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Late last night, the Legislature passed SB 129 (Skinner), the Budget Act of 2021 – “Budget Bill Junior”, sending the general agreement to the Governor’s desk for signature or veto in time for the start of the new fiscal year, July 1. They also sent a package of budget trailer bills to the Governor for approval as part of the 2021-22 budget process. Typically, the Governor has 12 working days to sign or veto a bill, including the budget bill, and has the authority to blue pencil (eliminate) and appropriation within the budget which can be overridden by a 2/3 vote in the Legislature. The budget is an urgency measure and goes into effect as soon as it is signed. 

Two weeks ago, California state legislators passed AB 128 (Ting), the Budget Bill in Chief, which represented their version of the state budget: a sweeping $264 billion proposal that included a number of the Newsom administration’s policy priorities along with a number of items of significant disagreement between the Legislature and Administration.  AB 128, which was enrolled on June 14 in time to meet the Legislature’s constitutionally mandated deadline to send a balanced budget to the Governor by June 15, was more of a placeholder and did not reflect a deal with the Administration. CSDA authored an article that appeared in the June 22 edition of eNews which provided an overview of the budget blueprint devised by the Legislature.

The Budget Bill Junior passed yesterday updates many provisions of the Budget Bill in Chief and is a reflection of general agreement following significant negotiations with the Governor’s office; note, however, while funding levels have been solidified the details of many programmatic provisions continue to remain yet to be determined and it is anticipated many budget trailer bills will follow over the coming weeks until the Legislature breaks for the summer July 16 and further budget action is almost guaranteed in the month that follows and into the fall.

FISCAL RELIEF FOR SPECIAL DISTRICTS

SB 129 represents more of a framework than final agreement in many areas, yet CSDA is pleased to report the package retains the $100 million COVID-19 relief fund for independent special districts that can demonstrate fiscal impacts due to the COVID-19 public health emergency.

• The language has been amended from that which was proposed in AB 128, the package first sent to the Governor, and now states: “the amount appropriated in this item shall be available 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 and that have not received other forms of fiscal relief from the state or federal government.”
• In the vein of further detail yet to be determined, the provisional language additionally specifies: “ The Department of Finance, in consultation with the California Special Districts Association, shall develop a plan to distribute the funding provided in this item by September 1, 2021, and shall notify the Joint Legislative Budget Committee of the plan.”
• Further, the language provides additional detail regarding the plan for distribution: “The plan shall provide to each qualifying district that applies for relief a prorated share of the amount appropriated in this item, with each district’s share based on its proportionate share of revenue losses reported by all qualifying districts from all fund sources between the 2018–19 and 2019–20 fiscal years, as reported by the district to the department. Applicant districts shall self-attest to the accuracy of all information reported to the department for purposes of this item. Upon completion of application reviews, the department shall order the Controller to remit funds to each county auditor-controller for all qualifying districts in each county. The county auditor-controller shall disburse these funds to each qualifying district within 30 days of receipt from the Controller.”

While CSDA has advocated heavily for access to fiscal relief for COVID-19 response impacted independent special districts, ultimately the proposal and provisional language has been determined in negotiations between the Assembly, Senate, and Administration. CSDA will continue to work with the Department of Finance (DOF) to seek clarification as to the intent of what constitutes “other forms of fiscal relief from the state or federal government“ and hopes to be a strong partner to DOF as they work to develop a plan for distribution of funds

Additionally, the budget package retains the following provisions CSDA has advocated for in coordination with our local agency partners supporting the services and infrastructure of special districts, cities, counties, and other agencies:

• $1 billion in water utility household assistance and nearly $1 billion in energy utility household assistance. This funding is critical to stabilize public utility fiscal impacts – inclusive of special district utilities – and provide relief to the ratepayers least able to manage the fiscal burdens brought by the pandemic. While the package indicates agreement for the level of funding, the details of eligibility and distribution are subject to agreement between the Senate, Assembly, and Governor and continue to be negotiated. CSDA is actively advocating for this funding to include eligibility for publicly owned water, wastewater, and energy utilities.
• $250 million in economic assistance California’s public ports. California’s special district ports and harbors were significantly impacted by COVID-19 response and, as drivers of local economies and contributors to the state’s economic health, we have continuously urged continued support for public port funding relief.
• Significant investment in local priority transit projects. Transit districts experienced substantial reductions in ridership and other fiscal impacts related to pandemic response. CSDA has supported these proposed investments for local agency projects.

CSDA extends a sincere thank you to each of the special districts, stakeholders, and partners who have supported this effort over the past year. Without your outreach, elevating your voices and needs to your elected officials, and your consistent calls for special district access to fiscal relief the above provisions would not have come to fruition.

Other areas of the budget package of potential interest to special districts are as follows:

ENVIRONMENT 

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

• Wildfire Prevention & Resilience: $258 million General Fund, plus additional special funds in 2021-2022, plus $500 million General Fund in 2022-2023.
• Agriculture Budget Plan: $200 million General Fund plus special funds
• Circular Economy: $65 million General Fund in 2021-2022
• Water and Drought Resilience: $730,700,000 General Fund in 2021-2022
• Climate Resilience: $3.7 billion over three years, with $440 million General Fund in 2021-2022
• Cap-and-Trade Spending Plan: $720 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 $40 million in one-time funding for a sea level rise local assistance grant program with funds available until June 30, 2026.

SB 129 retains the 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.

SB 129 also includes $45,000,000 for local air districts in severe or extreme nonattainment through the Carl Moyer Air Quality Standards Attainment Program for the purchase of nondiesel medium- and heavy-duty vehicles that replace diesel vehicles. Projects must make use of existing re-fueling infrastructure and self-certify that no new infrastructure will be needed to support their use.

The bill provides $20 million in one-time funding resources to provide education and technical assistance to local governments seeking to improve their permitting processes for technologies that reduce greenhouse gas emissions from homes with placeholder trailer bill language.

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

WATER 

In addition to the $1 billion American Rescue Plan Act funds for water arrearages, subject to a final agreement with the Senate, Assembly, and Governor, SB 129 includes $60 million 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. A previous iteration of this proposal used CARES funding for this purpose. SB 129 also retains the $1,962,000 for groundwater sustainability plan review.

The budget also retains the approval of $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.

SB 129 approves the language of the CalConserve Fund trailer bill.

 TRANSPORTATION 

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.

Provides that these funding pots are dependent on future legislation being enacted by October 10, 2021, and if no legislation, the funding reverts to the General Fund.

COMMUNITY SERVICES: BROADBAND/LIBRARIES PARKS, MOSQUITO/VECTOR CONTROL 

The Legislature’s budget plan provides $6 billion ($4.3 billion ARPA and $1.7 billion General Fund) for broadband issues, including: 

• $3.75 billion for middle-mile infrastructure;
• $250 million for a loan-loss reserve, and;
• $2 billion for last-mile projects

The 2021-22 Budget includes $4.3 billion total for broadband for the fiscal year, with the entire middle mile appropriation contained in the fiscal year. Details will continue to be worked out through three party negotiation.

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 proposal includes a provision restoring $1.8 million ongoing to the California Library Services Act, and a separate $1.1 million ongoing to support the administration of new library programs.

SB 129 differs from the previous budget bill by deferring $200 million in one-time funding for capital outlay local park grants and legislative investments for later action.

The budget also includes $1 million in ongoing funding for the California Vectorborne Disease Surveillance Gateway (CalSurv) pest abatement program.

HUMAN RESOURCES 

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.

PROPERTY TAX 

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