members will consider the programs that they're defunding if they adopt the the allowance and the structures that they have recently proposed. And with that, I'll turn it over to my colleagues for any initial comments about GGRF as we go forward. Alright.

Yeah. Real quickly. I was gonna reiterate your main point, and that is kind of what I hope is a common understanding about the primary purpose of Cap and Invest, and that is to reduce greenhouse gas emissions. So I'll probably put that question directly to folks and then have some follow ups. So just to kinda plant that flag along with you.

Thank you very much. Alright. Well, yep.

Yeah. I mean, I'll just kinda, as introductory, I think we have a huge problem with the priorities in this. And part of the problem is, like, we made the mistake of setting it this way. We passed SB 840, which put certain things in the top tier, and it put certain things in the bottom tier.

And one of the biggest things that we put in the bottom tier that is completely unacceptable is wildfire prevention funding. It should be the reverse. Wildfire prevention should be number one for the money. One, because of the risk we face from catastrophic wildfire in the state that everybody should be familiar with. But number two, it's actually one of the best climate reduction programs we can do.

And everybody knows that. And it's been said time and time again, every study has shown it, that having a healthy forest is a carbon sink. You know, having an unhealthy forest that's got all kinds of tinder and underbrush and dead and dying trees is a carbon emitter, and it ends up burning up and millions of metric tons of carbon go into the atmosphere. So if we're if the goal is to reduce emissions, that should be number one. It's not.

It's number, it's third tier. And right now, under your guys' proposed budget, this May Revise, it's gonna get a $105 million. It's a which would be a big reduction in wildfire prevention. But at the same time, we're keeping the $115 million for the zero emission vehicles incentive. We're, you know, we're not making any reduction in that.

So you guys are choosing that that's more of a priority that people get a tax credit to get an electric vehicle than not getting burned up in a fire in their community. I think that's wrong. You, we are choosing, if we keep this 840 metric, to put a $125 million for transit passes so that people can get transit passes in front of wildfire prevention. We are choosing to put $25 million for seed funding for the University of California Climate Research Center.

I don't know what it does. It doesn't seem to be doing anything to reduce emissions today. Right? But 25 million is gonna go to that instead of wildfire reduction. $15 million for rebuilding Topanga Park, which I'm sure is an important issue for, you know, people in the Los Angeles area and losing that park. But, I mean, is that a bigger priority than saving people from catastrophic wildfire?

I don't think so. 85 million for an entity chosen by the legislature to support climate focused technological innovation related research and deployment of climate solutions as specified. What in the hell is that? $85 million that we're just putting into some entity that's gonna help us with climate innovation. Meanwhile, we're not funding wildfire prevention.

That's crazy. But this is all in here, man. It's in the bill. We have to change this. We have to change what this is doing. And then I'll get to how about safer drinking water for our communities? We're gonna cut that program, the SAFER program. Disadvantaged communities that need clean drinking water. We're just gonna cut that out, and we're gonna fund all those priorities. I'm sorry, man. This is just backwards.

So I would love for someone to explain to me why this is a good plan, and I think we need to drastically change it. It sounds like the Chair is open to that as well, and I think we should. Let's revert. We are the... By the way, we are the legislature. CARB answers to us.

I'm not gonna ask you kindly, CARB, what to do. I'm gonna order you what to do. That's what this legislature should be doing, setting the priorities. You guys are unelected. You're not accountable to anybody. We are. It's our constituents who get hurt by this stuff.

So I wanna see more of this legislature saying, no, CARB. You're gonna do what we want you to do, what the people want you to do, and stop doing crazy stuff that puts us at a disadvantage and defunds programs that are vital to our existence.

You know, that's the problem that I'm seeing here. And I think there needs to be much more authority over this body that seems to be just doing whatever it wants. You're right, Mr. Chair. It's they're doing whatever they want because we're letting them. And it's about time that we said no.

I appreciate your passion on this issue. I will offer a caution in terms of the language being used up here needs to be professional, needs to respect the decorum of this place. So I'll call that out more strongly if it happens again. At the same time, I would point out, while we have an agreement about some frustration with CARB's decisions, if we politically want to do something, we have to have 41 votes in the Assembly to do it.

So we have to pull it together if we wanna do something different. That's what the process is. So it's not these people's fault that we may or may not have exerted ourselves. It's our fault. So we are not attacking you folks at all personally in any way. We have some frustration with the recent CARB changes, particularly the changes from January.

You know, January, we were at one spot, felt like we were implementing sort of much of the legislators. And then I think as a result of a lot of interactions with industry, CARB, you know, took a took a different proposal. You know, took a different tact in terms of doing this. And it dramatically cuts the funding available, and that's sort of a decision that we ought to be making.

We could easily, we could take the same $2 billion, which I'm estimating is same $2 billion that we're losing in revenue. And you could have given a test. We could have said, hey. Do we want to use that $2 billion to buy down electricity rates? Or do we want to do this and do wildfire prevention or any of these other things?

That's the option that I think we're frustrated with. And the question is whether we will organize ourselves, whether there are 41 votes in the Assembly to organize ourselves to do something different. That's not at all certain, alright, that that there are 41 votes to do that. Assembly Member Rogers.

Thanks so much, Mr. Chair. And I'm gonna have to step out in a second. So I want to make a couple of comments and present a couple of questions. And, obviously, me and my team will be looking for them. Some of the criticism that I've seen from folks about the CARB proposal is that it fundamentally undermines the existing offset programs that devalues nature based solutions.

And, specifically, some of the studies that have been done show that less money will be coming in and things like the MDI in particular will allow for increased emissions and increased polluting with no guarantees that it's gonna actually prevent leakage, with no guarantees that it's actually going to be passed on to consumers.

So one of the fundamental questions that I'd be looking for an answer from CARB is if we are talking about the intent of this program holistically to be about carbon reduction, to be about incentivizing innovation and the right types of technology while also reducing the amount that we get from the GGRF auctions. Why are we proposing this if it doesn't meet any of the intent of the design of GGRF and design of the Cap and Invest program? So I'll be looking for that.

Specifically, as it impacts the discussion around oil and refineries, what kinds of guarantees can you give that the MDI would actually still prevent those refineries from leaving and make sure that the savings that you see happening are actually in effect passed on to consumers given that it's a global commodity, that it has global supply chains, and we've discussed all of the different aspects of that as well.

And then the final one is about the process. And that's using the 15 day process for a change of this magnitude really deprives people of the opportunity to weigh in, especially given that we're in the middle of one of those auctions that creates blackout periods for folks to be able to engage.

So how does CARB both meet the timeline that we are looking for for implementation of Cap and Invest for later in this year while also making sure that people have an opportunity to engage in a meaningful way? So I hope that you'll address that in your presentation.