Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael Callagy, County Executive
Connie Juarez-Diroll, Chief Legislative Officer
Subject: State and Federal Legislative Update #7-Update on the 2024 State and Federal Legislative Sessions and State Ballot Measures
RECOMMENDATION:
title
Recommendation to:
A) Accept an informational report on the 2024 State and Federal Legislative sessions; and
B) Accept an informational report on the 2024 State Ballot Measures for the November 5, 2024, election.
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BACKGROUND:
The Legislature has reconvened from its July recess and has reached the final stretch of this legislative session. More than a thousand bills were considered by the Appropriations Committees in both houses, as bills with a fiscal impact were approved or held during “Suspense” hearings. Both houses must pass bills by August 31, 2024, and the Governor has until September 30, 2024, to sign or veto measures.
In June, Legislative leaders and the Governor approved five state ballot measures for the November 5, 2024, those measures are:
• Proposition 2 - AB 247 (Muratsuchi) - Would authorize a $10 billion education facilities modernization, safety, and repair bond for K-12 schools and Community Colleges.
• Proposition 3 - ACA 5 (Low) - Would repeal provisions of the constitution already deemed invalid and unconstitutional provisions that limit marriage to a "man and a woman" and replace it with provisions that affirm the fundamental right to marry.
• Proposition 4 - SB 867 (Allen) - Would authorize a $10 billion water, wildfire prevention, drought preparedness, and clean air bond.
• Proposition 5 - ACA 1 (Aguiar-Curry) - Would allow local governments to issue bonds related to affordable housing and public infrastructure with 55 percent voter approval instead of the two-thirds vote threshold under current law.
• Proposition 6 - ACA 8 (Wilson) - Would delete provisions in the state Constitution that allow involuntary servitude as punishment for a crime and prohibit the California Department of Corrections and Rehabilitation from disciplining any incarcerated person for refusing work assignments.
Additionally, five ballot measures authorized via the signature-gathering processes qualified and were submitted for inclusion on the November ballot, which are:
• Proposition 32 - Would raise the state minimum wage to $18 in 2025.
• Proposition 33 - Would eliminate Costa-Hawkins rent control prohibitions and prohibit the state from limiting how local governments expand or maintain rent control policies.
• Proposition 34 - Would require healthcare providers that utilize federal drug discount programs to spend at least 98 percent of those funds on direct patient care.
• Proposition 35 - Would make state Managed Care Organization (MCO) taxes permanent and limit the Legislature’s ability to redirect proceeds to purposes other than Medi-Cal.
• Proposition 36 - Would revise state proposition 47 and, allow felony charges and increases sentences for certain drug and theft offenses.
A number of ballot measures were withdrawn after the legislative leaders, the Governor, and stakeholders negotiated to remove propositions related to oil drilling prohibitions near homes and schools, reforms to the Private Attorneys General Act (PAGA) for labor code violations, healthcare, and financial literacy education.
In an unprecedented step, the California Supreme Court acted to remove a measure known as the Taxpayer Protection and Government Accountability Act. Sponsored by tax reform advocates, the measure would have raised voter approval thresholds for new taxes and required local agencies to reapprove previously enacted tax measures. The Court ruled that the proposed measure exceeded the scope of power of the citizen initiative by altering basic plans of government.
Legislative leaders and the Governor were unable to move forward with their own version of public safety issues related to retail theft and drug trafficking reforms that would have competed with Proposition 36 on the November ballot. However, the proposal did not include reforms to Proposition 47 and contained additional guardrails and more specific criteria than Proposition 36, which would have been invalidated if Proposition 36 had received more votes. Leadership failed to secure support from advocacy coalitions and legislators, and opted to withdraw their plan. Sponsored by the California District Attorney's Association, Proposition 36 will be the only measure related to criminal justice on the November 2024 ballot.
Regional Ballot
In addition, on August 14, 2024, the Bay Area Housing Finance Authority (BAHFA) adopted a resolution to remove Regional Measure 4, a general obligation bond measure scheduled for the November ballot in each of the nine Bay Area counties. The measure would have raised $20 billion to preserve and produce affordable housing. Recent polling commissioned by the Authority found support for the potential bond hovering around the 55 percent threshold required if Proposition 5 was simultaneously approved. Additionally, opponents of the measure filed a lawsuit against the Authority, arguing that the proposed language to describe the measure was “false and misleading.” The Authority recently issued a correction on the annual cost of the bond from $670 million to $911 million.
DISCUSSION:
Staff is exploring these measures for impacts on County programs and services and will put any recommended positions before the Board before the November election. Staff recommendations for these ballot measures will be presented before the Board in September.
State Ballot Initiatives
Proposition 2
Placed on the ballot by the Legislature, the Kindergarten Through Grade 12 Schools and Local Community College Public Education Facilities Modernization, Repair, and Safety Bond Act of 2024 (Proposition 2) would authorize $10 billion in state general obligation bonds for the state School Facilities Program (SFP). If approved, $8.5 billion would go toward updating or building new K-12 buildings, with the remaining $1.5 billion for community colleges.
The SFP is funded through state and local general obligation bonds, developer's fees, and local assessments, including Mello-Roos community facilities districts. The SFP is oversubscribed, with a project backlog of about $1.2 billion for new construction and about $2.3 billion for modernization. Public school districts are typically responsible for 50 percent of the cost of new construction projects and 40 percent of for renovation projects through local bond funds. The state covers the remaining costs through the SFP.
The last school facilities bond was passed in 2016 and authorized $9 billion in total funding, with $7 billion going towards K-12 education facilities and $2 billion for community colleges. Of the $7 billion for K-12 education, $3 billion was for new construction, $3 billion for modernization, and $1 billion for charter schools and vocational education facilities. More recently, in 2020, voters rejected a $15 billion school infrastructure bond, which received only 47 percent of voter support.
If voters approve Proposition 2, it will allocate $8.5 billion toward updating or building new K-12 buildings. Funds would be distributed to the following programs:
• $4 Billion- Building renovations,
• $3.3 Billion- New construction, including land acquisition,
• $600 Million- Career technical education facilities,
• $600 Million- Charter schools.
The remaining $1.5 billion would be set aside for community college facilities.
Proposition 2 allows up to $115 million in renovation funds to be used to reduce lead levels in water at public school sites. Under the measure, school districts would be eligible for additional renovation funding to build or renovate facilities for transitional kindergarten programs with the expanded requirements for T-K programs.
The measure also implements a sliding scale for state grant amounts to enhance equity and ensure lower-wealth school districts receive a higher proportion of state funding. In doing so, the measure also introduces a proportional system that adjusts school district’s required local contribution to construction and renovation based on a district’s gross bonding capacity, enrollment, uneducated pupil percentage, and utilization of project labor agreements. These changes were made due to concerns that the previous modernization program disproportionally benefitted wealthier districts.
The measure further enhances state funding via supplemental grants for specific needs such as school kitchens and gymnasiums and establishes a program for replacing outdated buildings at least 75 years old. It also establishes a process for assisting small and priority school districts by leveraging a federal grant to provide in-person and ongoing regional support to priority school districts, particularly those new to the SFP, and setting aside 10 percent of funds specifically for small districts. These measures aim to create a more equitable school facility funding system that addresses the needs of smaller districts and those with the greatest need.
Proposition 3
The Right to Marry and Repeal Proposition 8 Amendment (Proposition 3) would eliminate language from California’s Constitution that says marriage is a union between one man and one woman. California voters enshrined this definition when they approved Proposition 8 in 2008, effectively banning same-sex marriages. Proposition 8 was invalidated by the U.S. Supreme Court's ruling in Obergefell v. Hodges in 2015, which protected same-sex marriage under the Due Process and Equal Protection Clauses of the Federal Fourteenth Amendment. Still, the wording from Proposition 8 remains in the State Constitution despite having no force of law.
Yet the United States Supreme Court's decision on marriage equality does not remove unconstitutional provisions from the law. Instead, those unlawful provisions remain unless specifically removed by an act of the legislature. While the legislature has acted to remove provisions of Proposition 8 from state statute, those changes have yet to align with changes to the California Constitution. State legislators and the Governor acted in July 2024 to place the constitutional amendment onto the November ballot. The measure would also add language to the state constitution, establishing a right to marry to further the right to life, liberty, the pursuit of happiness, and privacy, as well as the Due Process and Equal Protection Clauses of the state constitution.
Section 7.5 of the California Constitution:
“Only marriage between a man and a woman is valid or recognized in California.”
Proposition 3 replaces that text with the following amendment to Section 7.5:
“(a) The right to marry is a fundamental right. (b) This section is in furtherance of both of the following: (1) The inalienable rights to enjoy life and liberty and to pursue and obtain safety, happiness, and privacy guaranteed by Section 1. (2) The rights to due process and equal protection guaranteed by Section 7.”
Proposition 4
State legislators and the Governor passed a legislative proposal before the summer recess, placing the Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024 (Proposition 4) on the November ballot. The measures would authorize $10 billion in state general obligation bonds for various climate projects. Proposition 4 requires that at least 40 percent of the total funds be allocated to projects that benefit vulnerable populations and gives priority to disadvantaged communities and vulnerable populations.
Funds would be allocated to the following programs:
• Drought, Flood, and Water Supply- $3.8 billion:
Approximately half of these funds would support programs and infrastructure to increase water quality and supply, including water storage projects. The remaining funds would go towards flood reduction programs, dam repair, stormwater treatment, and habitat restoration.
• Forest Health and Wildfire Prevention- $1.5 billion:
Eligible programs include wildfire reduction programs, such as tree thinning, vegetation clearance, and homeowner wildfire resistance initiatives.
• Sea-Level Rise and Coastal Areas- $1.2 billion:
Most of these funds would support coastal restoration and sea-level rise resiliency for coastal areas and wetlands. The remaining funds would go towards ocean and marine habitat protection and improvements.
• Land Conservation and Habitat Restoration- $1.2 billion:
These funds would protect and restore areas that support fish and wildlife habitats, including land conservation.
• Energy Infrastructure- $850 million:
Funds would go to support the development of coastal wind turbines and supporting transmission infrastructure. Other eligible programs include battery storage infrastructure.
• Parks- $700 million:
Funds would support various activities that expand recreational opportunities or reduce climate change impacts on state and local parks. This includes park creation and expansion, trail construction, maintenance, education, and infrastructure upgrades.
• Extreme Heat- $450 million:
These funds would support community protection initiatives, including cooling centers, greenspaces, tree planting, and air pollution reduction.
• Farms and Agriculture- $300 million:
A variety of farm owner incentives would be supported by these funds, such as soil health, air pollution reduction, water conservation, farmworker transportation, and farmland conservation. Other programs this account supports include grants for community gardens and farmers' markets.
Proposition 5
The Lower Supermajority Requirement to 55% for Local Bond Measures to Fund Housing and Public Infrastructure Amendment (Proposition 5) would reduce the voter approval threshold from 66 percent to 55 percent for specific funding categories. These changes would make it easier for local governments to pass local bonds to develop affordable housing and other projects in their jurisdictions.
Section 18 of Article XVI of the state constitution requires that all local bond measures, except those issued by local school districts or community college districts, must be approved by two-thirds of voters. In 2000, California voters adopted Proposition 39, which lowered the vote threshold for local school districts and community college districts to issue bonds from 66.67 percent to 55 percent.
The measure defines affordable housing as "housing developments, or portions of housing developments, that are affordable to individuals, families, seniors, people with disabilities, veterans, or first-time homebuyers, who are lower income households or middle-income households earning up to 150 percent of countywide median income." Affordable housing would also include downpayment assistance programs, first-time homebuyer programs, permanent supportive housing, and facilities used to serve residents of affordable housing. It also includes the construction, reconstruction, rehabilitation, or replacement or lease of public infrastructure, affordable housing, or permanent supportive housing for persons at risk of chronic homelessness, including persons with mental illness.
Public infrastructure projects would include water quality, sanitation, wastewater treatment, property protection from sea level rise, parks and recreation facilities, flood control, streets, highways, broadband internet access, local hospital construction, public safety buildings, and public libraries.
The measure requires local governments to take specific steps to monitor and report the use of bond funds approved under this threshold. This includes annual independence performance audits and mandates local citizen oversight.
According to the state Legislative Analyst’s Office (LAO), between 20 to 50 percent of additional local bond measures would have passed under the 55 percent threshold statewide. This includes a bond measure placed on the ballot in East Palo Alto (Measure V) in 2020 that received 64.66 percent of the vote, just over 2 percent below the constitutional threshold.
Proposition 6
The Remove Involuntary Servitude as Punishment for Crime Amendment (Proposition 6) would remove all language allowing slavery and involuntary servitude from California's Constitution. Currently, the California Constitution bans involuntary servitude except as a punishment for crime.
Proposition 6 amends the Constitution to eliminate involuntary servitude as a punishment for crime and prohibits state prisons from disciplining incarcerated individuals who refuse to work. The measure would not prohibit prisons from giving time to incarcerated individuals with credits for working.
The Thirteenth Amendment of the U.S. Constitution was ratified in 1865 and prohibited slavery and involuntary servitude. However, an exception was allowed if involuntary servitude was imposed as punishment for a crime. Article I, section 6 of the California Constitution contains the same prohibitions on slavery and involuntary servitude and the same exception for involuntary servitude as punishment for crime.
California is one of 16 states that still allows for involuntary servitude as a criminal punishment. More recently, several states, including Colorado, Nebraska, Utah, Alabama, Oregon, Tennessee, and Vermont, received voter approval to amend language in state constitutions regarding slavery as punishment for a crime.
According to the LAO, the fiscal effects of Proposition 6 on state and local criminal justice programs are uncertain. It is unclear how Proposition 6 would change work rules for incarcerated individuals. For example, a shortage of interested incarcerated individuals interested in specific jobs may require increased pay to incentivize participation. The LAO estimates that any potential cost changes would not exceed "tens of millions of dollars" annually statewide.
Proposition 32
The Living Wage Act of 2022 would increase California’s minimum wage up to $18 an hour by 2026 through gradual yearly increases. Workers earning $16 an hour would see their pay increase by a dollar each year until it reaches $18 on January 1, 2026. Businesses with more than 25 employees must begin paying their workers $18 by the start of 2025. For employers with 25 or fewer workers, the minimum wage would reach $18 on January 1, 2026. After that time, wages would be increased annually by an inflation adjustment-the equivalent of the consumer price index (CPI), but no greater than 3.5 percent yearly. However, in an economic downturn, the Governor could suspend increases twice, temporarily delaying those wage increases for one year.
In 2016, the legislature and then Governor Jerry Brown passed Senate Bill 3, which increased the state's minimum wage to $15 an hour. SB 3 required an annual increase in the state minimum wage until the amount reached $15 on January 1, 2022, for employers with 26 workers or more and January 1, 2023, for employers with 25 workers or less.
In November 2022, the San Mateo County Board of Supervisors set a minimum wage in unincorporated areas of $16.50 an hour, which increased to $17.06 per hour effective January 1, 2024.
According to the LAO, state and local government costs could increase or decrease by hundreds of millions annually statewide.
Proposition 33
The Justice for Renters Act (Proposition 33) would expand local authority to enact rent control ordinances by repealing the Costa-Hawkins Rental Housing Act (Costa-Hawkins). The measure would allow cities and counties to establish governing local rent control policies and rent increases for new tenants. Proposition 33 would insert new language into California law prohibiting the state from limiting how cities and counties expand or maintain rent control.
Costa-Hawkins limits local rent control laws in three main ways:
1. It prevents rent control ordinances from applying to any single-family home.
2. Rent controls cannot apply to any housing built on or after February 1, 1995.
3. Rent control laws generally prescribe rent prices landlords charge to new tenants and only allows for rent control to limit how much landlords increase rent for existing renters.
Similar ballot initiatives in 2018 and 2020 were put before state voters and failed by 19 and 20 points, respectively.
As of 2023, seven states and the District of Colombia have enacted rent control policies at the state or local level. Thirty-one states have enacted laws preempting local governments from adopting rent control policies. In California, only a handful of cities (Los Angeles, San Jose, San Francisco) had local rent control ordinances grandfathered in before the passage of Costa-Hawkins.
With average monthly rents of $3,195, San Mateo County renters must earn $61.44 per hour to afford average rents. An estimated 24,517 low-income renter households in the county do not have access to affordable housing. Of those rent-burdened residents, 78 percent of extremely low-income households pay more than half of their income on housing.
According to the LAO, Proposition 33 may reduce local property tax revenues. Declines in the value of rental properties would reduce the taxes paid by landlords, resulting in statewide tax reductions of at least tens of millions of dollars annually, constituting less than 0.5 percent of all property tax revenue.
Proposition 34
The Require Certain Participants in Medi-Cal Rx Program to Spend 98% of Revenues on Patient Care Initiative (Proposition 34) creates new rules about how certain healthcare entities spend revenue from the federal drug discount program. Specifically, entities identified by the measure would have to spend at least 98 percent of their net revenue earned in California on healthcare services provided directly to patients for certain entities.
These restrictions would only apply to entities that:
• Participate in the federal drug discount program,
• Have or have ever had a license in the state to operate as a health plan, pharmacy, or clinic, or have certain contracts with Medi-Cal or Medicare.
• Have a ten-year period spending more than $100 million on purposes other than direct patient care.
• Owns and operates multifamily housing units with at least 500 “high” severity violations.
Entities that qualify and do not meet the 98 percent disbursement requirement would be penalized for ten years with a loss of licensure and tax-exempt status, be prohibited from receiving state and local government contract or grants, and prohibit any of the entities’ executives from serving in leadership roles in a health plan, pharmacy, or clinic.
Lastly, the measure would enshrine the state’s Medi-Cal Rx program in state law. In January 2021, the state began to implement Medi-Cal Rx, which transferred Medi-Cal's pharmacy services benefit from managed care to fee for service. This program saw cost savings for the state through standardization of the pharmacy benefit for Medi-Cal members, as well as increased pharmacy access.
Sponsored by the California Apartment Association, the measure appears to be targeted towards the AIDS Healthcare Foundation, the sponsor of the Costa-Hawkins rent-control ballot measure (Proposition 33).
Proposition 35
The Protect Access to Healthcare Act (Proposition 35) would permanently extend a tax on Managed Care Organizations (MCOs) that operate as insurance providers under state law.
The MCO tax is levied on health insurance organizations based on enrollment in the Medi-Cal program and in the commercial sector. The 2023 California Budget Act established the MCO tax from April 2023 to December 2026. The MCO tax revenues offset General Fund spending in the existing Medi-Cal program and support program augmentations. This measure would make the MCO tax permanent, limit the tax structure, and establish specific uses for the tax revenue.
Most Medi-Cal beneficiaries enrolled in a managed care plan that contracts with MCOs, such as Kaiser Permanente and Anthem Blue Cross, for services. MCOs accept capitation payments (per person, monthly payments) to deliver health benefits to individuals enrolled in Medi-Cal. California has charged this tax since 2005, initially as a fee on all premiums paid to MCOs providing coverage to Medi-Cal members. In 2009, the revamped version established a gross premium tax on the total operating revenue of Medi-Cal managed plans.
The 2024 Budget Act included $161 billion for the Medi-Cal program in 2024-25, including 7 billion in MCO tax revenues. These funds go towards Medi-Cal costs, which reduce general fund obligations to the program and for rate payment increases to doctors and other health care providers.
The appropriate distribution of the MCO tax revenues in offsetting existing Medi-Cal costs vs. augmentations for the Medi-Cal program has been a yearly point of negotiation. Due to recent turmoil in the state's budget, the MCO has been a critical mechanism to generate new state funds.
Using revenues to pay for existing Medi-Cal costs allows the state to offset General Funds on Medi-Cal through federal matching dollars. Alternatively, increasing funding to Medi-Cal for payments to doctors and other health care providers.
Proposition 35 makes the MCO tax permanent, beginning in 2027. The tax would continue to be based on the number of people to whom health plans provide health coverage. In addition, Proposition 35 specifies how MCO tax funds can be used and requires the state to use more of the revenues to increase funding for Medi-Cal and other health programs. Proposition 35 specifies which programs would receive MCO tax revenues, amounting to between $2 to $5 billion annually, for increased funding to Medi-Cal and programs. This would leave less MCO tax revenue available to pay for existing costs in Medi-Cal. Instead, the state likely would have to use more money from the General Fund to offset this allocation.
Under Proposition 35, the state would be required to spend MCO revenues in specific ways, prohibiting the funds from being used to replace existing funds. The measure would benefit Medi-Cal programs through specified provider rate increases, yielding increased access to health care and improved quality of care. However, the measure may also impair future flexibility for the legislature and the Governor in balancing general fund obligations and health care spending, which may impact local governments.
The Public Policy Institute of California notes longstanding concerns about whether Medi-Cal coverage offers adequate access to healthcare providers and services. Researchers and advocates often cite lower payment rates and provider reimbursements as the main reason fewer healthcare providers are willing to treat Medi-Cal enrollees. In a recent study, Medi-Cal enrollees reported more problems finding doctors who would accept their insurance than people with employer-based insurance or Covered California plans, even after adjusting for socio-economic factors and health status. However, the PPIC ultimately concluded that "Without more detailed information on health care costs and usage patterns, it is difficult to pinpoint a Medi-Cal payment rate that would ensure adequate access.'"
If voters approve Proposition 35, the MCO tax spending package included in the 2024 Budget Act would become inoperable. Staff from the California State Association of Counties (CSAC) prepared Attachment A, which displays a comparison between the MCO tax expenditure plans in the 2024 Budget Act and Proposition 35, noting that the choice before voters is whether to preserve or restrict the state's flexibility and which providers and services to prioritize.
Proposition 36
Item 11 also on the agenda for the August 27th meeting of the Board includes additional information related to Proposition 36.
The Homeless, Drug Addiction, and Theft Reduction Act (Proposition 36) would change criminal sentencing for theft and drug crimes, revising Proposition 47 from 2014. Proposition 47 changed some theft and drug crimes from felonies to misdemeanors to reduce overcrowding at state prisons. Proposition 47 also permitted incarcerated persons previously sentenced for these reclassified crimes to petition for resentencing. For example, shoplifting (stealing items worth $950 or less from a store) and drug possession generally became misdemeanors.
Proposition 36 makes several key changes related to punishments for theft and drug crimes:
• It increases punishment for possessing certain drugs, including fentanyl, and for individuals who are convicted of a third misdemeanor theft crime.
• It creates a new treatment-focused court process for some drug possession crimes.
• It requires courts to warn people convicted of selling or providing illegal drugs to others that they can be charged with murder if they keep doing so and someone from consuming an unlawful substance sold by that individual.
Under current law, the theft of items worth up to $950 is generally a misdemeanor. Proposition 36 makes this crime a felony if the person has two or more past convictions for certain theft crimes, such as shoplifting, burglary, or carjacking. Under the measure, these sentences could be lengthened by up to three years for theft or property damage if three or more people committed the crime together, regardless of the amount stolen.
In addition, Proposition 36 will allow for the value of property stolen in multiple thefts to be combined so that individuals who commit multiple thefts that, in combination, meet $950 in value may be charged with felony theft instead of petty theft.
The ballot initiative would also increase sentences for the sale of drugs such as fentanyl, heroin, cocaine, or methamphetamine based on the amount sold. In addition, those found guilty of possession could be charged with a "treatment-mandated" felony for those with two or more previous convictions for drug crimes and go through treatment-focused court processes. Individuals who complete the mental and substance use treatment programs would have their charges dismissed.
Proposition 36 also requires courts to warn individuals convicted of selling or providing drugs that they could be charged with murder if they sell or provide illegal drugs that lead to the death of another person. Fentanyl would be added to the list of drugs that warrant a felony charge if the person is also found in possession of a firearm, increasing the punishment up to four years.
The measure would have unknown costs for San Mateo County operations. Estimates from the LAO and the California Department of Finance indicate the measure would result in increased state criminal justice system costs s ranging from several tens of millions of dollars to the low hundreds of millions of dollars annually, primarily due to an increase in the state prison population and state court workload.
Some of these costs could be offset by reductions in state spending on local mental health and substance use services, truancy and dropout prevention, and victim services due to requirements in current law. In addition, an increase in local criminal justice system costs throughout the state, potentially up to tens of millions of dollars annually, due to increased local court workloads and a net increase in the number of people in county jail and under county community supervision.
State Legislative Update
On June 29, 2024, Governor Newsom signed the final 2024-25 budget agreement. After weeks of negotiation, the Governor, Senate Pro Tem, and Assembly Speaker announced an agreement containing $211.5 billion in state general fund spending and $46.8 billion in various solutions to address the state's $45 billion deficit. The deal also includes planning for a deficit of $30 billion in fiscal year 2025-2026.
The budget relies on some of the following budgetary strategies to close the shortfall:
• $16 billion in one-time and ongoing reductions:
o $1.1 billion in reductions to affordable housing programs, $746.1 million to healthcare workforce programs, and $41.5 million to public health programs.
• $11.2 billion in program pauses, deferrals, and shifts:
o Nearly $4 billion in shifts to climate and transportation programs from the state’s Greenhouse Gas Reduction Fund.
o Delays expansion of the Food Assistance program, increased pay for service providers, delays expansion of childcare slots, and investments into broadband last mile.
• $13.6 billion in new revenues and borrowing:
o Suspends net operating loss claims for companies with $1 million in taxable income and limits business tax credits over the next three years.
o Increases the Managed Care Organization (MCO) tax over the next three years.
The state budget includes the following notable changes to County operations:
FY 2022-23 Vehicle License Fee (VLF) Shortfall
• The budget fully backfills the $70 million needed to account for FY 22-23 VLF shortfall funds to keep the County and its twenty cities whole. Of this amount, $41,492,515 is the County’s allocation.
Health
• $15.9 million in cuts to the Future of Public Health Program. County Health has received approximately $3.14 million annually since 2020, funding 19 full-time positions in infectious diseases, public health labs, epidemiology, administration, finance, and emergency medical services.
• The final budget includes reductions and delays to several behavioral health programs, including the Continuum Infrastructure Program ($326 million) and the Bridge Housing Program ($340 million). The budget also shifts state general funds out of these programs, replacing them with Proposition 1 revenues, and provides $50 million to counties for behavioral health reform transitions.
• Lastly, the budget uses additional Managed Care Organization (MCO) tax revenues from Medi-Cal provider rate increases to generate additional funding for the state, which will generate $1.5 billion. However, only a limited portion of these funds will go to support Medi-Cal rate increases in 2025 and 2026.
Human Services
• The adopted 2024 budget rejects the more significant cuts proposed to County human services programs and maintains more than $600 million for various CalWORKs programs, including the Single Allocation and Family Stabilization.
• The budget also freezes local county administration allocations for Medi-Cal eligibility and includes $18 million in reductions for local health enrollment navigator programs.
• In addition, the budget preserves funding to support the expansion of Medi-Cal benefits, including In-Home Supportive Services, for all Californians regardless of immigration status.
Housing and Homelessness
• Initially slated for program elimination, the budget includes $1 billion for the Homeless Housing, Assistance Prevention (HHAP) Program for another round of funding in 2025. However, the budget also claws back $260 million in one-time supplemental funding from the previous round (5).
• Funding reductions include $235 million for the infill Infrastructure Grant Program (IIG), $153 million for CalHOME, and $40 million for the Regional Early Action Planning Grant 2.0. These reductions will impact affordable housing projects in the County's development pipeline or formulaic funding. Furthermore, eliminating the Housing and Disability Advocacy Program (HDAP) may require the County to identify additional funding to support rapid rehousing services and rental subsidy programs.
Additional Items
• Victims of Crime Act funding- Provides $103 million to backfill lost federal funds for financial assistance and support to victim’s service providers.
• Local Child Support Agencies- Reduces funding for local agencies by $10 million in FY 24-25 and ongoing, equating to $29.4 million in total cuts. The Legislature noted that these funds have historically been unspent. Additional budget language notes that this reduction accounts for anticipated program savings but does not intend for this reduction to impact service delivery at the local level, which would result in staffing reductions or layoffs.