GOOD MORNING, EVERYONE. WELCOME
TO THE ASSEMBLY BUDGET
COMMITTEE. TODAY IS OUR 72ND
HEARING OF THE YEAR. CONTINUING
OUR COMMITMENT TO A THOROUGH AND
THOUGHTFUL BUDGET PROCESS.
TODAY'S HEARING WILL FOCUS ON
TWO BILLS THAT ARE FUNDAMENTAL
TO OUR ABILITY TO DELIVER AN ON
TIME, BALANCED BUDGET. AS
REQUIRED BY LAW. WE WILL VOTE ON
THESE TWO BILLS ALONG WITH THE
BUDGET BILL ON THURSDAY MORNING
ON THE ASSEMBLY FLOOR. THE TWO
BILLS BEFORE US TODAY ARE SB 154
ON EDUCATION, FINANCE AND SB 167
ON REVENUE. SINCE THESE BILLS
ARE PART OF A TWO PARTY
AGREEMENT AND DO NOT YET REFLECT
AN AGREEMENT WITH THE
ADMINISTRATION, I WILL ASK
ASSEMBLY BUDGET COMMITTEE STAFF
TO BRIEFLY INTRODUCE EACH BILL.
WE WILL THEN TAKE COMMENTS FROM
THE DEPARTMENT OF FINANCE AND
THE LÀ Þ BEFORE TURNING BACK TO
MEMBERS OF THE COMMITTEE FOR
QUESTIONS AND COMMENTS. TODAY'S
HEARING IS INFORMATIONAL AND
THERE WILL NOT BE ANY VOTES AT
THE END OF THIS HEARING. WE WILL
HAVE AN OPPORTUNITY FOR PUBLIC
COMMENT ON THESE TWO BILLS, AND
I WANT TO EMPHASIZE THAT WE ARE
NOT CONSIDERING THE MAIN BUDGET
BILL TODAY. SO WE WOULD
RESPECTFULLY REQUEST THAT YOU
LIMIT ANY COMMENTS TO THE TWO
BILLS BEFORE US. BUT FIRST, I'D
LIKE TO INVITE OUR VICE CHAIR,
ASSEMBLY MEMBER, FLORA, TO SHARE
ANY OPENING REMARKS. THANK YOU,
MR. CHAIR. THIS IS NOT MY 72ND
HEARING. THIS IS MY SECOND. BUT
IS AGAIN A PRIVILEGE TO BE HERE
AND, LEARNING ABOUT THE BUDGET
IN THE LAST FEW MONTHS THAT I'VE
BEEN KIND OF LOOKING INTO THIS,
IT JUST IS PUTS ME IN AWE OF
HONESTLY, THE STAFF THAT DO THE
WORK FOR THIS BUDGET. AND THOUGH
WE MAY NOT ALWAYS AGREE ON
WHAT'S IN THE BUDGET, THE AMOUNT
OF WORK AND TIME THAT GOES INTO
THIS IS REMARKABLE TO ME. SO I
JUST WANT TO SAY THANK YOU FOR
YOUR DILIGENCE AND LOOK FORWARD
TO WORKING WITH YOU. THANK YOU
VERY MUCH, ASSEMBLY MEMBER AND I
WILL ECHO AND SHARE THAT, THANKS
FOR OUR INCREDIBLE STAFF, THEIR
HARD WORK TO BRING US TO THIS
POINT. AND ALSO, THANK YOU, AS
ALWAYS, TO THE DEPARTMENT OF
FINANCE AND THE LEGISLATIVE
ANALYST'S OFFICE FOR JOINING US
TODAY, WITH THAT, I THINK WHAT
WE'RE GOING TO DO THIS MORNING
IS HAVE PRESENTATIONS ON BOTH OF
THE BILLS. WE'LL HAVE
OPPORTUNITIES FOR LÀ OWNED
FINANCE TO COMMENT ON BOTH THE
BILLS, AND THEN WE WILL TURN
BACK TO QUESTIONS AND COMMENTS
FROM MEMBERS OF THE COMMITTEE.
SO YOU CAN HAVE IF YOU WANT TO
ASK QUESTIONS ON ONE OR BOTH OR
MAKE COMMENTS ON ONE OR BOTH, WE
WILL DO THAT AT THAT TIME. SO
LET'S BEGIN WITH SB 154, OUR
SCHOOL FUNDING TRAILER. BILL,
I'M GOING TO ASK AARON GABEL TO
DISCUSS THAT. BILL. THANK YOU,
AARON. THANK YOU. AARON GABEL
WITH THE ASSEMBLY BUDGET
COMMITTEE, SB 154 IS A
CORNERSTONE IN THE BALANCED
LEGISLATIVE BUDGET. IT PROTECTS
SCHOOLS FROM REDUCTIONS IN ONE
TIME AND ONGOING APPROPRIATIONS
AND FUNDING. THE BILL DOES
SUSPEND THE PROPOSITION 98
GUARANTEE IN THE CURRENT YEAR.
2223 EXCUSE ME. 20 2020 2324
BUDGET YEAR PURSUANT TO THE
CONSTITUTION TO A LEVEL OF $98.5
BILLION. THIS APPROACH IS
CONSISTENT WITH THE RECENT
AGREEMENT THAT WE DISCUSSED LAST
WEEK IN OUR BUDGET HEARING. THE
AGREEMENT BETWEEN SCHOOL LEADERS
AND, GOVERNOR NEWSOM, AND IT
WOULD PROTECT SCHOOL FUNDING.
THANK YOU. THANK YOU VERY MUCH.
AND, WE WILL NOW TURN OVER TO
GENEVIEVE. MORELOS AND GENEVIEVE
WERE DELIGHTED TO HAVE YOU WITH
US TODAY. CAN YOU PLEASE SHARE A
LITTLE BIT ABOUT SB 167, THE
REVENUE TRAILER? BILL? GOOD
MORNING. GENEVIEVE MORALES,
ASSEMBLY BUDGET COMMITTEE. I'M
HERE TO PRESENT SB 167, WHICH IS
THE REVENUE AND TAXATION TRAILER
BILL, THIS BILL REFLECTS THE
LEGISLATURE'S PLAN TO ADOPT
TRAILER BILLS CONSISTENT WITH
TAX POLICY TAX POLICIES
CONSISTENT WITH THE GOVERNOR'S
PROPOSED JANUARY BUDGET,
JANUARY'S BUDGET AND MAY
REVISION PROPOSAL. THE
LEGISLATURE'S PLAN DIFFERS IN
TWO WAYS ON THE NET OPERATING
LOSS OR THE NOL AND THE BUSINESS
TAX CREDITS. FIRST, IT STARTS A
SUSPENSION A YEAR EARLIER, SO
THE SUSPENSION BEGINS IN 2024
AND THE LEGISLATURE'S PLAN AND
SECOND, THE LEGISLATIVE PLAN
INCLUDES INTENT LANGUAGE TO
ENACT ADDITIONAL TRAILER, BILL
LANGUAGE. THIS TRAILER THIS THIS
SESSION TO ADDRESS REFUNDABILITY
FOR BUSINESS TAX CREDITS. THANK
YOU. THANK YOU VERY MUCH,
GENEVIEVE. AND NOW WE WILL TURN
IT OVER TO THE DEPARTMENT OF
FINANCE. THANK YOU FOR JOINING
US. THANK YOU, GOOD MORNING,
CHAIR GABRIEL. VICE CHAIR, LARA.
MEMBERS OF THE COMMITTEE, ERIKA
LEE WITH THE DEPARTMENT OF
FINANCE. AND I'LL JUST SAY
LARGELY THAT THESE BILLS ARE
CONSISTENT, LARGELY CONSISTENT
WITH THE ADMINISTRATION'S
PROPOSAL, AS MENTIONED BY BOTH
STAFFERS. AND AT THIS TIME, WE
CONTINUE TO WORK WITH THE
LEGISLATURE TOWARDS A THREE
PARTY PLAN. THANK YOU. THANK YOU
VERY MUCH. AND, NOW TO THE
LEGISLATIVE ANALYST'S OFFICE.
GOOD MORNING. THANK YOU, MR.
CHAIR. MR. VICE CHAIR AND
MEMBERS, GABE PEDIC, LEGISLATIVE
ANALYST'S OFFICE AND I'M HERE
WITH A COUPLE OF OUR EXPERTS
THAT COVER THIS AREA. AND SO
WE'RE HAPPY TO RESPOND TO
QUESTIONS. IF THEY COME UP.
EXCELLENT. THANK YOU VERY MUCH.
AT THIS POINT WE WILL BRING IT
BACK TO THE COMMITTEE. DO WE
HAVE ANY QUESTIONS OR COMMENTS
FROM MEMBERS OF THE COMMITTEE?
MR. VICE CHAIR, THANK YOU, MR.
CHAIR, AGAIN, LIKE I STATED
BEFORE, LIKE THERE'S BEEN A LOT
OF TIMING, JUST TRYING TO
UNDERSTAND THIS. SO I DO HAVE A
FEW QUESTIONS IF YOU JUST
INDULGE ME FOR JUST A SECOND.
BUT I WOULD JUST START OUT BY
FIRST, SB 154 SUSPENDS THE PROP
98 GUARANTEE AND THEREBY
REDUCING SPENDING ON EDUCATION.
BUT WE ALSO CREATE A MAINTENANCE
FACTOR THAT HAS TO BE REPAID IN
THE FUTURE. THEN SB 167
INCREASES TAXES TEMPORARILY,
RETROACTIVELY UNTIL JANUARY OF
2024. THIS TAX INCREASE DRIVES
UP THE GENERAL FUND REVENUES AND
CORRESPONDINGLY THE MINIMUM
GUARANTEE IN 24 AND 25. I GUESS
WHAT HAPPENS WHEN THE TAX
INCREASE GO AWAY AND THE
REVENUES COME BACK DOWN? WHAT
DOES OUR BUDGET YEAR LOOK LIKE
AFTER THAT? SO I GUESS FOR THE
DEPARTMENT OF FINANCE, HOW ARE
WE NOT CREATING INSECURITY IN
FUTURE EDUCATION FUNDING? SURE.
I'M GOING TO BE JOINED BY ONE OF
MY COLLEAGUES TO RESPOND TO THAT
. OKAY. THANK YOU. AND I COULD
START TO ANSWER THAT. SO THE
PROPOSITION 98 GUARANTEE IS JUST
THAT. IT'S A GUARANTEE IN THE
CONSTITUTION THAT ESTABLISHES
THE FORMULA BY WHICH WE FUND
PUBLIC EDUCATION. SO THE
GUARANTEE IS BOOSTED IN THE
BUDGET YEAR TO $115 BILLION,
BECAUSE OF THE NEW REVENUES. AND
WE SEE THAT AS AN ONGOING
COMMITMENT TO PUBLIC EDUCATION
VIA THE CONSTITUTION. OKAY.
THANK YOU VERY MUCH. CHRIS
FERGUSON WITH THE DEPARTMENT OF
FINANCE. SO ON A MORE TECHNICAL
BASIS, IT CREATES MAINTENANCE
FACTOR, THAT MAINTENANCE FACTOR,
IS REPAID IN TIMES IN WHICH
REVENUES FOR THE GENERAL FUND
ARE GENERALLY TRACKING BETTER
THAN THE OVERALL ECONOMY. BUT IN
AT ITS CORE, TEST ONE, TEST TWO,
TEST THREE, THE THREE TESTS
UNDER THE PROPOSITION 98
GUARANTEE ARE REALLY DESIGNED TO
KEEP EDUCATION FUNDING STABLE
OVER TIME, SO AS YOU MAY SEE,
REVENUE FLUCTUATIONS, THE
FORMULAS THEMSELVES ARE REALLY
DESIGNED TO TRY AND KEEP STABLE
OR PREDICTABLE FUNDING OVER
TIME. SO WHAT DOES HAPPEN,
THOUGH, IF WE'RE UNABLE TO REPAY
THAT MAINTENANCE FACTOR. SO THE
MAINTENANCE FACTOR BALANCE WOULD
REMAIN. AND THEN IN FUTURE
YEARS, EVEN BEYOND, YOU KNOW,
THE NEXT TWO, THREE, FOUR YEARS,
THAT BALANCE WOULD BE REPAID
AGAIN WHEN GENERAL FUND REVENUES
ARE DOING BETTER THAN THE
OVERALL ECONOMY. THAT CAN BE,
YOU KNOW, ONE, TWO, THREE YEARS
OR THAT COULD BE, YOU KNOW, 10
OR 15 YEARS. IT JUST DEPENDS ON
THE SPECIFIC CONSTITUTIONAL
FORMULA. BUT WHAT IT DOES DO IS
IT PROVIDES SCHOOLS WITH THE
CERTAINTY THAT THAT FUNDING WILL
INEVITABLY RETURN TO THE
GUARANTEE. AND THEN WHAT WOULD
YOU SAY? LIKE, I MEAN, WHAT
WOULD BE THE UNFORESEEN FUTURE
RISK TO THIS PLAN IF YOU IF YOU
HAD ANY LIKE WHAT IS THE BIGGEST
CONCERN THAT YOU WOULD HAVE TO
THE PLAN THAT WE HAVE IN PLACE
HERE, I, I DON'T KNOW THAT I
WOULD SAY THERE ARE ANY SYSTEMIC
RISKS THAT I WOULD NOTE IN THE
PLAN, THE CONSTITUTIONAL FORMULA
IS SUCH THAT MAINTENANCE FACTOR
CAN INCREASE, SAY, IF WE GET TO
A TEST THREE YEAR, WHICH IS
DESIGNED TO ALLOW FOR, YOU KNOW,
THE GREATER GOOD, GREATER BAD,
TYPE SCENARIO IN REVENUES. SO
YOU MAY SEE FLUCTUATIONS IN THE
BALANCE WHERE IT INCREASES IN
FUTURE YEARS, BUT I DON'T SEE A
LOT OF SYSTEMIC RISK TO THE
BUDGET. THANK YOU VERY MUCH. AND
TO THE LÀ, DO YOU FEEL THAT
WE'RE IN A POSITION RIGHT NOW
THAT REQUIRES US TO SUSPEND PROP
98? YEAH, MR. VICE CHAIR, WE
THINK OF THE SUSPENSION PROPOSAL
AS SORT OF PART OF THE OVERALL
PACKAGE. SO WHEN THE FIRST, YOU
KNOW, IN 22, 23, WE ARE ADOPTING
THIS WHAT WE'VE BEEN CALLING
THIS PROPOSITION 98 MANEUVER,
WHICH, LOWERS WHAT WE RECOGNIZE
IS IN THAT YEAR FOR PROP 98. BUT
WE'RE GOING TO BUT THEN GOING
BUT WE'RE GOING TO SET GOING
FORWARD THE PROPOSITION 98
GUARANTEE AT THE HIGHER LEVEL,
AS IF WE DIDN'T DO THAT, THE
SUSPENSION THEREFORE PROVIDES US
SOME BUDGETARY RELIEF IN THE IN
THE BUDGET YEAR, TO KIND OF
OFFSET THAT, THE EFFECT OF THAT
AND I DON'T KNOW, MY COLLEAGUE
KEN IS, HERE AS A COVERS THIS
AREA. YEAH. THANK YOU, KEN, WITH
THE ANALYST'S OFFICE. SO AS THE
ANALYST SAID, THE PLAN BEFORE
YOU IS A TWO PART PLAN. IF YOU
ADOPT THE FIRST PART, WHICH IS
AGREEING TO A BASE THAT $6.2
BILLION HIGHER, THEN SUSPENSION
BECOMES, SOMETHING THE STATE
PROBABLY NEEDS TO DO TO BALANCE
THE BUDGET. THIS YEAR, I GUESS
THE ALTERNATIVE IS IF YOU REJECT
BOTH PARTS OF THE PLAN, BOTH THE
SUSPENSION AND THE PRIOR YEAR
BASE ADJUSTMENT, THEN YOU END UP
WITH SOMETHING THAT'S MUCH MORE
SIMILAR TO THE MAY REVISION AS
INTRODUCED ON MAY 14TH. THANK
YOU VERY MUCH. THANK YOU, MR.
CHAIR. THANK YOU, MR. ALVAREZ.
YEAH. THANK YOU. I JUST WANT TO
SPEND A LITTLE BIT MORE TIME ON
98, BECAUSE I THINK IT'S THERE'S
SOME IMPORTANT THINGS TO
MENTION, YOU KNOW, IN THE 14
HEARINGS THAT WE HAD IN THE
EDUCATION, FINANCE SUBCOMMITTEE,
WHICH I WANT TO THANK THOSE
MEMBERS WHO SERVED AND OBVIOUSLY
THE STAFF, EXCUSE ME. ONE OF THE
THINGS THAT WE HEARD THE MOST
CONCERNS ABOUT FROM STAKEHOLDERS
IS THE IMPACTS TO THE CLASSROOM.
AND I THINK THERE'S SOME THINGS
THAT ARE IMPORTANT TO, TO, TO
NOTE WITH, WITH THIS PROPOSAL
TODAY. ONE, THERE IS, NO
IMPACTS, TO THE CLASSROOM BASED
ON WHAT WE ARE DOING WITH THE
SUSPENSION OF, OF PROPOSITION
98, AND IN FACT, WE'RE I WANT TO
ASK OUR COMMITTEE CONSULTANT TO,
TO SHARE HOW WE, ACHIEVED TO
MAINTAIN THE IMPACTS AWAY FROM
THE CLASSROOM WITH THIS
PROPOSAL. ABSOLUTELY SO WITH THE
SUSPENSION OF PROPOSITION 98 IN
THE CURRENT YEAR, WE THEN ARE
ABLE TO BACKFILL THE PRIOR YEAR
ENACTED FUNDING LEVELS FOR
SCHOOL DISTRICTS WITH OUR SCHOOL
READING DÂN ACCOUNT. SO WE'RE
GOING TO BE UTILIZING IN A
DIFFERENT BILL IN THE EDUCATION
OMNIBUS TRAILER BILL, THE $8.4
BILLION, THE SCHOOL RAINY DAY
FUND THAT WILL ENSURE THERE ARE
NO REDUCTIONS TO SCHOOL FUNDING
IN THE CURRENT YEAR DESPITE THE
SUSPENSION. CORRECT. THANK YOU
FOR SHARING THAT. AND AS THE
VICE CHAIR STATED, THERE IS A
MAINTENANCE FACTOR. BUT AS I
THINK FINANCE, APPROPRIATELY
DESCRIBED THE PAYBACK OF THAT,
OF THE MAINTENANCE FACTOR, WE
ARE ANTICIPATING THAT FOR THE
BUDGET YEAR THAT WE WILL BE
ADOPTING, $4 BILLION WILL BE
PAID BACK OUT OF THE ROUGHLY. I
THINK IT'S $8 BILLION. I DON'T
WANT TO GIVE THE WRONG NUMBER.
CAN YOU CONFIRM THAT YOU ARE
CORRECT. SO THERE'S
APPROXIMATELY $4 BILLION IN
MAINTENANCE FACTOR THAT WOULD BE
OWED UNDER THE CONSTITUTIONAL
FORMULA FOR THE BUDGET YEAR,
WHICH BRINGS THE TOTAL GUARANTEE
IN THE BUDGET YEAR UP TO $115
BILLION. SO EDUCATION WILL BE
RECEIVING $115 BILLION IN THIS
BUDGET AS PROPOSED BY. CORRECT.
AND THAT WILL BE THE MINIMUM
GUARANTEE GOING FORWARD. AND
THEN EXCUSE ME, AS WAS EXPLAINED
EARLIER, AS THE REVENUE PICTURE
CHANGES AND THERE'S MORE REVENUE
TO WORK WITH, THE REMAINING $4
BILLION, A LITTLE OVER $4
BILLION. AND I ASSUME THERE'S
ALSO, SOME ADDED ADDITIONAL COST
TO THAT WILL GET PAID OUT AS THE
BUDGET PICTURE IMPROVES AND
THERE ARE MORE RESOURCES TO DO
THAT. CORRECT. AND SO TO
ASSEMBLYMEMBER'S FLORES
QUESTION, PART OF THE IMPORTANCE
OF SUSPENDING THE GUARANTEE IN
THE CURRENT YEAR IS IT DOES
CREATE THAT CONSTITUTIONAL
MAINTENANCE FACTOR, GUARANTEE OF
REPAYMENT OVER TIME. SO RATHER
THAN HAVING IT BE, OWED IN A
DIFFERENT WAY THAT WAS NOT
CONCRETE AND DRIVEN BY THE
CONSTITUTION, THIS PROTECTS
THAT. RIGHT. AND JUST SO THAT,
LAST QUESTION ON THIS, SO THAT
WE'RE ALL CLEAR ON, EXPECTATIONS
IN FUTURE YEARS FOR BEYOND THE 4
BILLION IN THE 24, 25 BUDGET. IF
THIS TAKES LONGER TO PAY OFF
VERSUS THE NEXT 4 TO 5 YEARS,
DOES THAT NUMBER GROW
SIGNIFICANTLY OR DOES IT GROW?
WHAT IS THE SORT OF, BALLPARK
FIGURE, IF YOU WILL, OF WHAT
THAT COULD LOOK LIKE OVER THE
NEXT 4 TO 5 YEARS VERSUS 10 TO
15 YEARS? YEAH, WE Kò TO YOUR
POINT, WE CAN ONLY PREDICT, YOU
KNOW, BASED OFF OF FORECASTING
OF THE CURRENT ECONOMIC
CONDITIONS OR HOW WE THINK THE
MAINTENANCE FACTOR WOULD GROW
AND THE GUARANTEE WOULD GROW
OVER TIME. BUT WE'RE ESTIMATING
THAT IT WILL GROW APPROXIMATELY,
YOU KNOW, OVER APPROXIMATELY
FIVE, $5 BILLION OVER THE MULTI
YEAR, BUT WE ARE HOPING TO BE
ABLE TO START PAYING THAT OFF
WITHIN THE NEXT THREE YEARS.
GROW TWO, $5 BILLION, GROW TWO 5
BILLION AFTER WE'VE PAID OFF THE
4 BILLION IN THE BUDGET YEAR.
APPRECIATE THAT. DELYLAH I WANT
TO ADD ANYTHING TO IT. I THOUGHT
I SAW YOU REACH FORWARD. NO.
OKAY. THANK YOU. THANK YOU
AGAIN. I WANT TO THANK,
CERTAINLY THE PUBLIC WHO WAS AT
ALL OF THE HEARINGS ON, ON THIS
PARTICULAR ISSUE OF 98, AND THE
SIGNIFICANT IMPACT THAT, THE
INPUT HAD ON THIS PROPOSAL AGAIN
, TO MAKE SURE THAT WE KEPT THE,
CUTS AWAY FROM CLASSROOM AND
FROM STUDENTS, REALLY AND
FOCUSED ON CONTINUING TO
INCREASE IN THE FUTURE. ARE
FUNDING AND COMMITMENT TOWARDS
EDUCATION. SO THANK YOU FOR THE
WORK FOR ALL ALL AT THE TABLE.
THANK YOU, MR. CHAIR. THANK YOU,
MR. ALVAREZ. AND LET ME JUST
ALSO ADD MY THANKS TO YOU FOR
YOUR VERY ABLE LEADERSHIP OF ALL
THESE ISSUES. OTHER MEMBERS OF
THE COMMITTEE QUESTIONS,
COMMENTS. OKAY. WITH THAT, I
WOULD JUST WANT TO, ECHO MY
THANKS TO THE STAFF FOR, FOR ALL
OF YOUR HARD WORK IN, WORKING
TOGETHER, WORKING ON THESE
ISSUES FOR BEING HERE WITH US TO
TESTIFY TODAY, APPRECIATE THIS.
THESE ARE OBVIOUSLY IMPORTANT.
AND AS I MENTIONED, FUNDAMENTAL
TO THE ARCHITECTURE OF THE
LEGISLATIVE BUDGET, AND I THINK
THAT WE HOPEFULLY THIS
CONVERSATION HAS ILLUMINATED FOR
THE PUBLIC THE FACT THAT, THE
APPROACH THAT WE'RE TAKING HERE
CONSISTENT WITH THE
ADMINISTRATION'S APPROACH IS ONE
THAT IS SUPPORTED BY EDUCATION
STAKEHOLDERS, BY TEACHERS AND
OTHERS WHO CARE ABOUT CLASSROOM
FUNDING, THAT IT WILL LOCK IN A
CONSTITUTIONAL GUARANTEE THAT
PRESERVES IMPORTANT CLASSROOM
FUNDING, BOTH NOW AND IN THE
FUTURE. AND I THINK THAT'S THE
THAT'S THE HIGH LEVEL BULLET
POINT FOR FOLKS TO TAKE AWAY IS
THE COMMITMENT BY THE STATE OF
CALIFORNIA, SHARED BY THE
GOVERNOR AND THE LEGISLATIVE
LEGISLATURE TO PROTECT FUNDING
FOR SCHOOLS AND TO PROTECT
FUNDING FOR CLASSROOMS. SO WITH
THAT, LET ME, THANK YOU, FOR ALL
OF YOUR HARD WORK. WE LOOK
FORWARD FORWARD TO DISCUSSING
AND VOTING ON THESE BILLS, ON
THE ASSEMBLY FLOOR, ON THURSDAY,
AND LOOK FORWARD TO CONTINUE
CONVERSATIONS WITH OUR PARTNERS
IN THE ADMINISTRATION. THANK
YOU. AND WE WILL NOW TURN TO
PUBLIC COMMENT. YEAH. OR DID YOU
WANT TO SAY SOMETHING? OH,
EXCUSE ME WITH APOLOGIES. WE'LL
TURN TO. WE'LL TURN TO MR. LEE.
MY APOLOGIES. I THOUGHT WE WERE
JUST TALKING ABOUT THE PROP 98,
LANGUAGE RIGHT NOW. I HAD A
QUESTION ABOUT IF, OKAY, ABOUT
THE, TAX AND REVENUE MEASURE,
PLEASE. MR. LEE. SO, I
UNDERSTAND THAT WE ARE GOING TO
BE CAPPING THE BUSINESS.
BUSINESS CREDIT CAPS AND NET
OPERATING LOSS, BUT ALLOWING
FOR, CARRY OVER FOR AFTER 2027.
IS THERE AN ESTIMATE OF HOW MUCH
THAT COULD COST AS TO THE FUTURE
YEARS, IF WE'RE GOING TO ALLOW
FOR SO MUCH, TAX CREDIT ROLLOVER
IN THE FUTURE YEARS? HI, ERIC
LEE WITH THE DEPARTMENT OF
FINANCE, AND I'M GOING TO TURN
IT TO ONE OF MY COLLEAGUES FOR
THAT. OKAY. HI COLBY WHITE
DEPARTMENT OF FINANCE, SO AS YOU
NOTED, THE, THE REFUNDABILITY
WOULD LEAD TO, BUSINESSES TAKING
REFUNDABLE CREDITS AT A CERTAIN
JUNCTURE AFTER THE SUSPENSION
ENDS. AND SO THE ROUGHLY THE
ESTIMATE THAT WE'RE CURRENTLY
THINKING IS, IS ABOUT A
-1,000,000,000 IN 27, 28, AND
THEN THERE WOULD BE ONGOING
REVENUE LOSSES AFTER THAT. SO
YOU BELIEVE IT CARRIED OVER INTO
THE 2728 BUDGET WOULD BE $1
BILLION. RIGHT. SO OKAY, OKAY.
AND THAT'S THE, BUSINESS CREDIT
CAP. AND THE NET OPERATING LOSS
TOGETHER WOULD BE A BILLION. YOU
THINK? YEAH. IT'S THAT'S THE
THAT'S THE PIECE FOR
REFUNDABILITY BY ITSELF. SO, THE
ESTIMATE WOULD BE 1.25 BILLION
MINUS, FOR EVERYTHING, 1.25
BILLION. AND THAT'S THE, THE
LAST YEAR OF THE MULTIYEAR.
YEAH. OKAY. VERY GOOD, AND THEN
I HAD JUST ONE MORE QUESTION.
THEN I APOLOGIZE AGAIN FOR
MISUNDERSTANDING THE ORDER. BUT
ON WHEN WE HAVE ELIMINATED THE
OIL AND GAS SUBSIDIES, HOW MUCH
MONEY, ARE WE SAVING IN ANNUALLY
ABOUT FOR THAT? IT'S RELATIVELY
SMALL. SO THESE ARE THESE
SUBSIDIES ARE NOT, NOT NOT LARGE
AS FAR. AND SO IT'S ABOUT, TEN,
10 MILLION, TEN, 11 MILLION PER
YEAR, 10 TO $11 MILLION A YEAR.
OKAY. STILL SIGNIFICANT AMOUNTS,
OKAY. THAT THAT IS ALL MY
QUESTIONS. I APOLOGIZE AGAIN TO
THE CHAIR. AND THANK YOU. THANK
YOU VERY MUCH, MR. LEE, FINAL
CALL FOR QUESTIONS OR COMMENTS.
OKAY. THANK YOU VERY MUCH,
EVERYBODY. WITH THAT, WE WILL
TURN TO PUBLIC COMMENT. THANK
YOU. GOOD AFTERNOON, MR. CHAIR
AND MEMBERS. CHRIS REIF, ON
BEHALF OF THE CALIFORNIA SCHOOL
BOARDS ASSOCIATION. FIRST, WE
JUST WANT TO SAY THANK YOU TO
THE LEGISLATURE FOR MAINTAINING
THE GUARANTEE AND REJECTING THE
RECLASSIFICATION OF PROP $98.
THAT WAS A BIG STEP FORWARD. AND
WE ALSO WANT TO COMMEND STAFF
AND ALSO THE DEPARTMENT OF
FINANCE, IN THEIR INGENUITY AND
CREATING, THIS APPROACH.
HOWEVER, WE DO JUST WANT TO BE
MINDFUL OF THIS IS THE LARGEST
SUSPENSION OF PROP 98 IN
HISTORY, RECOGNIZING WE HAVE, OF
COURSE, SUSPENDED 98 IN THE
PAST, BUT THE USE OF, I WOULD
SAY OPTIMISTIC REVENUES AND
OUTYEARS DOES RAISE CONCERNS FOR
CCPA IN TERMS OF THE HOW QUICKLY
AND HOW, ABLE THE LEGISLATURE
AND THE BUDGET AND THE GOVERNOR
WILL BE ABLE TO PAY DOWN THE
MAINTENANCE FACTOR IN FUTURE
YEARS. SO WE JUST WANTED TO FLAG
THAT. BUT AGAIN, WE APPRECIATE
THE EFFORTS OF THE LEGISLATURE
TO MAINTAIN THE GUARANTEE. I
WANT TO ALSO POINT OUT, FOR
THOSE FOLKS WHO KIND OF WE REFER
TO THE GUARANTEE, RIGHT? THE
GUARANTEES, THE GUARANTEE
BECAUSE OF MAINTENANCE FACTOR.
IF WE DON'T HAVE MAINTENANCE
FACTOR, THE GUARANTEE NO LONGER
BECOMES A GUARANTEE. AND IF WE
DIDN'T HAVE THAT, WE'D BE WE
WOULD BE CREATING TRAP DOORS
THROUGH WHICH THE LEGISLATURE
AND THE STATE WOULD BE FALLING
THROUGH FOR YEARS TO COME. IF WE
DIDN'T MAINTAIN THAT, LOYALTY,
IF YOU WILL, TO THE
CONSTITUTION. SO AGAIN, THANK
YOU. THANK YOU. GOOD MORNING,
MICHELLE UNDERWOOD, ON BEHALF OF
THE COALITION FOR ADEQUATE
FUNDING FOR SPECIAL EDUCATION
AND APPROXIMATELY 40 GRANTEES OF
60 THAT WERE JUST RECENTLY
AWARDED THE INCLUSIVE EARLY
EDUCATION EXPANSION PROGRAM, SO
THIS IS A LITTLE BIT LESS THAN
$200 MILLION IN THE CURRENT YEAR
BUDGET, THAT WAS RECENTLY,
AWARDED OUT. THESE ARE FOR FUNDS
TO HAVE PRESCHOOLERS WITH
DISABILITIES BE ABLE TO BE IN
THE GENERAL EDUCATION CLASSROOM
SETTING, SO THIS IS TO BUILD
INCLUSIVE CLASSROOMS,
PLAYGROUNDS, BATHROOM SETTINGS
AT THESE SCHOOL DISTRICTS AND
COUNTY OFFICES OF EDUCATION SO
WE CAN HAVE PRESCHOOLERS, BOTH
WITH AND WITHOUT DISABILITIES,
LEARNING, GROWING AND PLAYING
TOGETHER IN THE LEGISLATIVE
PACKAGE. THESE DOLLARS WERE
PROPOSED TO BE USED INSTEAD TO
BACKFILL THE PROPOSITION 98
RAINY DAY FUND. SO WE'RE
CONCERNED THAT AS THE
PROPOSITION 98, MINIMUM
GUARANTEE IS SUSPENDED, THAT
THESE DOLLARS DON'T GET PUT AWAY
FOR A RAINY DAY FUND. INSTEAD OF
SUPPORTING THE INCLUSIVE
SETTINGS FOR PRESCHOOLERS WITH
DISABILITIES TODAY. THANK YOU.
THANK YOU VERY MUCH. GOOD
MORNING, MR. CHAIR. CHRIS
MICHELI, ON BEHALF OF THE LOS
ANGELES AREA OF LOS ANGELES AREA
CHAMBER OF COMMERCE AND
RESPECTFUL OPPOSITION TO SB 167,
WE'RE HOME TO TECH AND BIOTECH
AMONG MANY OTHER INDUSTRIES. THE
KNOLL SUSPENSION AND CREDIT
LIMITATION ADVERSELY IMPACT
THOSE IN INDUSTRIES IN
PARTICULAR. TO MAKE MATTERS
WORSE, WE DID A SUSPENSION AND
CREDIT CAP IN 20 AND 21, AND NOW
THAT THOSE ARE AVAILABLE, THEY
ARE BEING SWIPED A SECOND TIME
TO MAKE MATTERS EVEN WORSE,
THESE PROVISIONS ARE RETROACTIVE
TO JANUARY, THE FIRST OF THIS
YEAR. HALFWAY, ALMOST HALFWAY
THROUGH THE TAX YEAR. THE OTHER
ISSUE I WANTED TO RAISE IS THE
APPORTIONMENT FORMULA ITEM, MANY
CLAIM THAT IT IS A
CLARIFICATION. WE THINK THAT THE
BUSINESS COMMUNITY WOULD
RESPECTFULLY DISAGREE THAT IT IS
A SIGNIFICANT CHANGE IN LAW, AND
HAS A POTENTIAL $1.3 BILLION
IMPACT. AS YOU KNOW, IN
CALIFORNIA, WE HAVE A PAY TO
PLAY SYSTEM, MEANING TAXPAYERS
MUST PAY TAX THAT'S UNDER
DISPUTE AND CLAIM, AND FILE A
CLAIM FOR REFUND. AND
UNFORTUNATELY, BY REVERSING THE
OTA DECISION, REALLY ONE OF THE
FIRST SIGNIFICANT ONES TO
BENEFIT THE TAXPAYER, THE STATE
IS PROPOSING TO TAKE THAT AWAY.
WE ALSO ADVOCATE FOR THIS
PARTICULAR PROVISION TO BE HEARD
IN THE TWO POLICY COMMITTEES.
THANK YOU, MR. CHAIRMAN. THANK
YOU VERY MUCH. GOOD MORNING, MR.
CHAIR. MEMBERS. PAMELA GIBBS,
REPRESENTING THE LOS ANGELES
COUNTY OFFICE OF EDUCATION. I'D
LIKE TO ALIGN MYSELF WITH THE
ADVOCATE FROM THE CALIFORNIA
ASSOCIATION FOR SPECIAL
EDUCATION, ADEQUATE FUNDING FOR
SPECIAL EDUCATION. CÁC. WE ARE
THE LARGEST REGIONAL EDUCATION
AGENCY IN THE NATION, AS YOU
KNOW, AND HAVE A LARGE NUMBER OF
EARLY LEARNING AND EDUCATION
PROGRAMS THAT THIS PROGRAM WOULD
SERVE. SO WE'D LIKE TO ALIGN
OURSELVES WITH THAT. WE ALSO
APPRECIATE THAT THE EXPANSION OF
THE SUSPENSION IN SB, AB 154, TO
THE EXTENT THAT IT WOULD HELP
PROVIDE A CONTINUED EFFORTS FOR
OUR TEACHER RECRUITMENT EFFORTS
AND GOLDEN STATE TEACHER
PROGRAM. WE KNOW THERE'S STILL
SOME WORK TO BE DONE THERE, BUT
TO THE EXTENT THAT THIS WILL
HELP US TO CONTINUE TO BUILD
UPON THE SUCCESSES THAT YOU HAVE
MADE IN EDUCATION OVERALL, WE
LOOK FORWARD TO CONTINUE TO WORK
WITH YOU. WE KNOW THIS IS A
DIFFICULT BUDGET AND WE WOULD
JUST REFER YOU TO THE LETTER
THAT WE PREVIOUSLY SENT, AND
WE'LL FOLLOW UP WITH THE FINAL
LETTER. THANK YOU VERY MUCH FOR
YOUR TIME, AND AGAIN, YOUR
SUPPORT FOR THE PRIORITIES THAT
WE'VE LAID OUT. THANK YOU. GOOD
MORNING, CHAIR AND MEMBERS. MY
NAME IS DANIELLE BAUTISTA WITH
UNITED WAYS OF CALIFORNIA. AND
ALSO HERE ON BEHALF OF THE CAL
EITC COALITION, AND WE JUST WANT
TO EXTEND OUR DEEP GRATITUDE TO
THE LEGISLATURE, DEPARTMENT OF
FINANCE AND PARTNERSHIP WITH
BUDGET COMMITTEE CONSULTANTS FOR
THE INCLUSION OF TRAILER BILL
LANGUAGE TO ADJUST THE INCOME
THRESHOLD BETWEEN THE CAL EITC,
YOUNG CHILD TAX CREDIT AND
FOSTER YOUTH TAX CREDIT AND AB
SB 167 THESE. THIS ADJUSTMENT IS
CRITICAL TO ENSURE THAT
CALIFORNIA FAMILIES AND
HOUSEHOLDS GET THE TAX CREDITS
THAT THEY'RE ELIGIBLE FOR DURING
TAX SEASON. THESE TAX CREDITS GO
TOWARDS THINGS SUCH AS HOUSING,
CHILD CARE, GROCERIES, GAS. SO
THANK YOU SO MUCH. WE REALLY
APPRECIATE IT. THANK YOU. GOOD
MORNING, KATIE HARTMAN WITH THE
CALIFORNIA TEACHERS ASSOCIATION.
I JUST WANT TO APPRECIATE THE
COMMITTEE FOR LISTENING TO THE
CONCERNS AROUND PROP 98. WE
SUPPORT AN APPROACH THAT, YOU
KNOW, PROTECTS THE INTEGRITY OF
PROP 98, PROTECTS CLASSROOM
FUNDING AND LONG TERM FUNDING
FOR PROP 98. THANK YOU. THANK
YOU. GOOD MORNING, CHAIR AND
MEMBERS. DEREK LENNOX, ON BEHALF
OF THE CALIFORNIA COUNTY
SUPERINTENDENTS REPRESENTING THE
58 COUNTY SUPERINTENDENTS OF
SCHOOLS, ORDINARILY, I MIGHT USE
MY MINUTE WITH MY LIST OF ASKS
AROUND THE BUDGET, BUT TODAY I
JUST WANT TO EXPRESS GRATITUDE
TO THE COMMITTEE MEMBERS AND THE
STAFF FOR THE WORK AROUND
PROPOSITION 98. THIS IS THE
BASELINE FUNDING THAT HELPS TO
SUPPORT ALL OF OUR SCHOOLS AND
STUDENTS, AND THE PROGRAMS THAT
THE LEGISLATURE HAS CREATED OVER
THE PAST FEW YEARS, IN
PARTICULAR, ARE BECOMING TRULY
TRANSFORMATIONAL FOR OUR
STUDENTS. SO THE FACT THAT
YOU'VE MODIFIED YOUR BUDGET
PROPOSAL TO MATCH WITH WHAT THE
GOVERNOR'S PROPOSING AND WHAT
THE INTEREST HOLDERS HAVE BEEN
ADVOCATING FOR IS INCREDIBLY
IMPORTANT TO US. AND I WANT TO
THANK YOU ALL FOR THAT. THANK
YOU VERY MUCH, SEEING NO
ADDITIONAL, PUBLIC COMMENT, I
JUST WANT TO THANK THE
SERGEANTS, AS ALWAYS, THANK THE
DEPARTMENT OF FINANCE,
LEGISLATIVE ANALYST'S OFFICE,
OUR VERY ABLE STAFF FOR THEIR
HARD WORK AND TESTIFYING TODAY.
WE LOOK FORWARD TO CONTINUING
THIS CONVERSATION AND VOTING ON
THE ASSEMBLY FLOOR, ON THURSDAY
MORNING. AND THEN CONTINUED
CONVERSATIONS WITH OUR PARTNERS
AT ADMINISTRATION. SO THANK YOU,
EVERYBODY. THIS HEARING IS
ADJOURNED.