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One day before the constitutional deadline to pass the state budget, the California Legislature passed Assembly Bill 128, the Budget Act of 2021-22. However, legislative leaders and Governor Newsom are still negotiating the final spending plan which would take effect July 1. The final agreement will allocate an estimated $100 billion surplus and determine whether special districts receive COVID-19 relief funding.

According to a handout from the Legislative Analyst’s Office, the budget bill passed by the State Legislature “provides significant additional funding to schools and community colleges... additional funding for drought, wildfire, and other climate-related purposes... discretionary funding for homelessness services... additional funding for public health infrastructure... substantially larger augmentations for student financial aid programs... [and] sets aside funds to prepay bond debt service.”

Among other things, the 2021-22 state budget contains an appropriation of $100 million to provide fiscal relief to independent special districts that have encountered unanticipated costs or loss of revenue due to the COVID-19 public health emergency. Special districts are strongly encouraged to email the Governor and legislative leaders as soon as possible using the sample letter found at CSDA’s Take Action page related to COVID-19 Relief Funding.

The Legislature proposes several packages addressing environmental concerns with details to be determined in a final agreement among the Senate, Assembly, and Governor. The spending levels are:

• Wildfire Prevention & Resilience: $1 billion
• Agriculture Budget Plan: $776 million
• Water and Drought Resilience: $3.7 billion
• Climate Resilience: $3.7 billion over three years
• Cap-and-Trade Spending Plan: $1.4 billion
• ZEV Package: $3.9 billion over three years, including $2.7 billion in 2021-22
• Advancing Clean Energy: $835 million

The passed budget plan does not include a proposed $200 million carve-out from the Greenhouse Gas Reduction Fund for the Department of Forestry and Fire Protection meant to fund healthy forest and fire prevention programs and projects that improve forest health and reduce greenhouse gas emissions caused by uncontrolled wildfires, and complete prescribed fire and other fuel reduction projects through proven forestry practices.

The budget includes $30 million in one-time funding for a sea level rise local assistance grant program with funds available until June 30, 2026.

The plan includes $100 million for community hardening to build disaster resistant communities. Of the funds made available, $85,000,000 shall be used to cover a portion or the full share that local governments must pay to participate in the federal hazard mitigation grant program; $15,000,000 shall be used for the administrative costs of the Office of Emergency Services to administer this program. Only under-resourced communities will be eligible for this funding.

AB 128 contains approval for $3 million in General Fund dollars to establish the Board of Environmental Safety within the Department of Toxic Substances Control with placeholder trailer bill language on the specifics of the Board and governance reform. The companion measure, placeholder trailer bill language to revise the Environmental Fee rates and the hazardous waste fee rates and structure, is also approved. The trailer bills previously associated with these proposals [1][2] are available from the Department of Finance.

The budget rejects the tiered mil fee assessment trailer bill proposed earlier this year.

On the topic of unpaid utility arrearages, the budget bill approves Governor Newsom's May Revise proposal regarding the American Rescue Plan Act energy arrearages, providing approximately $1 billion in one-time assistance provided by the federal government under the American Rescue Plan Act of 2021 to cover low-income utility payment arrearages.

The Legislature's budget proposal approves $60 million in CARES funding for the Sustainable Groundwater Management Program, while deferring action on drought control sections and drought contract exemption trailer bill language pending future discussions on the drought package with the Assembly, Senate, and Governor. It also includes $1,962,000 for groundwater sustainability plan review.

The budget approves $1 billion of American Rescue Plan Act funds for water arrearages, subject to a final agreement with the Senate, Assembly, and Governor. Coupled with the $1 billion mentioned earlier for unpaid utility arrearages, this makes up the bulk of the state's plan to address the operating revenue loss experienced by water and utility providers as a result of shutoff moratoriums. CSDA continues to advocate for this funding and supports eligibility for all special district utilities.

The budget also approves $4,282,000 in reimbursement authority and adds personnel to oversee cleanup of contaminants including per- and polyfluoroalkyl substances (PFAS). This funding underscores a continuing interest of the Legislature, CalEPA, and the California State Water Resources Control Board in monitoring for, detecting, and addressing PFAS contamination.

Provides $3 billion in funding for transportation infrastructure across the state including:

• $1 billion (General Fund) to deliver critical projects for completion by 2028
• $1 billion (General Fund) for transit and rail projects statewide that improve rail and transit connectivity between state and regional/local services
• $500 million (General Fund) to advance projects that increase active transportation
• $500 million (General Fund) to support critical safety improvements throughout the state

The budget also provides $400 million for a State and Local Transportation Adaptation program.

The budget rejects trailer bill language to extend the AB 8 fees on cars, tires, and boats that fund zero-emission vehicles and infrastructure.

The plan includes $250 million from the Coronavirus Fiscal Recovery Fund of 2021 for California ports impacted by the COVID-19 state of emergency, as proclaimed on March 4, 2020.

The Legislature’s budget plan provides $7 billion ($2 billion ARPA and $5 billion General Fund) for broadband issues, with specific direction to be determined through additional Legislative Action. This would be allocated as follows:

• 2021-22: $1 billion ARPA Funds
• 2022-23: $1 billion ARPA Funds
• 2023-24: $1 billion General Fund
• 2024-25: $1 billion General Fund
• 2025-26: $1 billion General Fund
• 2026-27: $1 billion General Fund
• 2027-28: $1 billion General Fund

The budget passed by the Legislature approves the governor’s proposal of $3 million in one-time General Fund dollars to support grants to local library jurisdictions to acquire bookmobiles and vans, and provides $439 million on a one-time basis to support an equity-focused matching infrastructure grant program to support local library maintenance, capital projects, broadband and technology upgrades, and purchasing of devices. The bill also includes $6 million to support the Broadband Connectivity initiative for public libraries, assisting in leveraging federal funds to connect rural and under-sourced public libraries, tribal libraries and cultural centers and to upgrade local library equipment to support high speed connectivity.

The Legislature’s budget bill makes available $35 million on a one-time basis to support local projects seeking to expand broadband access and upgrade equipment to access high-speed connectivity in isolated and under-served communities through a collaborative partnership of local and regional libraries, local education agencies, and telehealth providers on projects eligible to leverage funding available through the Federal Universal Service Program for Schools and Libraries.

The Legislature’s budget plan approves $250 million in one-time funding for capital outlay local park grants and legislative investments.

The budget bill changes employers' contributions to the Public Employees’ Contingency Reserve Fund to 0.25 percent of the gross health insurance premiums paid by the employer and employee for administrative expenses. The Director of Finance may adjust the rate to ensure a two-month reserve in the Public Employees’ Contingency Reserve Fund. The contributions made to the Contingency Reserve Fund are not used for administrative expense purposes, but are instead utilized to defray increases in future rates, to reduce the contributions of employees and annuitants and the employers, or to increase the benefits provided by any plan to the extent that amounts in the Fund are derived from that plan, upon determination by the CalPERS board.

Finally, the budget provides approximately $11 million for local assistance to local governments affected by the 2020 wildfires.

#StateBudget

#COVID-19

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