June 4, 2020

On Wednesday, the Senate and Assembly unveiled a joint 2020-21 budget package, representing an earlier-than-usual agreement between the two houses. In a typical year, both houses would pass their own version of the budget and then resolve differences between those two versions and the May Revision through a Budget Conference Committee. This year, the Legislature is now set up for a unified final series of negotiations with the Governor to reach an overall budget agreement that must be passed by the June 15 constitutional deadline.

Safety Net Preservation/Realignment Backfill

Of significant note for counties, this agreement includes $1 billion to preserve safety net services as a Realignment backfill in 2020-21. Counties appreciate the recognition by the Legislature of the vital need to provide additional funding above the May Revision in order to protect safety net services, which has been the top budget priority for CSAC, county affiliates, and counties. These public health, behavioral health, social services, and public safety services are facing extreme cuts as counties grapple with the twin pressures of increased service demands and declining revenues. Of the $1 billion total, $600 million is subject to the Legislature’s federal trigger, meaning that it would be pulled back on October 1 if sufficient federal COVID-19 relief funding has not been received by September 1. This version of the backfill is an improvement over both the initial Senate version ($600 million, all subject to federal trigger) and initial Assembly version ($1 billion total, split over two years, with some amount subject to federal trigger). CSAC will continue to engage directly with the Legislature to gather additional details about this safety net funding and to advocate for the funding to be utilized for both 1991 Realignment and 2011 Realignment so that it can help protect the full range of services that counties provide on behalf of the state.

The inclusion of funding to preserve safety net services and the improvements to the earlier legislative proposals were made possible by the sustained advocacy efforts of counties to ensure the Legislature recognized the need to prevent devastating cuts to the services that counties provide on behalf of the state. CSAC’s advocacy efforts included spearheading a county coalition letter, a series of remote meetings between CSAC Board Members and Budget Committee Members, multiple county action alerts, and direct communication with Administration and Legislative leaders. While it is positive that this funding is included in the Legislature’s version of the budget, this is not the finish line and counties must keep the pressure on to ensure safety net funding is included in the agreement that will be reached between the Governor and the Legislature. Please continue to contact the Governor and legislators to communicate with them the vital need to include this funding to preserve safety net services in the final budget agreement.

Key Differences between Legislative Package and May Revision

The Legislature’s version of the budget has many similarities to the Governor’s May Revision, with both utilizing a mixture of reserves, spending reductions, and existing and anticipated federal funds to close the projected $54 billion budget shortfall. However, the Legislature does differ from the May Revision in several key approaches.

The Legislature’s version of a federal trigger solution anticipates that federal funding will be received and then only applies the trigger if the funding is not received by September 1, rather than the Governor’s approach of making cuts and then restoring if federal funding is received. The Legislature also proposes to not fully cut $14 billion in spending, but rather to utilize reserves and other mechanisms to lower the amount of cuts that will occur if federal funding does not materialize. As noted above, one of the trigger solutions is to reduce the amount of the county Realignment backfill.

The Legislature also included different actions from the Governor on several program areas that impact counties.

Agriculture, Environment, and Natural Resources

• Includes 63 permanent positions for wildfire safety at the California Public Utilities Commission and remaining positions as limited-term basis, instead of approving $29.3 million permanent funding for Utility Wildfire and Safety Process Reform (SB 901)

Government, Finance and Administration

• Includes $35 million in additional funds to support the November 2020 general elections.
• Includes increased expenditure authority in 2020-21 of $38 billion, (about $34 billion federal funds) for Unemployment Insurance.
• Adopts January Budget proposal to extend Paid Family Leave job protections to all workers currently eligible for program, and extend pregnancy/birth disability job protections to all workers currently eligible.

Health and Human Services

• Rejects the elimination of aging programs – multipurpose senior services program (MSSP) benefit and community-based adult services (CBAS)
• Rejects elimination of Medi-Cal optional benefits, such as dental and optometry
• Delays the development and implementation of the Governor’s proposed e-cigarette or vaping tax
• Rejects the $134.1 million cut to CalWORKs Subsidized Employment
• Rejects the elimination of the Family Urgent Response System
• Restores the CalWORKs historic 60-month time clock
• Rejects the 7% cut to In-Home Supportive Services hours

Homelessness

• Adopts an additional $350 million General Fund for homelessness, subject to legislation outlining the allocation and eligible uses.

Housing, Land Use & Transportation

• Rejects $250 million in cuts to housing infill infrastructure grants to local agencies and mixed-income housing development funding to the California Housing Finance Agency; both which were funded by AB 101 (Committee on Budget, 2019)
• Rejects a $130.5 million transfer to the General Fund from interest earnings on state highway funds