While maintaining he was being fiscally prudent — increasing the Rainy Day Reserve to $15.3 billion, paying down a total of $4.1 billion state pension liabilities, allocating an additional $700 million to a social safety net reserve and $2.3 billion in general reserves — he also proposed major spending augmentations in various areas, including:
- Allocating $500 million to expand childcare infrastructure;
- Increasing CalWORKs (welfare) payments by 25 percent;
- Spending a total of $80.7 billion on K-12 and Community Colleges, including $750 million to address barriers to full-day kindergarten;
- Augmenting funds to UC and CSU, and extending the free community college program to two years;
- Supplemental Cal Grants to assist college students with children;
- Doubling the state’s Earned Income Tax Credit for low income households;
- Expanding Medical to serve undocumented youth between 19-25; and
- Providing six months of paid parental leave.
Many of the above expenditures reflect a troubling economic undercurrent in California, despite its position as the world’s fifth largest economy. Demographic information reveals that since 2007, the median income for households with bachelor’s degrees has stayed relatively flat at $72,000, but average income for those with less education has declined from $42,000 to $35,000 in the same time period.
As he previewed in an announcement earlier this week, the Governor’s budget includes $415 million in funding for emergency preparedness and response. Of the $415 million, the Governor indicated he will propose a historic investment of $305 million in new emergency planning funding. The remaining $110 million is expected to be carried over from last year, and one-time funding repeated from last year’s appropriations.
Cities received additional housing-related investments, including $500 million to build homeless shelters, $500 million for affordable housing tax credits and $500 million for moderate housing production. When asked by reporters about restoring redevelopment, the Governor shied away from committing to reintroducing the tool, saying instead that affordable housing resources were being restored and that we should make Enhanced Infrastructure Finance Districts (EIFD) more useful by repealing the current 55 percent vote requirement associated with issuing debt, and pairing them with federal Opportunity Zone incentives.
Of paramount concern to cities is a policy proposal that would empower the Department of Housing and Community Development (HCD) with top-down authority to dictate local land use policies and penalize local communities if new state quotas are not met by stripping local transportation dollars and other vital revenue.
Detailed budget areas of importance to cities are outlined below.
Housing, Community and Economic Development
This budget is a mixed bag for local government in regards to housing. While historic levels of new funding are proposed to help address homelessness and affordable housing needs, the budget also includes possible statutory changes that would undermine local land use authority, limit the ability to impose impact fees and jeopardize local transportation revenues.
RHNA Reforms, Production and Enforcement/Link to Transportation Funding
The budget proposes to increase housing production long-term by “revamping” the Regional Housing Needs Assessment (RHNA) process. As part of this new process, HCD will use its new authority under Chapter 370, Statutes of 2017 (AB 72) and Chapter 958, Statutes of 2018 (686) to more actively oversee housing element implementation and take enforcement action on local governments as needed. Additionally, the Governor wants to explore the possibility of linking housing production to transportation funds and other applicable sources of funding (see transportation section for greater detail).
Capping Local Impact Fees
While the budget does not contain a direct proposal to limit or restrict local planning or impact fees, it does declare that these fees contribute substantially to the cost of development. Additionally, during the Governor’s press conference, he stated that impact fees are “out of control” and he is forming an impact fee task force. The Governor also said that he is considering “going to the ballot” to address the problem.
Short-Term Planning and Performance Incentive Grants
$750 million in one-time funding is proposed to increase housing production and provide technical assistance to local governments. HCD is directed to establish new higher short-term housing production goals at each income level for all jurisdictions. These include:
Funding for Housing Tax Credits and Moderate-Income Housing Production
- $250 million (SB 2 funds) for technical assistance for local governments to develop plans that include but are not limited to: streamline housing approvals, complete California Environmental Quality Act (CEQA), improve permitting or rezone to increase density; and
- $500 million for grants to local governments that can be used for general purposes if they achieve unspecified milestones associated with enhanced planning and increased housing production.
Accelerating Housing Bond Allocations
- $500 million General Fund one-time funding for the development of moderate-income housing. The California Housing Finance Agency will expand the existing Mixed-Income Loan Program that provides a lower subsidy than traditional state housing programs.
- $500 million, and up to $500 million annually thereafter, upon appropriation, for affordable housing tax credits as follows:
- $300 million to the existing housing tax credit program that targets new construction projects that pair with the underutilized 4 percent federal tax credit program.
- $200 million to a new program targeting housing projects for households earning between 60 and 80 percent of area median income.
The budget proposes to accelerate awards to qualifying projects from the $4 billion Veterans and Affordable Housing Bond Act of 2018.
Building on Excess State Property/No Local Approvals
The budget proposes to allow affordable housing developers to build demonstration projects on excess state property, which does not require local approvals, and use creative and streamlined construction processes. Developers, selected through a competitive process, will receive low-cost, long-term ground leases.
Changes to Enhanced Infrastructure Finance Districts
The budget proposes to expand Enhanced Infrastructure Financing Districts (EIFDs) authority by removing the 55 percent voter approval threshold to issue debt. The Governor believes that more cities and counties will form EIFDs if they have greater ability to raise capital. Additionally, the budget proposes to pair EIFDs with federal Opportunity Zones. The state will also conform to federal law and allow for deferred and reduced taxes on capital gains in Opportunity Zones for investments in green technology or affordable housing, and for exclusion of gains on such investments in Opportunity Zones held for 10 years or more.
$500 Million General Fund One-Time Funding for Homelessness
Last year $500 million in one-time funding was allocated to local jurisdictions to address emergency homelessness needs. This year’s proposed budget once again allocates $500 million in one-time funding for jurisdictions that site and build emergency shelters, navigation centers or supportive housing.
The proposed allocation of these funds is similar to the formula from last year’s budget:
CEQA Streamlining for Homeless Shelters
- $200 million will be distributed by the Business, Consumer Services and Housing Agency (BCSH) through Continuums of Care to jurisdictions that establish joint regional plans. In order to receive the money, cities and counties must work together and collaborate to site and build emergency shelters, navigation centers or supportive housing;
- $100 million will be allocated to the 11 most populous cities in the state; and
- $200 million will be made available to jurisdictions that show progress in permitting new supportive housing units or constructing emergency shelters and navigation centers.
The Administration will seek legislation to grant homeless shelters, navigation centers, and new supportive housing units the same streamlined environmental review recently given to sports stadiums. The expedited CEQA review will accelerate judicial review of challenges to an Environmental Impact Report.
Department of Transportation (Caltrans) Airspace for Emergency Shelters
The budget includes the development of a statewide policy for the use of Caltrans airspace, or land located in the state’s highway right-of-way, for emergency shelters, expanding on 2018 legislation that allowed for such spaces on up to 30 parcels in Oakland, San Jose, Los Angeles, San Diego, and Stockton.
Assisting Homeless Individuals to Qualify for Federal Disability
The budget proposes an annual appropriation of $25 million General Fund beginning in 2019-20 to continue the Housing and Disability Advocacy Program to assist homeless, disabled individuals with applying for the federal Supplemental Security Income disability benefit programs. Participating counties are required to match any state funds on a dollar-for-dollar basis.
Whole Person Care Pilot Programs
$100 million General Fund (one-time with multi-year spending authority) is allocated for Whole Person Care Pilot programs that provide housing services. These programs coordinate health, behavioral health (including mental health and substance use disorder services), and social services. This funding will be used to match county investments in health and housing services with a focus on the homeless mentally ill population.
Accelerating Allocation of No Place Like Home Funds
The budget proposes to accelerate awards to qualifying projects authorized by Proposition 2, authorizing a $2 billion bond to construct housing for the homeless mentally ill.
Mental Health Workforce Investment
$50 million General Fund is proposed for training opportunities for mental health practitioners.
$27 million in Greenhouse Gas Reduction Funds (GGRF) is proposed to increase job training and apprenticeship opportunities focused on disadvantaged communities.
Transportation and Infrastructure
- Pre-Apprenticeship Construction Partnerships — $10 million annually for 5 years to place approximately 3,000 disadvantaged workers in apprenticeships for a career in the trades by doubling the training capacity for each of the existing 14 regional hubs;
- Training Partnerships — $10 million annually for five years to place 2,000 disadvantaged workers into entry-level jobs and develop skills in climate and technology-related occupations through the expansion of existing partnerships;
- Worker Transition Fund — $5 million annually for five years to provide income replacement in conjunction with retraining for approximately 1,500 displaced workers resulting from climate policies or automation; and
- Technical Assistance and Program Administration — $2 million for 11 positions and contract resources at the California Workforce Development Board to support these programs.
While the Administration plans to release a five-year infrastructure plan later this year, the Governor’s proposed January budget includes $4.8 billion for transportation generated by SB 1 (Beall, Chapter 5, Statutes of 2017) in FY 2019–20, with funding distributed from the Road Maintenance and Rehabilitation Account to the following state and local programs:
- $1.2 billion for local streets and roads, including $600 million for cities and $600 million for counties;
- $458 million for local transit operations;
- $386 million for transit, commuter, and intercity rail;
- $200 million for the State-Local Partnership Program;
- $100 million for the Active Transportation Program;
- $36 million for Commuter Rail and Intercity Rail; and
- $25 million for Local Planning Grants.
- $1.2 billion for maintenance of the state highway system known as the State Highway Operation and Protection Program;
- $400 million for bridges and culverts;
- $307 million for trade corridor enhancements; and
- $250 million for commuter corridors.
In addition to these allocations, the budget includes $2.4 billion to pay off the state’s budgetary debts, including the elimination of all outstanding loans from special funds and transportation accounts for the first time in over a decade.
It is important to note that the SB 1 allocations above do not represent all of the transportation tax revenue cities will receive. In fact, omitted from this summary are the existing revenue streams from the Highway Users Tax Account (HUTA), which are similar in amount to the SB 1 revenues. For the latest city transportation funding estimates, please visit www.californiacityfinance.com
in the coming weeks.
New Threat to SB 1 Funding
Over the last two years, the passage and defense of SB 1 (Beall), the largest transportation infrastructure investment in state history, which dedicates all of the new revenue to transportation projects in every community across the state, required every resource available to the League and a coalition of transportation stakeholders in partnership with the Legislature and Administration. The voters rejected Proposition 6 and sent a strong signal that fixing potholes and making roads safer in their communities is a top priority. Therefore, it is very concerning to be faced just a couple of months later with a proposal that threatens promises made to the voters.
The Governor’s January budget states:
“Going forward, the state will strongly encourage jurisdictions to contribute to their fair share of the state’s housing supply by linking housing production to certain transportation funds and other applicable sources, if any. The Administration will convene discussions with stakeholders, including local governments, to assess the most equitable path forward in linking transportation funding and other potential local government economic development tools to make progress toward required production goals.”
The $54 billion transportation investment in SB 1 is a major accomplishment for state and local governments, and while this investment will make significant improvements to transportation across the state, it does not represent a windfall for state or local agencies. In fact, for the last 10 years, state and local governments have consistently identified massive backlogs and funding shortfalls for the state and local transportation networks exceeding $50 and $70 billion over 10 years, respectively.
As a result of SB 1, however, the unmet funding need for local streets and roads shrinks by approximately $18 billion, while two-thirds of the network moves into a state of good repair.
Absent such investment, such shortfalls would have grown by $20 billion and over half of all roads would have fallen into a state of disrepair. SB 1 will stabilize road conditions across the state in the aggregate, while seeing significant improvement where such investments can be maximized. Preserving these investments and the commitment made to the voters will continue to be a top priority for the League.
Addressing State Infrastructure Maintenance
The budget includes one-time funds to address backlog of deferred state maintenance needs to the following departments:
Emergency Preparedness and Response
- $112 million — Department of Corrections and Rehabilitation;
- $45 million — Department of Parks and Recreation;
- $40 million — Judicial Branch;
- $35 million — Department of State Hospitals;
- $16 million — Department of General Services;
- $10 million — Department of Fish and Wildlife;
- $7 million — Network of California Fairs;
- $6 million — Department of Forestry and Fire Protection;
- $5 million — Department of Developmental Services;
- $5 million — California Military Department;
- $5 million — California Highway Patrol;
- $5 million — Department of Veterans’ Affairs;
- $5 million — State Special Schools;
- $3 million — Department of Motor Vehicles
- $3 million — Exposition Park;
- $3 million — Department of Food and Agriculture;
- $3 million — Housing and Community Development;
- $2 million — Employment Development Department;
- $2 million — Office of Emergency Services;
- $1 million — California Conservation Corps;
- $1 million — Hastings College of the Law;
- $1 million — Tahoe Conservancy;
The Governor prioritized emergency preparedness and response in his brief tenure, as evidenced by his early focus on the issues. In a press conference held early this week in Colfax, the Governor unveiled two executive orders and $415 million in funding for emergency preparedness and response. Watch
the 45-minute press conference and read
the Governor’s press release for full coverage.
The January budget proposal lays out funding proposals for emergency preparedness and response as follows:
Support for Affected Communities
The budget proposes the following allocations for local communities affected by the devastating disasters in recent months:
Department of Forestry and Fire Protection (CAL FIRE)
- Property tax backfill — $31.3 million to backfill property tax losses for cities, counties and special districts:
- $11.5 million to backfill entities in Butte, Lake, Los Angeles, Orange, Riverside, Shasta and Siskiyou counties for losses estimated to be incurred in 2019-20 as a result of the 2018 wildfires;
- $16.1 million to backfill entities in Butte County for losses estimated to be incurred in 2020-21 and 2021-22 due to the 2018 Camp Fire; and
- $3.6 million to backfill entities in Lake County for losses estimated to be incurred in 2019-20, 2020-21, and 2021-22 resulting from the wildfires in 2015, 2016, and 2017.
- Debris removal — $155.2 million for waiving local county share of costs for debris removal. This is an estimate, as the budget assumes a $2.5 billion estimate for debris removal costs for the Camp, Woolsey, and Hill fires and the federal government is expected to cover 75 percent of those costs; and
- Backfill affected schools Prop. 98 funding.
The Governor’s budget includes a total of $2.6 billion and 7,645.6 positions for CAL FIRE. Earlier this week, the Governor detailed the $415 million in appropriations specifically for emergency preparedness and response. Proposed appropriations are as follows:
Office of Emergency Services
- Fire Prevention — $213.6 million for fuel reduction projects through prescribed fire crews and grants for forest health projects, implementation of the recently enacted wildfire prevention and recovery legislative package, which streamlines regulatory barriers for fuel reduction projects, and disposal of illegal and dangerous fireworks. Of this, $200 million was agreed to as part of last year’s SB 901 compromise to appropriate $1 billion over five years;
- Enhancing Aviation Resources — $120.8 million General Fund to add aircraft with increased tactical capabilities to CAL FIRE’s aviation fleet to meet the challenges associated with more severe wildfire activity. This includes:
- $11.4 million for the first year of operating C‑130 air tankers that will be transferred from the U.S. Air Force; and
- $109.4 million to continue replacement of CAL FIRE's helicopters with new Blackhawk helicopters.
- Expanding Firefighting Surge Capacity — $64.4 million General Fund for fire protection capabilities to:
- Add new 13 year-round fire engines to be located in the highest fire risk areas;
- Expand staffing for bulldozer operations during emergency wildfire events;
- Accelerate replacement of fire engines and mobile equipment as a result of wear and tear from the longer fire season; and
- Add five CAL FIRE/California Conservation Corps fire crews at Los Padres, Camarillo and Butte fire centers.
- Emergency Responder Services — $6.6 million to expand CAL FIRE’s health and wellness program and to provide medical and psychological services and peer support to firefighters; and
- Technology — $9.7 million to support incident commanders with data gathered via remote sensing technology, situational awareness software and satellite imagery, and 100 additional fire detection cameras that will be linked into the existing command centers to provide additional data on conditions.
California’s Office of Emergency Services (Cal OES) coordinates emergency readiness and response activities. This budget proposes an additional $172.3 million for the following activities:
- Mutual Aid — An additional $25 million in ongoing General Fund funding has been proposed for mutual aid to support existing Cal OES and local government prepositioning;
- 9-1-1 advancements — $60 million in one-time funding ($10 million in 2018-19 and $50 million in 2019-20) to upgrade the 9-1-1 system from analog to digital. This budget also assumes a 9-1-1 fee structure will take effect in 2020 to generate about $170 million annually. Imposing a fee would require a two-thirds vote of the Legislature;
- Broadband Communication and 9-1-1 — $1 million for emergency communications coordination and First Responder Network Authority broadband services;
- California Earthquake Early Warning — $16.3 million in one-time funding to complete a statewide earthquake early warning system;
- Public Education — $50 million for one-time to begin a comprehensive statewide education campaign on disaster preparedness and safety in high-risk areas and for local grants; and
- California Disaster Assistance Act (CDAA) — $20 million in one-time funding to repair or replace public real property damaged or destroyed by a disaster, and to reimburse local government for unspecified emergency activities in response to a state of emergency. Total CDAA funding is proposed to be $82.6 million in 2019-20.
Related Activities and Executive Orders
- Public Safety Radios — Updates to radio systems used by first responders who often operate on different systems and relay messages through dispatchers:
- $59.9 million over five years for a new California Interoperable Public Safety Radio System for Cal OES;
- $2.9 million to the Department of Justice to replace radios;
- $1.6 million to the Department of Fish and Wildlife to replace vehicle-mounted and handheld radios; and
- $62.4 million to the California Highway Patrol (CHP) to replace radio systems in vehicles, $18 million to replace laptops and hand-held citation devices, and $9.5 million to replace information technology infrastructure.
- Implement Wildfire Prevention and Recovery Legislation (SB 901, Dodd, 2018)—$20.5 million for the following purposes:
- $9.2 million to the California Public Utilities Commission for wildfire cost recovery proceedings, wildfire mitigation plans, and oversight of utility compliance;
- $7.9 million to the State Water Resources Control Board (SWRCB) and Department of Fish and Wildlife to review timber harvest plan exemptions and inspections, permits, and enforcement to improve forest health and vegetation management; and
- $3.4 million from the Greenhouse Gas Reduction Fund to the Air Resources Board for air quality and smoke monitoring and modeling, as well as air district public education efforts on prescribed burns and other fuel reduction activities (see additional allocations in Cap and Trade section).
The Governor also signed two executive orders earlier this week, the second and third of his short tenure.
- Executive Order N-05-19 requires CAL FIRE, in coordination with other state agencies, to report to the Governor within 45 days with recommendations to prevent and mitigate wildfires, including deploying personnel and resources, policy changes for rapid fuels management, and a methodology to assess at-risk communities. When determining which communities are at greatest risk, this executive order requires CAL FIRE to consult with local stakeholders and to consider “socioeconomic factors and vulnerable populations that exacerbate the human toll of wildfires.” Further, the executive order announces the new $50 million public education campaign described in the Cal OES section above; and
- Executive Order N-04-19 requires the state to develop a new approach to procurement with the goal of deploying new innovative solutions to the state’s wildfire crisis by spring 2020. This executive order is intended to speed up the use of new technology for fire detection by the next fire season.
Earlier this week, the Governor signed a joint letter to President Trump, along with Washington Gov. Jay Inslee and Oregon Gov. Kate Brown, requesting partnership between state and federal governments on forest management.
Over the life of the Cap-and-Trade program, approximately $9.3 billion of revenues have been appropriated to numerous programs. This budget proposes a $956 million expenditure plan, which the Governor noted is approximately $400 million less than the previous fiscal year. The expenditure plan is outlined in the figure below.
Because many of the small water systems in the state are unable to supply clean drinking water, the Governor proposes the following allocations for safe drinking water projects:
- Safe Drinking Water Projects — $168.5 million in Prop. 68 funds for SWRCB for technical assistance, grants and loans to public water systems in disadvantaged communities for infrastructure improvements to meet safe and affordable drinking water standards, including drinking water and wastewater treatment projects;
- Emergency Water Supplies — $10 million General Fund for SWRCB to address safe drinking water emergencies in disadvantaged communities, including interim alternate water supplies (bottled or hauled water) and emergency improvements or repairs to existing water systems, such as well rehabilitation or replacement, extension of service, consolidation projects, or treatment systems;
- Technical Assistance — $10 million General Fund for SWRCB to contract with, or provide grants to, provide services to a designated water system to achieve compliance with current drinking water standards. Technical assistance could also include the development of a community-based needs assessment and preparation of grant applications for capital projects; and
- Safe and Affordable Drinking Water Fund — Establish a new special fund, with a dedicated funding source from new water, fertilizer and dairy fees, to enable SWRCB to provide communities, especially disadvantaged communities, access to safe and affordable drinking water. This proposal is consistent with SB 623 (Monning, 2017), which failed to pass the Legislature. Proposed funding of $4.9 million General Fund on a one-time basis for SWRCB and the Department of Food and Agriculture to begin implementation, including for fee collection systems, an annual implementation plan and a map of high-risk aquifers used as drinking water sources.
- Exide Lead Acid Battery Facility — $50 million is allocated on a one-time basis to accelerate cleanup of properties within a 1.7 mile radius of the Exide lead acid battery facility that operated in Vernon.
The Governor proposed major new investments to provide support for children and families from cradle to career. Among his proposals are universal preschool for low-income four year olds, trauma screenings for children enrolled in Medi-Cal and additional measures to address poverty.
Child Care and Early Learning
$1.2 billion is proposed to increase child care and early education provider rates and increase the number of children served. Major proposals include:
Working Families Tax Credit
- Universal Full-Day Kindergarten — $750 million General Fund to eligible school districts to construct or retrofit facilities and reduce barriers to providing full-day kindergarten;
- Universal Preschool — $124.9 million General Fund (with additional funding expected for the next two fiscal years) to fund 200,000 slots by 2021-22;
- Subsidized Child Care — $500 million in one-time General Fund to expand subsidized child care facilities and provide education to the child care workforce; and
- CalWORKs — $347.6 million to increase grants by 13.1 percent effective Oct. 1, 2019 to 50 percent of the federal poverty level. The maximum grant level for an assistance unit of three would increase from $785 to $888 per month.
The Governor proposes to rename California’s version of the Earned Income Tax Credit the Working Families Tax Credit and double the size to $1 billion. It is proposed to provide a $500 tax credit for low-income families with children under the age of six, and expand to 400,000 additional full-time workers who earn $15 per hour. Funding for this tax credit is proposed to come from a “revenue neutral tax conformity package that will bring components of the state’s tax policies in line with the new federal law and remove burdens for small businesses.”
Child Savings Accounts
$50 million is proposed to establish new child savings account pilot projects funded by a one-time General Fund appropriation. The funding would support pilot projects to develop model programs and partnerships with First 5 California, local First 5 Commissions, local government and philanthropy. Eligible uses of the accounts would be for college or vocational school tuition, room and board, books, supplies and equipment and mandatory fees.
California Arts Council
$10 million is allocated to the California Arts Council to expand grant programs for public access to the arts, arts education and cultural infrastructure. The budget also anticipates matching funds.
The budget provides and augments funding for several programs of interest to local agencies:
- $14.9 million General Fund to restore Commission on Peace Officer and Standards and Training to its historical budget level prior to the decline in fine and fee revenues;
- $20 million General Fund to make permanent a one-time augmentation included in the 2018 Budget Act for training on use of force and de-escalation and engaging with individuals experiencing a mental health crisis;
- $10 million ongoing General Fund for Cal OES to continue funding for the Human Trafficking Victim Assistance Program;
- $4.2 million General Fund to establish two regional task forces within the Department of Justice (DOJ) to address the statewide human trafficking epidemic by focusing on the worst sexual predators who are involved in human trafficking;
- $5.8 million in General Fund dollars on a limited-term basis for CHP to coordinate with DOJ in the creation of regional task forces aimed at reducing organized retail theft activities;
- $16.9 million for the administration of the Armed Prohibited Persons System (APPS), including:
- $11.3 million to shift the existing APPS program from the Dealers’ Record of Sale Account to the General Fund; and
- $5.6 million in General Fund to support increased APPS workload.
- $6.9 million to the Bureau of Firearms for Dealers’ Record of Sale Account to address increasing workload related to firearm sales.
The Department of Finance estimates net General Fund savings of $78.5 million from Prop. 47 when comparing 2018-19 to 2013-14, an increase of $13.8 million over the estimated savings in 2017-18. The following amounts are provided for county realignment programs:
California Penal Code Review
- $116.4 million to continue incentivizing counties to reduce the number of felony probationers sent to state prison; and
- $11.8 million for county probation departments to supervise the temporary increase in the average daily population of offenders on Post-Release Community Supervision.
The California Penal Code has dramatically increased in size from about 234,000 words in 1965 to 1.2 million words in 2018. The budget includes $576,000 to begin an effort under the California Law Revision Commission to simplify and rationalize criminal law and criminal procedures included in the Penal Code.
Department of Corrections and Rehabilitation (CDCR)
The budget proposes total funding of $12.6 billion ($12.3 billion in General Fund and $303 million in other funds) for CDCR in 2019-20. While the average daily adult inmate population for 2018-19 is now projected to increase from 126,890 to 128,334 (a 1.1 percent increase from Spring 2018 projections), current projections show a year-over-year downward trend by approximately 1,360 offenders between 2018-19 and 2019-20. Prop. 57, the Public Safety and Rehabilitation Act of 2016, is currently estimated to reduce the average daily adult inmate population by approximately 6,300 in 2019-20, growing to an inmate reduction of approximately 10,500 in 2021-22.
Rehabilitation & Reentry
$475.3 million General Fund is allocated to the Division of Rehabilitative Programs, and includes:
Inmate Medical Care and Mental Health Services
- $5.5 million for a package of programs specifically aimed at improving literacy rates among the offender population, including:
- Diagnostic remedial reading program;
- Computer-based learning;
- English as a Second Language;
- Teacher mentor program;
- Literacy Coaches; and
- Literacy Mentor Program.
- $2.5 million for an expanded tattoo removal program for the adult offender population. Based on the existing Prison Industry Authority program model, this funding could allow tattoos to be removed from approximately 4,400 additional offenders per year.
The budget dedicates $3.3 billion in General Fund to health care services programs, which provide access to mental health, medical and dental care for inmates.
The Division of Juvenile Justice is projected to have a population of 759 young offenders in 2019-20 and focuses on providing rehabilitative programming designed for young offenders. The budget proposes to move youth correctional facilities from CDCR to a new department within the Health and Human Services Agency. $2 million is included in the budget to provide matching funds for a California Volunteers/AmeriCorps federal grant, which will support 40 half-time AmeriCorps members in organizations assisting youth released from the Division of Juvenile Justice.
Statewide Issues and Various Departments
California Public Employee Retirement System (CalPERS) and Retiree Healthcare (OPEB)
The state’s total unfunded CalPERS liability is $58.7 billion of an approximant $153 billion unfunded liability. The Governor’s budget proposal includes:
Proposed Paid Family Leave Expansion and Taskforce
- $3 billion in additional payments to CalPERS, in addition to the minimum required contribution of $6.8 billion ($3.9 billion General Fund) required by statute. Unlike the $6 billion supplemental payment approved in FY 2017-18 (which by in large was a loan from the state’s Surplus Money Investment Fund), this $3 billion allocation is directly from the state’s General Fund — making it the largest direct pre-payment in California history. This payment is projected to save the state approximately $7.2 billion over 30 years.
- $390 million in Prop. 2 debt funding is proposed to pay down the General Fund’s share of the aforementioned FY 2017-18 $6 billion supplemental payment; and
- $2.3 billion for state retiree healthcare benefits representing a 1.7 percent of the total General Fund.
Although no specific plan or proposed funding is allocated, the Administration announced its intention to expanding the Paid Family Leave Program from three months to six months.
The existing program allows workers to take up to six weeks of paid leave annually to care for a seriously ill family member or to bond with a newborn or newly adopted child, with wage replacement of up to 70 percent of salary based on income level. Each parent may take up to six weeks of paid family leave and, under California's Disability Insurance Program, a birth mother may take an additional six weeks of leave to recover from childbirth.
A taskforce will be convened to consider different options to phase-in and expand the program to accommodate single parent households by allowing a close relative to be designated. The Administration will also consider changes as needed to expand existing worker protections and non-retaliation protections to incentivize workers to access these benefits.
The Administration is proposing an additional $50 million for census activities bringing the total to $140.3 million. A majority of this allocation will be distributed to counties who have the highest hard-to-count population, minority population outreach, public private partnerships and the creation of complete count committees across the state.
The 2020 Census is critical to California. Data collected is directly linked to representation in the U.S. House of Representatives as well federal dollars received for a wide array of state and local programs. Furthermore, California has the highest amount of hard-to-count population. Additionally, the budget includes $4 million for the California Housing and Population Sample Enumeration — a statewide survey that will identify barriers to a complete count and identify successful approaches in an effort to develop recommendations for the 2030 Census.
Office of Digital Innovation
The Governor announced the creation of the Office of Digital Innovation, which would be housed under the Government Operations Agency. The agency will have the authority to develop and enforce requirements for state departments to assess their service delivery models and underlying business processes. Initial start-up costs are projected at $36.2 million ($33.7 million General Fund) with $14.6 million ($9.6 million General Fund) in ongoing costs.
Following the release of the Governor’s budget, an analysis by the Legislative Analyst’s Office is expected shortly. The League will continue to examine the details of this budget proposal and provide addition information to cities as warranted.