Transcript Highlights:

• So as we are making assessments about cost-effectiveness, we need to include that calculation.
• How does this work with a CPUC sort of rate calculations, et cetera?
• , it is... ...of assessing where we are with the number of access lines and the revenues.
• And in order to fund everyone that's eligible, revenues are needed to fund the program. Thank you.
• Yes, and... ...revenues are needed to fund the program. Thank you. Yes.

Transcript Highlights:

• So as we are making assessments about cost-effectiveness, we need to include that calculation.
• How does this work with a CPUC sort of rate calculations, et cetera?
• , it is... ...of assessing where we are with the number of access lines and the revenues.
• And in order to fund everyone that's eligible, revenues are needed to fund the program. Thank you.
• Yes, and... ...revenues are needed to fund the program. Thank you. Yes.

Summary: The committee first heard Issue 1 on trailer bill language to redirect funding for emergency demand-response programs. The Department of Finance proposed using about $26.9 million in General Fund originally set aside for the Distributed Energy Backup Assets program to bolster the Demand-Side Grid Support Program for summer 2026, and using about $70 million in CalCHAP interest to support ratepayer-funded demand response in summers 2027 and 2028. The CEC and CPUC said they are working on a transition from DSGS to ELRP or a successor program, while the LAO noted the General Fund money would otherwise revert to savings. Members pressed the administration on whether demand response remains important, whether DSGS has been successful, and whether the state should keep funding it through the CEC rather than shifting to a ratepayer-funded CPUC program. The CEC and CPUC said the programs are not directly comparable, emphasized different cost structures and enrollment metrics, and said a CPUC rulemaking is underway with a proposed decision expected in Q3 2026. No vote was taken in the transcript. The committee then took up Issue 2, a budget proposal tied to SB 254 and the new transmission accelerator. GoBiz and the California Infrastructure and Economic Development Bank described a five-year, roughly $26 million request to staff and administer the accelerator and manage Proposition 4 and AB 1207 funds for transmission financing. Members asked about state liability, ownership of financed lines, FERC revenue requirements, and whether the program would help underserved regions and offshore wind development. Staff explained that the accelerator would only consider projects already identified through CAISO’s competitive transmission planning process, and that state financing would be a small portion of large projects intended to lower overall costs to ratepayers. The LAO said it had no specific concerns but urged the Legislature to ensure the final language matches its intent. The committee also heard Issue 3 on petroleum market oversight. The CEC and its Division of Petroleum Market Oversight requested additional positions and funding to implement ABX2-1 and continue work on supply stabilization, refinery monitoring, and transportation fuels analysis. Members questioned why the work was funded through the Energy Resources Programs Account, whether existing staff from the paused price-gouging work could be reassigned, and whether the program had produced evidence of price gouging or improved supply conditions. CEC and Finance said the new positions are needed because the workload has expanded, while some existing staff remain on related analysis and reporting duties. The discussion ended without a vote in the transcript.

Transcript Highlights:

• the supply liquidity in California today, it's important to... ...part of our calculation in understanding
• And I would suggest that the calculations and the assumptions that are made about what our home-based
• the remaining refineries past a breaking point, further jeopardizing fuel supply, jobs, and state revenues
• It would increase the volatility of gas tax revenue to the state.
• Has that been part of your calculation? Yes, absolutely.

Summary: The Assembly Committee on Utilities and Energy held a hearing on the impact of the Iran conflict and global oil supply disruption on California fuel markets. Committee members and administration witnesses from the California Energy Commission and the Division of Petroleum Market Oversight described California’s heavy reliance on imported crude and refined products, the state’s shrinking refining base, current inventory levels, and how global supply tightness is affecting gasoline, diesel, and jet fuel prices. CEC officials said near-term supply looked adequate for roughly the next six weeks, but warned that continued disruption would likely raise prices further and increase competition for imports. DPMO said the conflict is a real supply shock, but also emphasized a separate, longstanding problem of unusually high California retail gasoline prices, especially among major branded stations. Witnesses and members debated the causes of high prices and the state’s longer-term fuel strategy. Professor Severin Borenstein argued that much of the price gap beyond taxes and environmental costs comes from a “mystery gasoline surcharge” downstream of refineries, while also noting that California’s shrinking number of refineries creates market-power and supply-resilience concerns. Western States Petroleum Association CEO Jody Mueller argued that state policies have weakened California’s refining system and made it more vulnerable to global shocks, urging the state to protect remaining refining capacity and improve infrastructure for imports. United Steelworkers Local 675 Vice President Norman Rogers stressed the need for safe, reliable refinery operations and adequate staffing. Several members pressed witnesses on whether California should rely more on imports, how to manage inventories and port/storage capacity, and whether the state needs clearer authority and better data collection to coordinate fuel policy. Discussion also covered branded versus unbranded gasoline pricing, the role of California fuel specifications, and whether a floating gas tax or other policy tools could buffer consumers from global price spikes. No formal votes or committee actions were taken during the hearing.

Transcript Highlights:

• </c> so it really won't impact the revenue so it really won't impact the revenue number<03:22:05.600>
• revenues were flat.
• driven by the revenues the performance of<03:45:33.960><c> revenues</c><03:45:34.359><c> over</c><03
• And so the revenue picture is also part of that, right? Yes, and our revenues have been okay.
• our revenues are.

Summary: The committee first heard from the Personnel Appeals Board, which explained that it became an independent state agency after Senate Bill 487 and was presenting its first standalone operating budget. The board described its quasi-judicial role in hearing appeals from classified state employees over disciplinary actions such as warnings, suspensions, and terminations, and said it handles about 25 to 35 cases a year, with some cases lasting longer because of their complexity. Members also outlined the need for a chair and vice chair who are attorneys, the board’s current staffing and space needs, and its plan to move away from reliance on Administrative Services for office support and website functions. The board requested about $353,500 for fiscal year 2026, including startup costs, routine operating expenses, and two new part-time positions: a program director and a paralegal. Members said the budget reflects the new independent status, includes funding for only four board members rather than the authorized five, and is designed to avoid full-time staffing costs and benefits. Legislators asked about the cost per case, the board’s relationship to DAS, whether appeals must go through the board before court, and how often cases are appealed further. The board said appeals must first go through it, that court appeals are infrequent but have increased recently, and that the board’s process is intended to resolve disputes more quickly and less expensively than court litigation. Committee members also asked about the board’s caseload, outcomes, and staffing. The board said that in the prior year there were 22 cases, with four decisions overturned in favor of employees, nine dismissals, and nine settlements, and that many disputes are resolved before reaching the board through a multi-step internal process. A member noted the governor and council had recently approved a new board member and were expected to approve a fifth soon. The discussion ended with questions about the board’s website and records access, which members said would need to be moved from Administrative Services as part of the agency’s transition. The committee then moved to the New Hampshire Council on Developmental Disabilities. The executive director explained that the council is 100 percent federally funded under the Developmental Disabilities Assistance and Bill of Rights Act and develops a five-year plan to address the needs of people with intellectual and developmental disabilities. She said the council works with state agencies and advocacy organizations on quality-of-life issues, accessibility, voter rights training, and plain-language or easy-to-read materials, and that 60 percent of its membership must be individuals with disabilities or family members/guardians. She also described the council’s funding structure, including reimbursement to the state for operating costs, and noted that it currently has three full-time and three part-time positions, with no new positions requested but one full-time position being eliminated and replaced after a pandemic-era staffing change did not work out as planned.

Transcript Highlights:

• language to make the bill do what we're wanting it to do, which is to ensure that when the Department of Revenue
• put additional burdens on the Department of Water Resources to somehow provide more assessments to calculate
• ... ...somehow provide more assessments to calculate a new concept of the number of years of water left
• good example of maybe it's a good project, but it should be funded through HIRF, the Highway User Revenue
• Fund, not take money away from... ...but it should be funded through HIRF, the Highway User Revenue

Transcript Highlights:

• And so they simply do not have the sales tax revenues, the measure sales tax revenues, to continue to
• their revenues, we don't have what is being looked at in the Bay Area.
• We've seen a 27% increase in average revenue per trip.
• We're also working across a number of efforts for non-farebox revenue.
• We're also working across a number of efforts for non-farebox revenue.

Transcript Highlights:

• 00:04:25.520><c> it</c><00:04:25.759><c> would</c> special revenue account and it would special revenue
• ,<00:31:12.720><c> an</c> Revenue, an Revenue, an $875,000<00:31:15.039><c> operating</c><00:31:15.679
• </c> revenues and transfer sections begin. revenues and transfer sections begin.
• </c><01:03:32.079><c> it</c> discuss those things and calculate it discuss those things and calculate
• It's revenue neutral. that's what it is. It's revenue neutral.

Committee: Senate Finance

Transcript Highlights:

• And so that funding is completely a totally different calculation than it is for the accommodation district
• to run that juvenile detention facility, and so that funding is completely, a totally different calculation
• Good projects like this should be paid from HURF, the highway user revenue fund.
• transportation champion, to get together with us Democrats and work on updating and modernizing our HURF, our revenue

Summary: The committee took up several appropriations, transportation, naming, and education measures. It first approved SB 1035, which provides a FY27 General Fund appropriation for a 5% salary increase for Arizona Department of Corrections sworn officers and civilian employees; an amendment set the appropriation at $34 million and extended the raise to private prison employees under contract. Testimony from corrections advocates emphasized severe staffing shortages and pay gaps with other law enforcement employers, while some senators objected to including private prisons. The bill passed 6-3. The committee then approved SCM 102 and SCM 1006, which rename stretches of highway in honor of L.F. Quinn and PFC Michael Nolan, respectively, after emotional testimony from family members and local supporters; both memorial measures passed 9-1. SB 1065, appropriating $3.64 million for the Hyperbaric Oxygen Therapy for Military Veterans Fund, also passed 6-4 after supporters described HBOT as a promising, drug-free treatment for veterans, while opponents questioned the evidence and FDA approval for the claimed uses. SB 1248, which clarifies funding and attendance rules for county jail and juvenile detention education programs, passed unanimously 10-0 after county school officials said it would prevent double-counting students and separate funding streams properly. The committee also advanced transportation bills focused on the fast-growing West Valley corridor. SB 1204 appropriates $5.5 million to ADOT to design and conduct environmental analysis for interchange improvements at U.S. 60 and SR 303; supporters from the City of Surprise described severe congestion, safety risks, and economic impacts, while some senators argued the project should be funded through HURF rather than the General Fund. It passed 8-1, and the chair invited members to discuss broader HURF funding issues later. SB 1207, a smaller $150,000 study bill to examine financing mechanisms for development tied to U.S. 60/SR 303 infrastructure, also passed 7-1 after local officials said it would help align growth with transportation funding. SB 1274, creating a Police Foundation specialty license plate and fund for Phoenix Police Foundation programs, passed 6-2; the foundation said proceeds would support officer wellness, remembrance, and community/youth outreach. Finally, SB 1001, a $1 million appropriation for the Older Individuals Who Are Blind program, passed 9-0 after blind seniors and advocates testified that the services preserve independence and prevent more costly institutional care. The committee also heard SB 1161, which would make non-lapsing a prior $750,000 DPS appropriation for the Yuma County Family Advocacy Center, with the sponsor explaining it was intended to allow the funds to be spent over multiple years; the transcript cuts off before final action on that bill.

Transcript Highlights:

• State revenue, like on the regular PSCCA and the CVRA account, averages $122 million per biennium.
• just told you that the expenditures have averaged in the 300s, and I’m telling you that the regular revenue
• times quote that you gave earlier for the potential increasing costs, it seems like we could do a calculation
• Given the potential increasing costs you gave earlier, it seems like we could do a calculation where

Committee: House Transportation

Summary: The committee received a detailed staff presentation on Washington State Ferries’ capital program, service levels, fleet age, and long-term funding needs. Staff said the system is operating with 21 vessels, no Sidney, B.C. service, and limited spare capacity, which leaves service vulnerable to disruptions. They described aging vessels, deferred preservation work, dry dock constraints, terminal needs, and the state’s electrification plan, including three new hybrid-electric Olympic class vessels now funded, one Jumbo Mark II conversion, and several terminal electrification projects. Members asked about ridership trends, biodiesel supply, procurement risk, sequencing of terminal electrification with new vessels, and the possibility of restoring international service; staff said many of those questions would need follow-up with the department. The presentation emphasized that current funding covers near-term needs, but long-term ferry capital needs exceed available resources by roughly $250 million to $300 million per biennium, with additional future needs not yet funded. The committee then heard from WSDOT maintenance operations staff on the condition of the highway system. The presentation said maintenance is increasingly reactive because of underinvestment, rising material costs, and the addition of new assets without corresponding operating funds. Staff highlighted winter operations, facilities that are mostly in poor or critical condition, a large equipment fleet, growing guardrail damage, and increasing pavement and bridge preservation backlogs. Members asked about asbestos in facilities, the effect of deferred maintenance, and whether the agency had previously warned about these needs. Staff said the program is funded at only about half of its facility need and that more than 40% of roadways are due or overdue for preservation. A separate preservation presentation focused on highways and bridges. Staff said WSDOT is below the lowest life-cycle cost for preservation and that delaying work can make repairs three to five times more expensive later. They reported that about 40% of roadways need preservation now, bridge conditions are nearing the federal poor-bridge threshold, and the agency is prioritizing the highest-risk bridge and closure threats first. The presentation cited an estimated $8 billion 10-year preservation need to change the trajectory of the system. Members asked about prioritization, whether other states face similar issues, and whether a cost-benefit analysis of earlier repairs versus later costs had been done; staff said they would look into those questions. Finally, the committee heard about bridge strikes and financial recovery. WSDOT bridge staff described recent overheight vehicle strikes on Bullfrog Road over I-90 and SR 410 over White River, noting the safety risks, closures, and repair costs. They outlined countermeasures such as improved trip-planning tools, outreach, and a possible sensor/beacon pilot on SR 410. Financial recovery staff said the agency collects about $20 million per biennium from third-party damage claims, recovering roughly 78% to 80% of billed amounts, with insurance claims and collections used to recoup costs. Members asked about prevention feedback loops and where recovered money goes; staff said recoveries go to the motor vehicle fund and that there is not a formal routine mechanism for design or policy changes from individual claims.

Transcript Highlights:

• State revenue, like on the regular PSCCA and the CVRA account, averages $122 million per biennium.
• just told you that the expenditures have averaged in the 300s, and I’m telling you that the regular revenue
• five X quote that you gave earlier for the potential increasing costs, it seems like we could do a calculation
• Given the earlier quote for the potential increasing costs, it seems like we could do a calculation where

Summary: The committee received a detailed staff presentation on Washington State Ferries’ capital needs, current fleet status, and long-range funding outlook. Staff described the current service pattern, ridership recovery since the pandemic, the aging fleet, and the state’s plan to add three new hybrid-electric Olympic-class vessels under the 2025 budget, with delivery expected around 2030-2032. Members also heard that the fleet is operating with no reserve vessel, that preservation time is below the desired level, and that terminal electrification and vessel conversion plans face timing, cost, and procurement risks. Questions focused on ridership trends, biofuel supply, design-risk allocation in vessel contracts, sequencing of terminal electrification with new vessel delivery, and the cost and feasibility of restoring international Sidney service, which would require a SOLAS-certified vessel. Staff then outlined ferry capital funding, saying recent spending and programmed needs are far above regular ferry-specific revenues and that the system relies on a mix of dedicated accounts, transportation package money, federal grants, and transfers. They said the near-term budget is balanced through 2027-29, but the longer-term capital outlook shows a shortfall of roughly $250 million to $300 million per biennium, with broader unmet needs much higher. The presentation estimated costs for future vessels, life extensions, terminal electrification, and additional Jumbo Mark II conversions, and noted that the current enacted plan does not fully fund fleet replacement, full electrification, or life extension of older vessels. Members asked for follow-up information on terminal seismic/environmental issues, contract options for additional vessels, and the timing and cost of alternative vessel designs. The committee then shifted to WSDOT maintenance and preservation. Pascoe Focktich described maintenance operations, including winter response, guardrail repair, facilities, equipment, and the effects of underfunding and inflation. He said most of the maintenance budget is fixed cost and labor, that material prices have risen sharply, and that many facilities are in poor condition with asbestos issues and deferred upkeep. He also noted growing guardrail damage, increasing pavement claims, and the burden of maintaining aging bridges and facilities. Members asked about prior planning for these needs, the role of asbestos, and whether more proactive sequencing could help budget decisions. Troy Suing then presented the highway preservation program, saying WSDOT is in the early stages of critical failure and has stretched preservation dollars as far as possible. He explained the distinction between pavement, bridge, and other highway asset preservation, said the department is largely reactive, and estimated that delaying work can make it three to five times more expensive later. He said about 40% of roadways are currently due or overdue for preservation, bridge conditions are nearing the federal poor-bridge threshold, and the department’s 10-year preservation need is about $8 billion. Members asked about the cost of deferring work, whether the department could do more if funded, how priorities are set, and whether other states face similar problems. Finally, Evan Grimm and Mike Fay briefed the committee on bridge strikes by overheight vehicles. They described recent incidents on I-90 near Cle Elum and SR 410 near White River, the damage and closures caused, and possible countermeasures such as public outreach, improved trip-planning tools, and a pilot warning system with sensors and flashing beacons. Fay explained the state’s financial recovery process for third-party damage, saying WSDOT recovers roughly $20 million per biennium and about 78% to 80% of billed damages, with money going to the motor vehicle fund. Members asked about prevention, insurance recovery, and whether the state uses claim data to inform future design or safety changes.

Transcript Highlights:

• Joint Committee on Revenue to order.
• all of our revenue are back-loaded.
• At a time when revenues are needed more than ever, maintaining the $1,200 cap provides much-needed revenue
• we have and find new streams of revenue.
• If we don't do everything we can to protect the revenue we have and find new streams of revenue to make

Committee: Joint Joint Committee on Revenue

Summary: The Joint Committee on Revenue held a public hearing on H. 4975, Governor Healey’s bill to manage the impact of the federal “One Big Beautiful Bill” (OB3) on Massachusetts tax law and state revenues. Administration officials, led by Secretary of Administration and Finance Matt Gorowitz, said OB3 would otherwise reduce FY26 revenue by about $442 million and argued for a phased-in conformity approach that would preserve the current-year budget while still adopting selected federal business tax provisions over time. The proposal would phase in the research and experimental expenditure deduction first, delay other major corporate provisions for two years, extend the pass-through entity excise to income subject to the 4% surtax, add a one-year delay mechanism for future federal tax changes over $20 million, limit opportunity zone benefits to Massachusetts investments, and make smaller technical changes to DFML contributions and casino reporting thresholds. Committee members questioned the rationale for phasing in rather than fully decoupling, the effect on the budget if the bill did not pass, and the treatment of opportunity zones, the surtax, and future federal tax changes. Public testimony was split. MassBudget, Progressive Massachusetts, and several labor and public-sector groups urged the committee to permanently decouple from the federal corporate tax changes rather than delay them, arguing that the bill would still send state revenue to corporate tax breaks, often for investments outside Massachusetts, and that the state should protect funding for schools, health care, human services, and other public services. The Massachusetts Society of CPAs supported the administration’s timing and the research-and-development provisions, citing filing deadlines and the importance of certainty for businesses and startups. Business and tax experts also testified that rushed conformity can create revenue losses and that the governor’s review-and-delay framework was a prudent improvement, though some said decoupling should be the default if the Legislature does not act. Unite Here Local 26 testified against sections 3 and 4, which would raise the slot-machine jackpot reporting threshold from $1,200 to $2,000, arguing the current threshold helps with problem-gambling intervention, preserves slot attendant jobs, and generates revenue. Several union leaders, including the Massachusetts Teachers Association, AFT Massachusetts, SEIU 509, the Massachusetts Building Trades, the AFL-CIO, and 1199 SEIU, urged permanent decoupling, warning that OB3’s federal tax cuts and related spending reductions would worsen budget pressures, harm public services, and shift costs onto workers, patients, and schools. No votes were taken at the hearing.

Transcript Highlights:

• Obviously, any revenue can only go for road safety purposes, but still, we want to make sure this is
• for safety, not for revenue.
• If you use the calculator, it doesn't make it cheating. Are you cheating or not?
• So if you use the calculator, it doesn't make it cheating. Are you cheating or not?
• you're all using the same calculator, that is collusion.

Summary: The committee heard several AI- and consumer-protection-related bills, with extensive testimony from authors, supporters, and industry opponents. SB 53 by Senator Wiener would create transparency requirements for large AI developers, including disclosure of safety and security protocols, reporting of critical safety incidents, whistleblower protections, and the CalCompute public cloud. Supporters said it is a narrower, transparency-based follow-up to last year’s vetoed AI safety bill, while opponents argued it still relies too much on company size, could expose trade secrets, and should be narrowed further. The committee approved SB 53 on a do-pass-as-amended vote to Appropriations, with the roll held open for absent members. SB 766 by Senator Allen would codify the FTC’s Cars Rule and create a three-day cooling-off period for certain used-car purchases, along with stronger disclosure rules on pricing, add-ons, and government affiliation claims. Supporters said it would save consumers money and time and help buyers avoid bad deals, while dealer and industry groups said amendments addressed many of their concerns. Several former opponents moved to neutral, and the committee passed SB 766 unanimously as amended to Appropriations. SB 7 by Senator McNerney would regulate automated decision-making systems in employment by requiring notice, human review for discipline and termination, and limits on predictive behavior analysis. Labor and consumer advocates supported the bill as a safeguard against biased or overly automated workplace decisions, while employer and industry groups raised concerns about scope, notice burdens, and the predictive-analysis ban. The committee passed SB 7 to Appropriations on a 4-2 vote, with the roll held open. SB 833, also by Senator McNerney, would require human oversight of AI used in critical infrastructure, along with training and system assessments; it drew limited opposition focused on scope, and the committee passed it as amended to Appropriations on a 5-0 vote, also holding the roll open. Later, the committee took up SB 11, which would address AI-generated voice, image, and video cloning and deepfakes by clarifying likeness protections, requiring consumer warnings, and addressing misuse and evidence tampering. Supporters framed it as a targeted response to nonconsensual deepfakes, while industry groups said recent amendments improved the bill but still had concerns about penalties and warning language. The committee also heard SB 720, the Safer Streets Act, which would let cities opt into a revised red-light camera system that shifts from driver to owner liability, removes facial identification, makes violations civil rather than criminal, and directs revenue toward transportation safety projects; the author presented the bill, but the transcript ends before any final action on SB 720.

Transcript Highlights:

• However, the DOR preliminarily estimates the revenue increase to the state would be similar to the revenue
• So bottom line, this bill generates revenue.
• This bill would give us a more stable revenue stream and allow us to reduce our reliance on revenues
• Washington doesn't need, or doesn't have, a revenue problem.
• This ensures stable revenue without punishing quality.

Bills: HB2038 , HB2297 , HB2382 , HB2487 , HB2018

Committee: House Finance

Keywords: HB2038, Washington, B&O tax, business and occupation tax, social media tax, platform tax, youth behavioral health, mental health, adolescent mental health, children's mental health, telebehavioral health, behavioral health account, state treasury, digital services tax, internet platform, social media companies, youth services, depression, anxiety, public health funding

Transcript Highlights:

• However, the DOR preliminarily estimates the revenue increase to the state would be similar to the revenue
• So bottom line, this bill generates revenue.
• This bill would give us a more stable revenue stream and allow us to reduce our reliance on revenues
• Washington doesn't need, or doesn't have, a revenue problem.
• This ensures stable revenue without punishing quality.

Summary: The committee heard briefings, sponsor presentations, and public testimony on several finance bills. HB 2038 would impose an additional B&O tax on businesses operating social media platforms beginning in 2027 and create a youth behavioral health account funded by the tax. The sponsor argued the bill would help address youth mental health harms linked to social media and support implementation of the Washington Thriving plan. Supporters in testimony, including youth advocates and some public health voices, said social media contributes to youth anxiety and addiction and that the revenue should be used for behavioral health services. Opponents, including technology and business groups, argued the tax unfairly singles out one sector, could be passed on to consumers, and may violate federal internet tax law. The hearing on HB 2038 was suspended and later reopened for public testimony; no vote was taken. HB 2297 would create tax incentives for grocery stores in underserved communities, including local B&O preferences, a sales tax exemption for security services, a 30-year property tax exemption program, a B&O tax credit, and a B&O exemption for certain locally owned or employee-owned stores. The sponsor and supporters said the bill is intended to preserve and attract grocery stores in food deserts, especially after recent store closures, and to help communities with limited transportation and access to healthy food. County representatives supported the goal but raised concern about the bill’s sales tax exemption and its effect on local revenues. Public testimony was largely supportive, with advocates, local officials, grocers, and residents describing grocery stores as essential community infrastructure. No action was taken. HB 2382 would raise cigarette taxes by $2 per pack, restructure vapor and other tobacco product taxes, and dedicate portions of the revenue to a time-sensitive emergency system, tobacco enforcement, and the foundational public health services account. The sponsor said the bill would generate needed revenue, support cancer research funding, and strengthen public health and enforcement. Supporters said higher tobacco taxes reduce use and help cover long-term health costs, while some public health witnesses supported the revenue but suggested directing more funds to existing tobacco prevention accounts. Opponents from retail and industry groups argued the proposal is regressive, could increase illicit sales and cross-border purchasing, and would hurt small businesses and low-income consumers. The committee also heard HB 2487, a Department of Revenue request bill that would narrow the B&O exemption for insurers to clarify that it applies only to premium income subject to insurance premium tax, and apply the change retroactively to 2019. The sponsor and supporters said the bill closes a loophole created by a recent Supreme Court ruling and preserves tax equity, while insurers and business groups objected to the retroactive application, warning of higher premiums and unfair taxation. Finally, HB 2018 would increase the solid waste tax by 0.5% per year for five years and direct the new revenue to a local government solid waste assistance account for county and city waste management plans. County officials supported the bill as a way to stabilize funding for solid waste systems, and testimony emphasized rising disposal and infrastructure costs. No votes were taken on any of the bills during the hearing.

Transcript Highlights:

• The title says honesty and transparency, but the House version removes honesty from the safety calculation
• The title says honesty and transparency, but the House version removes honesty from the safety calculation
• The title says honesty and transparency, but the House version removes honesty from the safety calculation
• The title says honesty and transparency, but the House version removes honesty from the safety calculation
• And the transparency it calculation.

Transcript Highlights:

• With regard to this development of these units and the ROI, I haven't calculated it in the way you may
• With regard to this development of these units and the ROI, I haven't calculated it in the way you may
• There's only about $15 million of general fund revenue.
• There's only about $15 million of general fund revenue, and that amount has grown by over 50% in the
• And the goal of that was both to diversify revenues to the capital program.

Committee: House House Appropriations & Finance

Transcript Highlights:

• in closing. second leg of the stool, which we'd be able to look at tax and revenue and close a loop
• The Department of Revenue may not accept new applications after December 31, 2027.
• The Department of Revenue may not accept new applications after December 31, 2027, and based on use in
• Also, there are short-term fluctuations that can occur in revenue.
• That hazardous substance tax revenue did increase, but the review found that beneficiaries of this tax

Summary: The committee met on December 3, 2025, with a quorum present and approved the September 17 minutes. Members first voted to suspend the 2026 JLARC lodging tax expenditure report for one year, based on staff’s explanation that the report is self-reported, not verified, and less useful than State Auditor accountability audits; the motion passed. The committee also approved renaming the JLARC I-900 subcommittee to the “Committee to Hear SAO Performance Audits,” while keeping the opening script noting that the performance audit process exists under Initiative 900. The committee then heard follow-up updates on two prior performance audits. The Department of Health presented a draft strategic management plan in response to findings on hospital inspections, complaints, adverse event review, and hospital data access. JLARC staff reiterated that 72% of hospital inspections were late, that DOH did not verify third-party inspection standards or review adverse event reports, and that complaint data suggested possible language-access barriers. DOH said it concurred with the recommendations, had improved on-time inspection compliance to about 49%, planned annual updates starting in July 2026, and would work on accreditation oversight, complaint-language access, and data accessibility, though members pressed for firmer deadlines and questioned the three-year timeline for language access improvements. The Liquor and Cannabis Board also reported on its cannabis market study recommendation. JLARC staff said the agency’s data were incomplete and unreliable, limiting oversight of production, recalls, tax collection, and diversion. LCB said it had improved its current CCRS system but still relied on self-reported data, and it presented a decision package for a new traceability system estimated at about $9 million over three fiscal years. LCB described a plant-tagging and serialization approach tied to production, processing, testing, and retail, but acknowledged it did not currently have sufficient staff to fully implement the system without additional funding. The committee also received briefings on JLARC’s recommendation-tracking tools and the 2024 public records reporting summary, including a high-level review of agency response rates, request volumes, costs, and litigation. Finally, JLARC presented the proposed final report on the Office of Privacy and Data Protection, concluding that OPDP meets its statutory responsibilities and has high user satisfaction, but that its mandate should be updated to better match its current capacity and focus; the committee adopted the report for distribution. The meeting then moved into the 2025 tax preference performance reviews, where JLARC staff summarized nine reviews and noted that the Citizens Commission on Tax Preference and Performance Measurement endorsed all 17 legislative auditor recommendations, with comments on seven. Early reviews discussed included natural gas transportation fuel preferences, travel agent and tour operator B&O rates, nonprofit low-income housing development, multipurpose senior centers, disabled veteran adaptive housing, and trade convention attendance, with staff and commissioners generally recommending continuation of some preferences, modification of others, and improved objectives or performance measures where needed.

Transcript Highlights:

• tax revenue by $560 million in 2026-27.
• And the revenue estimate assumes revenue losses of $25 million in 2026-27, and $100 million in the following
• To be clear, we're scoring this as a revenue, revenue loss and, you know, the figures I cited, they're
• On the other hand, the loss of revenue is certainly difficult as we're looking at finding revenue.
• We don't make revenue off of them.

Transcript Highlights:

• sales tax revenue by $560 million in 2026-27.
• And the revenue estimate assumes revenue losses of $25 million in 2026-27, and $100 million in the following
• And the revenue estimate assumes revenue losses of $25 million in 26, 27, and $100 million in the following
• On the other hand, the loss of revenue is certainly difficult as we're looking at finding revenue.
• We don't make revenue off of them.

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:

• So another plug for revenue conversations.
• For revenue conversations.
• And monthly revenues are up even compared to the governor's budget. ...and monthly revenues are up even
• problem because we have been getting increased revenues.
• Our communities will also experience losses in revenue and economic decline from reduced revenues for

Committee: Senate Budget and Fiscal Review

Summary: The Senate Budget and Fiscal Review Subcommittee held an oversight hearing on the impacts of H.R. 1 on California’s safety net, focusing on Medi-Cal and CalFresh. The chair and vice chair framed the discussion around major federal changes to work requirements, eligibility redeterminations, immigrant eligibility, and financing rules, while noting the state’s own structural budget deficit and the need for a second hearing later in March on county and safety-net impacts. The first panel included the Legislative Analyst’s Office, the Department of Finance, the UC Berkeley Labor Center, and the Food Research and Action Center. LAO and Finance described H.R. 1 as driving major enrollment losses and cost shifts. LAO estimated that Medi-Cal work requirements and six-month redeterminations could affect 3.5 million people, with 1 to 2 million potentially disenrolled, while CalFresh changes could subject more than 800,000 people to work requirements and cause over 600,000 to lose food assistance. They also highlighted new ineligibility for certain non-citizens, reduced federal matching for emergency Medi-Cal services, tighter provider tax rules, and higher state and county administrative costs for CalFresh. Finance said the governor’s budget reflects about $1.4 billion in new General Fund costs in 2026-27 and a $2.4 billion reduction in federal funds, with larger out-year impacts and up to 2 million Medi-Cal disenrollments by 2029-30. The UC Berkeley Labor Center projected up to 3 million Californians could lose full-scope Medi-Cal by 2028 when H.R. 1 is combined with state budget changes, though it said the state could limit losses by choosing not to apply some new requirements to state-funded populations and by keeping some immigrants in full-scope state-funded coverage. The Food Research and Action Center argued that CalFresh cuts and time limits would increase hunger, homelessness risk, and health costs, while also hurting local economies and increasing administrative burden. Committee members from both parties questioned the fiscal sustainability of Medi-Cal growth, the 11% CalFresh error rate and possible $2 billion penalty, county indigent care costs, and the effect of work requirements; several Democratic members argued the federal changes and state cuts would disproportionately harm low-income Californians, immigrants, and communities of color, while Republican members emphasized program growth, work incentives, and the need for budget restraint. No votes were taken in the portion provided.