The 2020-21 Spending Plan:

Other Provisions

• Statewide Infrastructure
• California Public Utilities Commission (CPUC)
• California Department of Food and Agriculture (CDFA)
• Department of Veterans Affairs
• Cannabis Regulation
• Department of General Services (DGS)
• Department of Business Oversight (DBO)
• Department of Consumer Affairs
• Office of Emergency Services (OES)

Statewide Infrastructure

Debt Service

The budget provides $8.3 billion from various funds for debt service payments in 2020-21. This represents an increase of 2 percent from 2019-20. This total includes $7.3 billion for general obligation bonds ($5.2 billion from the General Fund) and $994 million for lease revenue bonds ($646 million from the General Fund).

Capital Outlay

As shown in Figure 1, the Legislature approved $2 billion for 123 capital outlay projects in 2020-21. This is a decrease of $ 1.5 billion (43 percent) compared to the revised level of spending in 2019-20. The decrease is mainly due to the reduction in capital outlay projects included in the budget act as a result of the state’s fiscal condition. The funding provided in the budget is for various phases of state projects, including acquisition, planning, and construction. It does not include state funding for local infrastructure projects. Total estimated costs for all of these projects are $7.4 billion. (A complete list of all state capital outlay projects approved in the 2020‑21 budget is available for download.)

In total, 12 departments had at least one capital outlay project approved in 2020-21. Projects in three departments received nearly two-thirds of the capital outlay funds approved: California State University ($509 million), University of California ($437 million), and Department of Veterans Affairs ($335 million). The individual project receiving the most funding in 2020-21 is Department of Veterans Affairs’ Skilled Nursing Facility at the Veterans Home of California-Yountville ($317 million for the design-build phase). Some other individual capital outlay projects are discussed in more detail in the other 2020-21 Spending Plan posts.

Capital outlay projects are funded through a variety of different fund sources, including the General Fund, special funds, bonds, and federal funds. Some projects have multiple fund sources, depending on the project phase. For example, California Department of Correction and Rehabilitation’s 50-Bed Mental Health Crisis Facility for the California Institution for Men will be funded by the General Fund for design and lease revenue bonds for construction. (These lease revenue bonds will be paid from the General Fund over time.) Common fund sources for these projects (including out-year costs) include the 2016 California Community College Capital Outlay Bond Fund, which comes from general obligation bonds passed in Proposition 51 (40 projects); General Fund (28 projects); and University of California revenue bonds (19 projects).

We note that not all state capital outlay projects are approved by the Legislature in the annual budget act and, therefore, are not included in our totals. For example, while the Legislature approves the overall budget for the California Department of Transportation, individual projects generally are approved by the California Transportation Commission. In addition, there are some capital expenditures that are continuously appropriated, such as some bond funds. The table also does not include funds that were reappropriated in 2020-21, for example, if funding for previously approved projects was not spent in the original budgeted time frame.

California Public Utilities Commission (CPUC)

The budget provides $1.6 billion from various special funds to support CPUC, a decrease of $63 million (4 percent) from the estimated 2019-20 level. The net year-over-year decrease is largely driven by (1) the expiration of temporary contracting resources provided in the 2019-20 budget and (2) lower caseload estimates in the LifeLine Program.

Oversight of Utility Safety and Wildfire Mitigation. The spending plan includes $29.6 million (Public Utilities Commission Utilities Reimbursement Account) to continue and expand various activities at CPUC related to oversight of utility safety and wildfire mitigation, pursuant to several bills adopted in recent years. This amount includes funding for 104 positions (73 permanent and 31 limited-term) and $10 million in annual contracting resources for a three-year period. (The 2019-20 budget included a total of $47.6 million for these activities, including for one-time contracting costs.) Some of the primary activities funded include:

• Oversight of utility wildfire mitigation plans, including developing evaluation criteria and metrics, reviewing and approving plans, monitoring compliance, and conducting enforcement.

• Reviewing utility financial requests to recover costs for wildfire mitigation plan activities and utility-caused wildfire damages, as well as applications to finance these costs through “securitization.”

• Identifying and implementing various process changes at CPUC intended to streamline commission operations.

The budget also provides $2.6 million ongoing (Public Utilities Commission Public Advocates Office Account) and 14 permanent positions to the Public Advocates Office to continue its review of various financial aspects of utility wildfire mitigation activities. This makes permanent funding that was provided on a one-time basis in the 2019-20 budget.

Special Fund Loans to the General Fund. The budget includes a total of $420 million in loans to the General Fund from the following special funds: Universal Lifeline Telephone Service Trust Administrative Committee Fund ($300 million), California High-Cost Fund-B Administrative Committee Fund ($60 million), and California Advanced Services Fund ($60 million). Loans must be repaid—in part or in whole—if the Department of Finance determines (1) the fund from which the loan was made has a need for the moneys or (2) there is no longer a need for the moneys in the General Fund.

California Department of Food and Agriculture (CDFA)

The budget includes $528 million from various funds (including $152 million from the General Fund) to support CDFA in 2020-21. This is a decrease of $123 million (19 percent) from the revised 2019-20 spending level. The decrease is mainly due to a reduction in one-time spending that was reflected in the previous year, particularly (1) $40.3 million from the General Fund to support state-affiliated fairs (discussed below) and (2) $62 million in Greenhouse Gas Reduction Fund (GGRF) discretionary expenditures. (The 2020-21 budget does not include a GGRF expenditure plan due to uncertainty about cap-and-trade auction revenues.) The 2020-21 Budget Act also made several funding reductions compared to what was proposed by the Governor in the January budget in order to provide General Fund savings. In particular, the enacted budget does not include a one-time $20 million General Fund proposal for State Water Efficiency and Enhancement Program grants, and it includes only $2 million for the Fresno-Merced innovation corridor (reduced from $32 million originally proposed). In addition, the CDFA budget includes $58.4 million from various special funds for the continued implementation of cannabis cultivation licensing and enforcement, including support for 165 positions, as discussed in the Cannabis Regulation section below.

Support for State-Affiliated Fairs. The budget package includes a supplemental appropriation of $40.3 million in 2019-20 to support the 53 state-affiliated fairs. Due to the coronavirus disease 2019 pandemic, many of the fairs have limited operations, which has resulted in financial difficulties and state employee layoffs. The amount provided is to help cover employee compensation costs during the layoff process. The budget also provides $3 million one time from the General Fund to CDFA to support the California Exposition and State Fair (Cal Expo) in 2020-21. The additional funding is to assist Cal Expo in maintaining the staffing level needed to support emergency services and operations. The budget also includes provisions authorizing the administration to expend up to an additional $3 million if deemed necessary.

Farm to School Program. The budget provides $10 million ($8.5 million one time and $1.5 million ongoing) from the General Fund and six positions to support the Farm to School Program. Of the total amount, $8.5 million will be made available for grants that will support schools in procuring locally grown foods for school meals and educating students about food and agriculture. The remaining $1.5 million is for state staff to administer the new program and for resources to support farm to school efforts.

Continuation of Proposition 12 Implementation. The budget provides $1.4 million and six positions in 2020-21 (growing to $2.8 million and 15 positions ongoing) to support the implementation of the Farm Animal Confinement Initiative (Proposition 12 [2018]). Under the initiative, CDFA is responsible for enforcing new requirements related to the confinement of certain livestock. The budget also includes budget trailer legislation that requires the department to establish a fee to support costs associated with Proposition 12 implementation. The augmentation is funded for two years from a loan from the Food and Agriculture Fund until the new fee is implemented.

Fresno-Merced Food Innovation Corridor. The budget provides $2 million one time from the General Fund to support the new Fresno-Merced Future of Food Innovation Corridor initiative. The initiative will provide grants for various efforts intended to support research and development, education, commercialization, and innovation that will advance sustainable agricultural production and create jobs in the San Joaquin Valley.

Department of Veterans Affairs

The spending plan for the California Department of Veterans Affairs (CalVet) includes $447 million General Fund in 2020‑21, a decrease of $25 million (5.2 percent) relative to revised estimates for 2019‑20. General Fund costs in 2020‑21 are expected to be offset by $85 million from federal reimbursements for Veterans Homes. The year-to-year decrease in General Fund is primarily due to the expiration of one-time 2019‑20 funding for capital outlay projects.

Reporting Requirements for Barstow Veterans Home. In May, the administration proposed to begin the closure process for the Veterans Home at Barstow. While the 2020‑21 budget rejects the administration’s proposal, it includes language that requires CalVet to conduct stakeholder meetings and develop a plan for the Barstow Veterans Home by February 1, 2021. The plan shall include a list and associated cost of deferred maintenance needs, actions taken to increase occupancy, summary of options discussed in stakeholder meetings, and a possible transition plan that is in alignment with the 2020 Master Plan.

Capital Outlay. The 2020‑21 budget includes funding for three capital outlay projects:

• Veterans Home of California, Yountville Skilled Nursing Facility. The spending plan provides about $317.1 million from the Public Buildings Construction Fund to proceed with the Design-Build phase for a new skilled nursing and memory care facility at the Veterans Homes of California in Yountville. The new facility, which is estimated to cost a total of $324.4 million, would largely replace the existing skilled nursing facility and memory care unit at Yountville.
• Veterans Home of California, Yountville Steam Distribution System. The spending plan provides $17.4 million ($7.8 million Public Building Construction Fund and $9.6 million federal funds) to renovate the existing steam distribution system at the Veterans Homes of California in Yountville.
• Southern California Veteran Cemetery. The spending plan includes $700,000 from the Southern California Veterans Cemetery Master Development Fund to complete and amend feasibility studies of two potential cemetery sites.

Cannabis Regulation

The budget package reflects various actions related to the state’s continued implementation of recently enacted laws, including Proposition 64 (2016), to regulate medical and adult-use cannabis.

Continuation of Funding for Cannabis-Related Activities Across Multiple Departments. As shown in Figure 1, the budget provides $218.3 million, mostly on an ongoing basis, from various funds in 2020‑21 to support cannabis-related activities across 11 departments. Most of this funding will provide ongoing support for licensing and enforcement-related positions at the Bureau of Cannabis Control (BCC), California Department of Public Health, and California Department of Food and Agriculture that were previously funded on a limited-term basis.

Statutory Changes Related to Cannabis Enforcement. The budget package includes statutory changes providing BCC with authority to employ sworn enforcement officers. As a result, BCC will be able to conduct its own enforcement activities rather than relying on the Division of Investigation within the Department of Consumer Affairs (DCA).

Statutory Changes to Temporarily Change Process for Adjusting Cannabis Tax Rates. The California Department of Tax and Fee Administration (CDTFA) makes periodic, statutorily required adjustments to the rates for the state’s two cannabis taxes: the retail excise tax and the cultivation tax. The budget package includes statutory changes that prohibit CDTFA from making the adjustments scheduled for January 1, 2021 if the adjustments would result in higher tax rates. CDTFA would still be required to make the adjustments if they would result in lower tax rates.

Department of General Services (DGS)

The budget provides DGS with $1.3 billion from various sources, including reimbursements from other state departments. This is a net decrease of about $2 billion, or 61 percent, compared to the estimated spending level for 2019‑20. This decrease primarily reflects the expiration of the following one-time funding provided in 2019‑20: (1) $1 billion in lease revenue bond funding to construct the Richards Boulevard Office Building Complex in Sacramento and (2) $1 billion for personal protective equipment and other purchases related to the state’s response to the novel coronavirus disease 2019 (COVID-19) emergency. (We note that additional COVID-19 related procurement is authorized in the budget. However, these funds are not yet reflected in departmental budgets, including that of DGS.) In addition to the augmentations described below, the department’s budget includes an augmentation related to the state’s cannabis programs described in the “Cannabis Regulation” section of this post.

Different Funding Source for Capitol Annex. The budget transfers $694.2 million from the State Project Infrastructure Fund (SPIF)—which had previously been anticipated to fund the replacement of a portion of the State Capitol building known as the annex (Capitol Annex project)—to the General Fund. Instead of with these SPIF funds, the budget assumes that the Capitol Annex project will be funded by a combination of previously approved lease revenue bonds ($754 million) and the funds that remain in the SPIF ($60 million).

Special Fund Loans. The budget provides $77.4 million in special fund loans to the General Fund from three special funds under DGS’ purview—the Disability Access Account ($35 million); Public School Planning, Design, and Construction Review Revolving Fund ($35 million); and the Building Standards Administration Special Revolving Fund ($7.4 million).

Funding for Deferred Maintenance Projects. The budget provides $65.8 million from the General Fund on a one-time basis for deferred maintenance projects at DGS facilities. This includes $42.2 million for the replacement elevators at the Ronald Reagan, Elihu Harris, and Earl Warren buildings. (It does not include $14.2 million that was proposed in January for the Hiram Johnson building.) It also includes $23.6 million for fire alarm projects at various DGS facilities.

Continued Funding for Installation of Electric Vehicle Charging Equipment. The budget provides $23.3 million from special funds for the installation of electric vehicle charging equipment at state facilities to be used by state employees and the state vehicle fleet. (In January, the installation of these charging stations was proposed to be funded by a combination of General Fund and special fund sources.)

Does Not Include Funding for Office Renovation Projects. The budget delays consideration of $721.7 million in lease revenue bonds that were proposed in January for the design-build phase of the renovations of the Bateson, Jesse Unruh, and Natural Resources buildings to a future budget. This delay will allow DGS time to reevaluate departments’ office space needs in light of COVID-19. (These renovation projects are part of a larger plan for sequencing the construction and renovation of a number of state office building projects in Sacramento.)

Department of Business Oversight (DBO)

The budget provides DBO with $108.5 million from various special funds in 2020‑21. This is a net increase of $1.8 million, or about 2 percent, compared to the estimated spending level for 2019‑20.

Statutory Changes to Expand Authority and Rename Department. As part of his January budget proposal, the Governor proposed legislation to change the name of DBO and broaden the department’s authority in various ways, such as by allowing it to regulate certain financial products and services that are not currently regulated. In addition, as part of the May Revision, the Governor proposed provisional language to provide the department with $10.2 million in special fund resources to implement the proposal upon enactment of the legislation. This was to ensure funding would be available to the department if the legislation was enacted after the start of the fiscal year.

While the proposed provisional language was approved as part of the 2020‑21 budget package, the legislation as proposed by the Governor was not. Instead, the Legislature passed Chapter 157 of 2020 (AB 1864, Limón) to implement a modified version of the legislation. The major changes in Chapter 157 include (1) changing DBO’s name to the Department of Financial Protection and Innovation (DFPI), (2) authorizing DFPI to promulgate regulations requiring a registration process for businesses offering consumer financial products or services that were previously unregulated, (3) providing DFPI additional enforcement authority, (4) reorganizing the department, and (5) establishing the Financial Technology Innovation Office.

Department of Consumer Affairs

The budget provides DCA and its boards and bureaus with $763 million from various special funds supported primarily by license fees. This is an increase of $27.7 million, or about 4 percent, compared to the estimated spending level for 2019‑20. In addition to the augmentations described below, this net increase includes augmentations related to the state’s cannabis programs described in the “Cannabis Regulation” section of this post.

BreEZe and Business Modernization Information Technology (IT) Projects. The budget provides $15.1 million in 2020‑21 and $14.2 million in 2021‑22 from various special funds to continue to operate and maintain the BreEZe IT system, which supports the licensing and enforcement activities of about half of DCA’s boards and bureaus. The budget also provides $5.2 million on a one-time basis in 2020‑21 from various funds to support four entities—the Acupuncture Board; Board of Chiropractic Examiners; Board for Professional Engineers, Land Surveyors, and Geologists; and the Bureau of Private Postsecondary Education—in their ongoing efforts to implement new IT systems to support their licensing and enforcement activities.

Increased Workload at Various Boards and Bureaus. The budget includes $6.9 million from various special funds and 36.5 positions to support additional workload at various boards and bureaus. For example, it includes approximately $1.3 million and ten positions for the Bureau of Private Postsecondary Education’s Office of Student Assistance and Relief to handle additional workload associated with unexpected school closures. Additionally, the increased funding includes about $900,000 annually through 2022‑23 and six positions for the Veterinary Medical Board to address a backlog of complaints against its licensees.

Various Fee Increases. As part of the May Revision, the Governor proposed budget trailer legislation to increase various fees that support various DCA boards and bureaus and the Controlled Substance Utilization Review and Evaluation System (CURES). However, in adopting the 2020‑21 budget, the Legislature rejected the proposed budget trailer legislation. Instead, the Legislature increased some of the fees proposed by the Governor in nonbudget-related legislation. Specifically, Chapter 359 of 2020 (AB 3330, Calderon) increases fees and authorizes potential future fee increases for the Acupuncture Board, Board of Behavioral Sciences, and the Podiatric Medical Board. Additionally, Chapter 359 increases the fees paid by certain DCA licensees to support CURES from $6 to $11 for a two-year period—April 1, 2021 through April 2, 2023. After this period, the fee for each licensee would be $9 on an ongoing basis.

Special Fund Loans. In addition to the augmentations, the budget provides $166.7 million in one-time loans to the General Fund from various special funds under DCA’s purview. These special funds include the High Polluter Repair or Removal Account ($60 million), Vehicle Inspection and Repair Fund ($30 million), Board of Registered Nursing Fund ($30 million), Barbering and Cosmetology Contingent Fund ($25 million), Accountancy Fund ($10 million), State Dentistry Fund ($5 million), Enhanced Fleet Modernization Subaccount of the High Polluter Repair or Removal Account ($3.4 million), Pharmacy Board Contingent Fund ($2.4 million), and the Psychology Fund ($900,000).

Office of Emergency Services (OES)

The budget provides OES with $1.6 billion (more than two-thirds from federal funds) in 2020‑21. This is a net decrease of $2.2 billion, or 57 percent, compared to the estimated spending level for 2019‑20. This decrease is primarily a result of the expiration of funding provided to the department on a one-time basis in 2019‑20 as a result of the COVID-19 emergency.

Community Resilience During Power Shutdowns. The budget provides $50 million in one-time General Fund support to mitigate the effects of power shutdowns implemented to reduce the risk of wildfires sparked by utility-owned equipment. The budget also provides $5 million and associated reporting language for an operational observer to monitor the efforts of Pacific Gas & Electric (PG&E) to implement steps to mitigate the risk of wildfire ignitions from PG&E’s infrastructure and limit the effects of public safety power shutdowns.

Increased Funding for California Disaster Assistance Act (CDAA). The budget provides $38.2 million in one-time General Fund support for CDAA to repair, restore, or replace publicly owned property damaged or destroyed by a disaster and reimburse local governments for various disaster-related activities. This augmentation brings the total amount provided for CDAA in 2020‑21 to $100.8 million.

Other Funding Increases. In addition, the budget includes additional funding for the following:

• Cybersecurity Integration Center (Cal-CSIC). The budget provides $7.6 million General Fund and 12 positions to expand OES’ staffing of the Cal-CSIC. (An additional $3.5 million General Fund is provided to support other departments’ participation in the Cal-CSIC.) This funding will augment the state’s cybersecurity detection and response efforts.

• Continued Support for Earthquake Early Warning. The budget provides a $17.3 million one-time loan from the School Land Bank Fund (rather than from the General Fund as initially proposed by the Governor) to continue implementation of the California Early Earthquake Warning System, which is a system intended to provide the general public, businesses, and other entities with advance warning of earthquakes.

• Seismic Safety Commission. The budget package transfers the Alfred E. Alquist Seismic Safety Commission to OES and includes $2.5 million ($503,000 General Fund) for OES to support the commission.

• Recently Passed Wildfire-Related Legislation. The budget provides $2 million General Fund to implement a Wildfire Forecast and Threat Intelligence Integration Center, consistent with Chapter 405 of 2019 (SB 209, Dodd). (As part of his January budget proposal, the Governor proposed an additional $7 million for this purpose.)

Maintains Legislative Augmentations From 2019‑20 Budget Act. The budget maintains several legislative augmentations that were made in the 2019‑20 Budget Act, including resources for domestic violence and sexual abuse prevention, the Internet Crimes Against Children Taskforce, school safety communications interoperability grants, the Homeless Youth Emergency Services Housing program, and the California Health Center Security Grant Program. (The Governor had proposed reverting unexpended funds designated for these programs as part of the May Revision.)

Excludes Funding for Some Major Proposals. The budget does not provide funding for certain proposals that were proposed in the Governor’s January budget. Notably, the final budget package does not include $25.8 million from the General Fund and $75 million from federal funds to implement the Wildfire Mitigation Financial Assistance Program created by Chapter 391 of 2019 (AB 38, Wood). Additionally, the budget does not include proposed resources for various disaster planning, preparedness, response, and administrative activities conducted by the department.