Transcript Highlights:

• Fund to the State Court Facilities Construction Fund, thereby reducing the general fund backfill needed
• to the general fund.
• unencumbered funds.
• of the requested funding.
• funding moving forward.

Transcript Highlights:

• funding.
• </c> ongoing general fund funding uh has been ongoing general fund funding uh has been slated<00:19:44.799
• Um, and that funding is expected funds.
• So, for the state funding that funds.
• The funding you provide will funding.

Committee: Senate Capital Investment

Transcript Highlights:

• Here, notably, a number of fund shifts to dedicated funds across a number of agencies, particularly DNR
• I urge you to please restore $275,000 in funding for youth mentoring this year, funding that was included
• This is not new funding.
• funding.
• We also need additional funding in the... ...the MSOC funding area.

Bills: HB2289

Committee: House Appropriations

Keywords: appropriations, budget, fiscal matters, state spending, general fund, supplemental budget, biennial budget, substitute bill, public defense, civil legal aid, courts, judicial branch, homelessness, supportive housing, affordable housing, behavioral health, juvenile rehabilitation, youth services, child welfare, foster care

Transcript Highlights:

• Notably, there are a number of fund shifts to dedicated funds across a number of agencies, particularly
• Notably, there are a number of fund shifts to dedicated funds across a number of agencies, particularly
• There's a 2% reduction to near-general-fund-funded WMS and EMS staff, as well as a 5% reduction for administrative
• This is not new funding.
• funding.

Summary: The House Appropriations Committee opened with committee guidelines for the 2026 session, including limits on testimony, amendment deadlines, confidentiality expectations, and professionalism rules. Chair Ormsby also reviewed housekeeping for the public hearing, noting the meeting was recorded and live streamed, and that testimony would be limited to one minute because of the large number of sign-ups. The committee then began its work session on Governor Ferguson’s proposed 2026 supplemental operating budget, presented by OFM Director Katie Chapman, who outlined the state’s fiscal pressures: higher caseloads in major programs, a revenue forecast decline of about $390 million, federal policy changes tied to H.R. 1, inflation, and a relatively small ending fund balance. She said the governor’s budget solves about a $2.3 billion shortfall through nearly $800 million in spending reductions, revenue shifts, fund transfers, use of about $1 billion from the Budget Stabilization Account, and some tax preference changes, while also making targeted investments in areas such as child welfare, behavioral health, wildfire response, housing, and IT modernization. Chapman also explained that the proposal does not fully balance over the four-year outlook under the state’s statutory assumptions, but said the governor relied on the budget-balance law’s exception tied to BSA use and low employment growth. A question from Rep. Connors about credit ratings was answered with the view that the impact is difficult to predict and that Washington’s strong pension funding and balanced-budget framework remain positives. The public hearing drew testimony from state officials and many advocates, most of whom opposed specific cuts or fund shifts in the governor’s proposal. Secretary of State Steve Hobbs objected to proposed sweeps from the corporations and charities fund and the library archives account, citing prior cuts, layoffs, cyberattack-related costs, and the need to upgrade aging systems. Commissioner of Public Lands Dave Upthegrove urged restoration of wildfire prevention funding, saying the proposed amount was still $30 million short of the commitment in House Bill 1168 and that underfunding would increase suppression costs and risk to communities. Many education witnesses opposed reductions to Working Connections Child Care, transition to kindergarten, local effort assistance, Running Start, and higher education across-the-board cuts, arguing they would harm access, equity, and workforce development. Higher education leaders from community colleges, the University of Washington, Western Washington University, and Evergreen State College described staffing cuts, program reductions, and pressure on student services, while K-12 groups and OSPI said the budget would deepen existing funding gaps. A large portion of testimony focused on human services, health, housing, and civil legal aid. Child welfare and youth-serving organizations supported some targeted investments but opposed cuts to child care, child welfare network administration, and youth programs; advocates for foster youth, homeless youth, and mentoring programs asked for continued or increased funding. Health care and long-term care providers warned that proposed Medicaid and rate changes would reduce access for seniors, people with disabilities, and safety-net patients, while Planned Parenthood and abortion access advocates urged full restoration of the Abortion Access Project and related reimbursements. Housing and legal aid witnesses backed the governor’s proposed right-to-counsel funding but asked for more support, and homelessness advocates sought contingency funding for federal housing programs. Crime victim and domestic violence service providers repeatedly said the proposed $12 million was far short of the roughly $21.38 million needed to avoid service cuts and closures. Other testimony addressed the Climate Commitment Account shift for the Working Families Tax Credit, with environmental advocates opposing the diversion of CCA dollars and workforce advocates supporting the governor’s economic security and employment programs. No votes or formal committee action were taken during the hearing portion described in the transcript.

Transcript Highlights:

• away the federal funding, the special funding and the general funding, then we're done.
• away the federal funding, the special funding and the general funding, then we're done.
• away the federal funding, the special funding and the general funding, then we're done.
• </c> service the fund Bond Fund for staff service the fund Bond Fund for staff services<01:11:00.360>
• ><c> general</c><01:11:23.800><c> funding</c> special funding and the general funding special funding

Summary: The joint committees first heard House Bill 229, which would establish a statewide speed restriction for motor vehicles under certain circumstances. Testimony on the bill was limited and came in support from the City and County of Honolulu’s transportation services, the Department of Parks and Recreation, and the Oahu Metropolitan Planning Organization. No one testified in opposition, and there were no questions. The committees then took up House Bill 860, which would grant immunity from liability to the state or counties when they repair or maintain a street whose ownership or jurisdiction is disputed between them. The Department of Transportation and the Department of Land and Natural Resources submitted written testimony, and the Hawaii State Association of Counties, Maui County Council Chair Alice Lee, Hawaii County Council member Heather Kimble, and the Iolani Homestead Community Association for Justice testified in support. The Ho Association for Justice opposed the bill, arguing the immunity was too broad and that the issue had already been addressed by prior legislation. In discussion, members raised concerns about liability and asked whether a different approach, such as extending the 2017 law transferring Oahu roads in limbo to the counties, would be acceptable; county representatives said that path could be considered if immunity were removed. House Bill 1161, which would authorize counties to use a road usage charge mechanism similar to the state’s, drew support from the Department of Transportation, the Energy Office, the Hawaii State Association of Counties, several county and city offices, and the Oahu Metropolitan Planning Organization. Rental car companies and industry groups supported the concept but asked for amendments, including a flat fee instead of a per-mile charge, relief for plug-in hybrid vehicles, and a delayed implementation date. The Tax Foundation of Hawaii also supported relief for hybrids. Members questioned the rental car representatives about the flat-fee proposal, and they said a per-mile charge would be difficult to calculate and pass on to customers. At the end of the joint agenda, the committees deferred decision-making on HB 1161 to Tuesday, March 18 at 3:00 p.m., and the Energy and Intergovernmental Affairs committee also deferred the three measures to that date and time. The Transportation and Culture and the Arts committee then began hearing House Bill 925, which would create a Performing Arts Special Fund, and House Bill 1378, which would establish a Performing Arts Grants Program and Special Fund and revise the State Foundation on Culture and the Arts’ responsibilities and funding sources. HB 925 received support from the State Foundation on Culture and the Arts and written support or comments from DBEDT, the Hawaii Arts Alliance, and others. HB 1378 drew extensive testimony and discussion focused on preserving arts funding while addressing concerns about the use of Works of Art Special Fund dollars for positions and programming. The Governor’s office said it supported the intent but had concerns; the Attorney General warned that the bill’s cap and transfer provisions were unclear and could affect the tax-exempt status of bond-funded dollars; and the State Foundation on Culture and the Arts opposed the measure, urging an audit, tracking of deposits, and a shift of positions and programs to general funds instead of changing the law. The chair explained that the bill was intended to protect arts funding while tightening the legal guardrails around bond-financed dollars and preserving federal support, and asked testimony to focus on new points as the hearing continued.

Transcript Highlights:

• Fund.
• Fund.
• opioid settlement fund, which are dedicated funds.
• So in the fund table, we'll reduce the federal funds by $6 million and increase dedicated funds by the
• fund, an additional $7,724,900 from dedicated funds, and a reduction of $7,195,900 from federal funds

Summary: The committee took up a series of Idaho Department of Corrections budget supplementals and FY 2027 enhancement requests. Members approved supplemental or ongoing funding for Hepatitis C treatment authority, county and out-of-state placement costs, medical services, management services replacement items and IT hardware, state prisons replacement items, and community corrections replacement items, with several motions passing by due pass recommendation after roll calls. In community corrections, the committee approved a reduced amount that excluded some vehicle replacements. The committee also approved a technical correction to the college and university budget to restore four FTP that had been omitted from yesterday’s motion. The committee then considered several Department of Health and Welfare items. It approved a budget-neutral fund source change for substance abuse treatment and prevention, moving $650,000 from the Liquor Control Fund to the Cooperative Welfare Dedicated Fund. In the Division of Welfare, members discussed SNAP administrative cost changes tied to H.R. 1, Medicaid expansion work requirements, and Medicaid eligibility system changes; the motion to fund all three items failed in the House committee, so no language advanced. The committee also approved psychiatric hospitalization supplemental funding to shift Idaho Behavioral Health Plan revenue from federal funds to dedicated funds. For FY 2027 mental health services, the committee approved a compromise package that reduced funding for a juvenile corrections clinical transfer and restored some mental health services staffing and Idaho Behavioral Health Plan costs, while adding Allenbaugh House funding through opioid settlement dollars. It also adopted language allowing certain transfers under state law and requiring separate reporting for children’s and adult mental health spending under the Idaho Behavioral Health Plan. For psychiatric hospitalization, the committee approved ongoing fund shifts for employee benefits, the Idaho Behavioral Health Plan, replacement items, and endowment fund adjustments. The meeting ended with notice of upcoming budget-setting work and a reminder for members to get any new motions to staff by early afternoon.

Transcript Highlights:

• the Grow Fund is separate from the General Fund.
• Funds.
• GROW program fund, and so the money from the big fund spends into the program fund.
• those funds.
• through increasing funding for the Housing Trust Fund.

Committee: House House Appropriations & Finance

Transcript Highlights:

• </c><00:09:40.399><c> on</c> fund to the um environmental fund. on fund to the um environmental fund.
• </c> funding for that uh direct uh funding funding for that uh direct uh funding for<00:09:54.320><c>
• </c> funded by a split of environmental fund funded by a split of environmental fund and<00:10:05.839
• funded by the environmental fund.
• The game and fish fund, as it is written, does take those funding sources from the game and fish fund

Summary: The conference committee on the Environment budget for Senate File 2077 met to introduce members and staff, then walked through the Senate and House budget spreadsheets side by side. Nonpartisan staff explained that the Senate budget was built around a smaller general fund increase and more use of environmental and dedicated funds, while the House met its target through several reductions, including cuts to DNR, PCA, and Board of Water and Soil Resources appropriations. The committee reviewed major agency items for the Pollution Control Agency, DNR, the Metropolitan Council, the Minnesota Zoo, and other accounts, including operating adjustments, permit-related funding, and transfers between funds. Several major differences were highlighted. For the PCA, the Senate included operating adjustments, permitting efficiency funding, composting grants, outreach funding, and a closed landfill investment fund approach that repeals an expiring statutory appropriation, while the House instead extends that appropriation for four more years. For the DNR, the Senate included operating adjustments, groundwater and AIS fee increases, aquatic invasive species funding, trail grants, outdoor schools for all, abandoned watercraft enforcement, and a sustainable foraging task force; the House had fewer of these fee and policy items and used reductions to meet its target. The committee also noted Senate-only policy provisions on outreach to diverse communities, field citations and mercury certification for skin-lightening products, disabled veteran license fee changes, and a moratorium on foraging rulemaking until July 1, 2027. Agency testimony followed. The MPCA commissioner praised both chambers for recognizing core agency work and urged adoption of operating adjustments, the closed landfill fund access, and the air appropriation increase. The DNR assistant commissioner supported operating adjustments, groundwater and AIS fee increases, and the veteran license proposal, but raised concerns about the Senate’s foraging task force language, saying it overweights consumptive users and could limit the agency’s ability to manage foraging without clear data. He also noted support for the land transfer funding and said the agency would continue working with the committee on unresolved issues. No votes were taken in this portion of the meeting.

Transcript Highlights:

• State Revolving Fund.
• State Revolving Fund.
• drinking water revolving fund.
• We can fund landfill projects.
• And it's a way to do the funding as a revolving loan fund.

Summary: The task force met to focus on funding systems and incentive structures for a proposed regional waste infrastructure effort, including how a future WIPA framework might support solid waste planning in the Willamette Valley. Staff and members heard presentations from DEQ on the Clean Water State Revolving Fund, from Business Oregon on the Special Public Works Fund, and from Oregon State Treasury on state bonding capacity and the bond issuance process. Presenters explained how their programs are structured, how projects are scored or approved, what kinds of public entities and projects are eligible, and how interagency coordination and co-funding can work. DEQ emphasized that its revolving loan fund is driven by water-quality benefits and public-health criteria, while Business Oregon described a broader infrastructure loan program for public entities with no scoring system, and Treasury outlined the state’s debt-capacity process and the differences between general obligation and lottery bonds. Members used the presentations to discuss whether similar funding tools could support solid waste infrastructure, especially for transfer stations, regional hubs, and related facilities that may need to be built before Coffin Butte reaches the end of its lifespan. Several questions centered on whether public-private partnerships could qualify, whether equipment inside facilities could be financed, how repayment would work, and whether planning costs could be covered. DEQ and Business Oregon both said they could potentially collaborate on scoring or co-funding, but noted eligibility limits and the need for public ownership in many cases. Treasury said bond capacity is limited and competitive, especially for lottery bonds, and that project authorization generally runs on a two-year cycle, though unused authority can sometimes be reauthorized. In task force discussion, members debated whether the group should pursue a dedicated funding lane for the seven-county region rather than having local governments compete with other statewide needs. Some members stressed the importance of criteria to avoid stranded assets and to ensure funding is available when projects are ready, while others raised concerns about how cities and counties would generate revenue to repay debt during construction and early operations. The group also discussed flow control, system fees, and the need for regional collaboration among counties, cities, and haulers to create enough waste volume to support new infrastructure. Staff noted that pre-session filing materials for the legislature are due September 11, and the chair said the August meeting will focus on organizational structure and identifying partners. During public comment, Representative Kevin Mannix submitted written testimony supporting the WIPA concept and urging the task force to endorse it. Commissioner Bubba King of Yamhill County urged the task force to compare alternatives objectively and warned against adding bureaucracy before evaluating existing infrastructure and costs. Commissioners Kevin Cameron and Roger Nyquist of Marion and Linn counties described regional hub-and-spoke concepts, transfer stations, and intermodal options, emphasizing the need for planning, strategic siting, and collaboration with haulers and local governments.

Transcript Highlights:

• in General Fund, $2.2 billion in federal funds, and $199 million being published in 64 funds.
• in its general fund, $2.2 billion being federal funds, and $199 million being published in 64 funds.
• CCDF funds.
• As the LAO mentioned, funds were included in the budget, both one-time automation funds and ongoing funds
• The request is for $703,000 General Fund in 2026–27 and $733,000 General Fund in 2027–28 to fund four

Transcript Highlights:

• The other fund, the 818 fund, is the educational due process fund.
• MoPerm invests those funds and generates the funding.
• And that compulsive gambling fund is funded by lottery, gaming—I mean, how's that funding?
• of the state lottery fund, Fund 682, in 2017, to fund lottery operations.
• fund.

Committee: House Budget

Transcript Highlights:

• to the General Fund.
• Fund deficit.
• that with state transportation funds rather than General Fund.
• that with state transportation funds rather than General Fund.
• And so those could also be funded by General Fund.

Summary: The Senate Budget Subcommittee No. 5 held an informational hearing on the Governor’s May Revision proposals for labor, public safety/judiciary, and transportation, and no votes were taken. In Part A on labor, the Employment Development Department described funding for EDD Next document management work, updated UI loan interest costs, disability insurance and paid family leave benefit increases, WIOA adjustments, UI and school employee benefit changes, an EMT training reappropriation, and a technical correction tied to an EDD Next reversion. PERB discussed reduced funding requests for AB 288 due to litigation and a proposal to implement AB 1 covering legislative employees. DIR presented proposals for legal unit reclassifications, two major IT modernization projects, a new Cal/OSHA emerging technologies unit, a COIA reappropriation, and trailer bill language requiring electronic payment of employer assessments and removing a salary cap for the DWC administrative director. CalHR proposed consolidating employee assistance services into a statewide contract with enhanced support for first responders, and CalPERS and CalSTRS presented budget adjustments tied to investment costs, state contributions, and benefit overpayments. Members focused heavily on the unemployment insurance debt and interest payments, asking why the administration had no concrete plan to pay down principal. Finance and LAO explained that the state’s UI tax structure has long been insufficient and that any long-term solution would need to address both the outstanding federal loan and the structural imbalance in employer taxes. Questions also centered on EDD Next costs and timelines, with the chair asking for clearer long-term project cost estimates and Finance noting that future maintenance and operations costs will continue after implementation. On DIR’s emerging technologies unit, members asked whether it would address AI-driven workplace harms; DIR said the unit would focus on physical workplace safety issues involving AI, robotics, autonomous equipment, and related guardrails, while LAO noted broader labor-practice questions would likely fall outside Cal/OSHA’s scope. In the CalPERS discussion, members raised concerns about transparency in private equity and external management fees, while CalPERS said higher fees reflect a strategy of greater private-market and active-management exposure and are offset by higher net returns. Members urged more information on specific investments and future reporting. For CalSTRS, Finance presented routine contribution and overpayment adjustments, but members also raised broader transparency concerns that CalSTRS staff said they would follow up on separately. Public comment in Part A was dominated by strong support for an immigrant worker emergency relief fund, along with support for apprenticeship and workforce proposals and PERB staffing. The chair and members said they would follow up on where the immigrant relief proposal should be considered, noting it may belong in another policy area. The hearing then moved into Part B with an overview of Judicial Branch-related May Revision items, including court interpreter funding, appellate court security, workload cap changes, lactation room implementation delays, and a reduction to the state court facility construction backfill.

Transcript Highlights:

• </c><00:29:02.480><c> the</c> general fund in order to fully fund the general fund in order to fully
• Fund.
• </c> Transformation Fund. Transformation Fund.
• fund.
• . fund. fund.

Transcript Highlights:

• housing funding.
• million General Fund with federal matching funds, that's $61.9 million total funds in fiscal year 2026
• funding of $8 million General Fund.
• Fund.
• funding.

Transcript Highlights:

• . ...funds and no deposit going to the Revenue Stabilization Fund.
• The small decrease in general fund is just state general fund specific.
• general funds.
• , and JRI funding.
• , and JRI funding.

Committee: House Appropriations

Transcript Highlights:

• from the other funds.
• The next item is the funding for information. From other funds.
• Other funds is $3,426.
• And that's other funds. And that's other funds.
• general fund.

Committee: House Appropriations - Human Resources Division

Summary: The committee took up Senate Bill 2025, the Veterans Home/Veterans Affairs budget, and worked through the long sheet line by line. Members discussed base payroll, salary and health insurance increases, FTE pool adjustments, IT rate increases, operating expenses, transportation grants, the PTSD service dog program, salary equity requests, temporary help/intern funding, a Veterans Benefit Specialist FTE, accrued leave, and several one-time or carryover items including the Fisher House, document scanning, and veterans medical transportation. The committee also reviewed proposed policy language that would shift governance authority for the Veterans Home and Department of Veterans Affairs from the Administrative Committee on Veterans Affairs to the governor, and would remove board authority over salary-setting and related hiring powers. A major portion of the meeting focused on clarifying the commissioner salary equity line and how the agency had shifted operating dollars to fund the commissioner’s current salary increase. After discussion with agency staff and Lonnie, the committee voted to remove the separate commissioner salary equity increase line and instead restore operating funding, ultimately setting the operating line at $50,000 above the prior amount rather than fully funding the executive request. The committee also approved funding for the Veterans Benefit Specialist FTE, approved a carryforward/exemption for accrued leave, approved authority to accept $200,000 in federal transportation grant funds, approved the $500,000 transfers related to veterans homelessness, and approved the exemption language for certain federal/state fiscal recovery funds after discussing whether the funds were properly obligated. On the governance amendment, members expressed concern about making a major policy change in an appropriations bill, but also frustration over the board’s salary actions. After debate, the committee adopted the amendment transferring governance authority to the governor by a 7-1 vote. The committee also approved a smaller amount for veteran service officer salary equity than requested, and rejected funding for temporary salaries and an intern. The chair then directed staff to prepare the amended bill for further action, with the committee planning to revisit it once the revised version was ready.

Transcript Highlights:

• to fund Cal Fire.
• into the Rainy Day Fund, Our ability to put more funding into the Rainy Day Fund going forward.
• federal HIV funding.
• for direct funding.
• for direct funding.

Summary: The Assembly Budget Committee heard opening remarks on the 2025 Budget Act, which will be amended into AB 101 and SB 101 for floor consideration. Committee leaders described the budget as a difficult compromise shaped by a $12 billion deficit, federal funding uncertainty, wildfire impacts, and rising out-year costs, while emphasizing a balance between compassion and fiscal responsibility. Each budget subcommittee chair then summarized major actions in their areas, including health care, human services, education, climate and transportation, housing and state administration, public safety, and oversight/transparency. Key policy items included delaying or narrowing some of the Governor’s proposed cuts, especially in Medi-Cal and other safety-net programs; preserving funding for dental care, women’s health, family planning, hospice, long-term care, IHSS, and services for undocumented Californians; and maintaining or expanding child care, foster care, food banks, and CalWORKs-related supports. Education actions included additional Proposition 98 settle-up, reduced deferrals, support for TK-12, teacher recruitment, literacy, mental health, preschool slots, and restored funding for UC and CSU. Other major items included housing and homelessness investments, wildfire and disaster response funding, transit loans and greenhouse gas reduction fund support, Proposition 36 and VOCA-related public safety funding, and oversight measures on federal impacts and state efficiency. Department of Finance and Legislative Analyst staff said the package makes some of the same savings moves as the May Revision but relies more on internal borrowing and fewer reductions, leaving a smaller reserve than the administration’s plan but still maintaining roughly $11 billion in the rainy day fund. Members from both parties largely supported the package while raising concerns about long-term sustainability, Medi-Cal costs, reserve use, and the need for future revenue and program review. The committee adopted the subcommittee actions by roll call, 18-6, with the roll held open for absent members and additional comments continuing after the vote.

Transcript Highlights:

• fund.
• fund.
• c><00:19:59.080><c> fund</c> general fund and trunk Highway fund general fund and trunk Highway fund
• not funded through trunk highway funds. funds um the state does face about A5 funds um the state does
• trunk Highway are not funded TR trunk Highway funds<00:48:49.799><c> next</c> funds next funds next

Committee: Senate Transportation

Transcript Highlights:

• is transferring funds to the General Fund regularly.
• is transferring funds to the general fund regularly.
• Fund.
• by $1.1 million General Fund one time and increases that special fund funding by a dollars General Fund
• funds.

Summary: The committee opened with the State Controller’s Office May Revision requests, including funding for Fiscal book-of-record stabilization, a Broadcom IDMS licensing adjustment, the California State Payroll System, ACFR reporting automation, and $3 million for unclaimed property outreach. Testimony emphasized progress on Fiscal becoming the state’s accounting book of record in July, faster ACFR publication, and the move to electronic unclaimed property claims. Members asked about the size of the unclaimed property fund and how quickly money is transferred to the General Fund; the Controller’s office said about $15 billion is held, with most excess transferred regularly, and the LAO noted the fund is the General Fund’s fourth-largest revenue source. No concerns were raised by Finance or the LAO, and the item was closed after no public comment. The committee then heard the administration’s proposal to tax prewritten digital software and software-as-a-service, with Finance saying it would modernize sales tax treatment and raise an estimated $450 million General Fund and $560 million local revenue in 2026-27. The LAO supported modernizing the tax but suggested broader digital goods coverage and a business-use exemption; industry and taxpayer groups opposed the proposal, warning of higher costs for consumers and businesses. Members also heard CDTFA’s administrative request tied to the proposal, plus a separate CDTFA budget reduction reflecting lower operational needs; that reduction was presented as a savings item and drew positive reactions. Next, the committee considered federal conformity for “Trump accounts,” which would align California tax treatment with federal rules for tax-deferred children’s accounts and avoid tracking burdens for families. The LAO recommended approval, and the item drew no opposition. The committee also heard a proposal to cut the first-year $800 annual business tax to $400 for LLCs, LPs, and LLPs; Finance argued it would lower startup costs and encourage new business formation, while the LAO said the benefit was not well targeted and could subsidize entities that would form anyway. Members discussed the policy tradeoff, and public commenters split between support for small business relief and concern about revenue loss. The final major revenue item was a permanent business tax credit limitation, capping credits at the greater of $5 million per corporation or 50% of pre-credit liability, while excluding the low-income housing tax credit and personal income tax credits. Finance said it would raise significant revenue from large profitable corporations, and the LAO said it was a reasonable option but noted it would mainly affect the R&D credit and could have future implications for programs like California Competes. Public testimony was sharply divided, with business groups opposing the cap and anti-poverty advocates supporting it as a way to recapture revenue. The committee also heard FTB’s CalFile realignment request, which would return most of the direct-file-related resources to the General Fund while retaining a smaller staff to improve CalFile, and the California Arts Council’s request to reauthorize the Keep Arts in Schools voluntary contribution fund, which members and advocates supported despite relatively modest annual donations. The hearing continued with GoBiz proposals on civic media funding, CA RISE reappropriation, and a semiconductor facility reversion, with the LAO supporting the latter two and members raising questions about the civic media program’s scope, outreach, and inclusion of broadcast and ethnic media.

Transcript Highlights:

• fund.
• We took it from the fund that it was in and put it in the fund.
• All matching funds for projects that receive funding from the Permanent Building Fund then become continuously
• as funding from the Permanent Building Fund.
• to the general fund.

Summary: The committee heard budget presentations for the Department of Administration and the Permanent Building Fund. For Administration, analysts reviewed the agency’s divisions, staffing, dedicated-fund structure, recent budget growth, and the governor’s and JFAC’s recommended changes. The department requested shifts of utility costs from the general fund to dedicated funds, three new positions and funding for Medicaid procurement and contract management, transfers of some positions between divisions, and one-time IT replacement funding. Members also discussed office-space utilization, vacant buildings and land at Chinden and elsewhere, and the department’s efforts to consolidate space and reduce general fund reliance. Director Bailey said the department has reduced or repurposed positions, closed duplicate printing operations, is exploring digital workflows and AI tools, and is trying to move toward a fully dedicated-fund model. He also explained the decision to remove GLP-1 weight-loss coverage from the state health plan due to rapidly rising costs, while noting diabetes coverage remains in place. Committee members questioned the need for higher-level procurement staff for Medicaid contracts, the role of Deloitte and the Department of Health and Welfare in the process, and the status of the MMIS procurement, which Bailey said is currently stayed by the courts after a legal challenge from the second-place vendor. He said the delay will affect MMIS implementation and, in turn, the timing of the broader managed care rollout. Members also asked about vacant state office space, the possible sale of older buildings, and whether agencies such as ITD and Health and Welfare could be moved into state-owned space to reduce lease costs. Bailey said the department is actively working on those facility-planning questions and that agencies at Chinden are paying rent for occupied space. The committee then reviewed the Permanent Building Fund budget, which finances state construction, repairs, and deferred maintenance through dedicated revenue sources and interest earnings. Analysts highlighted the fund’s multi-year project structure, the large deferred maintenance program funded in prior years, and a proposed one-time transfer of $33.75 million in canceled capital project balances to the general fund. They also described a possible redirection of fiscal year 2027 interest earnings to the general fund and a recommended new capital project for an Idaho National Guard readiness center. Administrator Barard reported that the Division of Public Works is managing 595 active projects, with most FY 2025 projects under construction, in design, or complete, and said the division continues to face labor shortages and rising construction costs. Members asked about canceled projects, including the North Idaho reentry center, the Carnegie Library purchase, the ISU pedestrian crossing, the Idaho State Police Lewiston facility, and other projects; staff said some are unlikely to return soon, while others may come back once land or other prerequisites are secured. The committee concluded the hearing and announced it would meet the next day for the Department of Parks and Recreation and the Office of the State Public Defender.