Each of these bills listed in numerical order have been passed by the Legislature and are now on Gov. Gavin Newsom’s desk. While AB 101 (Budget), a bill containing minor changes to housing programs was placed into print on Thursday, June 20, it lacks language dealing with various housing-related planning, tax credits and infrastructure. It is unclear whether the Legislature will pass this measure this week. Detailed descriptions of the key provisions of interest to cities, where applicable, are outlined below. The cannabis trailer bill SB 97
is in print but has not yet been taken up.
SB 76 (Enrolled) — Education Finance: Constitutional Minimum Funding Obligation: Inflation and Cost-of-Living Adjustments
This trailer bill makes various changes to implement budget actions related to the Proposition 98 certification process. This bill will also provide $282.2 million in Prop. 98 for the purposes of reducing the outstanding Prop. 98 funding owed to schools from previous fiscal years.
SB 77 (Enrolled) — Higher Education Trailer Bill
This trailer bill implements budget actions related to higher education. In brief, the bill:
SB 80 (Enrolled) — Human Services Omnibus
- Supports a second round of state funding for local college savings account programs. Grants will be available for existing local programs and to launch new local programs. This will be administered by the California Student Aid Commission.
- Creates the California Kids Investment and Development Savings (KIDS) program, under the state Scholarshare Board, to provide state funding to open savings accounts for every low-income California child.
- Authorizes specific colleges to use $43 million in Prop. 98 General Fund to waive fees for first-time community college students for two academic years.
This trailer bill provides statutory changes related to human-services. In brief it:
SB 81 (Enrolled) — Developmental Services
- Increases the maximum aid payment amounts for CalWORKs recipients. This grant increase is intended to be the next step towards alleviating the condition of deep child poverty, defined as living with a subsistence level less than 50 percent of the Federal Poverty Level.
- Deletes the requirement that temporary shelter assistance be used in 16 consecutive calendar days in the CalWORKs Homeless Assistance Program. Instead, temporary shelter assistance can be used for 16 cumulative days every 12 months.
- Increases the CalWORKs asset limit to $10,000 and the motor vehicle exemption to $25,000 and ties inflation factors to these limits. The Budget Act includes $7.5 million in 2019-20 for this purpose.
- Authorizes the Department of Housing and Community Development to provide funding to counties for allocation to child welfare services agencies to help young adults who are 18 to 24 years of age secure and maintain transitional housing, with priority given to young adults who were formerly in foster care or probation systems. This is supported with a General Fund appropriation of $8 million in 2019-20 and on-going, subject to suspension on Dec. 31, 2021.
- Requires the Department of Aging to administer the Aging and Disability Resource Connection Infrastructure Grants Program for the purpose of implementing a No Wrong Door System (NWD). NWD systems provide information and assistance not only to individuals needing either public or private resources, but also to professionals seeking assistance on behalf of their clients and to individuals planning for their future long-term care needs.
This trailer bill provides for statutory changes necessary to enact developmental services related budget provisions. It:
SB 82 (Enrolled) — State Government
- Requires the Department of Developmental Services (DDS) to submit an update of its Safety Net Plan, developed in consultation with stakeholders, on or before Jan. 10, 2020.
- For consumers with complex behavioral needs or who are at risk of, or currently in, crisis, DDS, together with regional centers, has been developing a variety of community based resources to serve as a safety net for these consumers when regular homes and/or services cannot meet their needs.
- The updated plan will evaluate the progress made to create a safety net, identify the further areas the stakeholder community suggests evaluating, and recommendations from the stakeholder community, and will consider new models for individuals whom private sector vendors cannot or will not serve.
- Allows the department to include community-based residential options that consist of community crisis homes for children who meet specific criteria. Also requires the department to develop guidelines around the use of restraints in community crisis homes.
This trailer bill makes numerous statutory changes related to state administration. Provisions of most interest to cities include:
SB 83 (Enrolled) — Employment
- Authorizing an adjustment of renewal fees for various Alcoholic Beverage Control Act licenses beginning in January 2021 to cover the costs of licensing and enforcement. This budget act would also help the department to improve its services and to protect communities from the harms that come with noncompliant licensed premises and service to obviously intoxicated individuals.
- Authorizing the Department of Alcoholic Beverage Control (ABC) to charge fees to cover the costs of administering a Responsible Beverage Service training program and authorizes a fee for administering the alcohol server certification exam.
- Appropriating $2.9 million from the Alcohol Beverage Control Fund to ABC to fund the Responsible Beverage Server Training Program Act and to provide electronic services for licensees.
- Authorizing the State Public Works Board, instead of the local fire marshal, to grant exemptions for state facilities to install diaper changing stations in restrooms.
- Allowing local agencies and schools to use the state's GS $Mart procurement and financing process and makes other conforming technical changes to the GS $mart program reporting. GS $Mart is an innovative acquisition finance program designed to facilitate state agencies and local governments with installment or lease purchases, while meeting all requirements of a competitively bid process.
This trailer bill makes various changes to implement budget actions related to labor and employment. In brief, it:
SB 84 (Enrolled) — Political Reform Act of 1974: Online Filing System
- Extends Paid Family Leave (PFL) benefits from six to eight weeks beginning July 1, 2020. Additionally, SB 83 will adopt intent language to convene a task force to develop a proposal by November 2019 to extend the duration of PFL benefits to six months by 2021–22. The proposal will also address job protections for workers and establish the goal of providing a 90 percent wage replacement rate for low-wage workers utilizing the PFL program.
- Reduces the reserve requirement for the Disability Insurance Fund from 45 percent to 30 percent.
- Authorizes $5 million in one-time General Fund to create an outreach and education grant program for domestic workers.
This trailer bill allows for a delay in the implementation of the Cal-Access Replacement System (CARS) from Dec. 31, 2023 to February 2021. Cal-Access is a resource that provides financial information supplied by state candidates, donors, lobbyists, and others. This bill also allocates $6.992 million from the General Fund to develop and implement CARS.
SB 85 (Enrolled) — Public Resources: Omnibus Trailer Bill
This trailer bill makes various changes to implement the resources, environmental protection, and energy budget actions. It:
SB 87 (Enrolled) — Transportation
- Clarifies that a fee may be charged by state and local entities for enforcement of building standards adopted by the state fire marshal relating to fire, panic safety, and other regulations.
- Specifies that Green House Gas Reduction Funds appropriated for projects to reduce air pollutants consistent with community emissions reduction programs also complement and further the rules and regulatory requirements by the Air Resources Board and local air districts.
- Establishes the Cal Fire infrastructure Projects Revolving Fund to undertake agency infrastructure improvement projects. These projects must be related to the acquisition of real property or the design, construction, alteration, repair, and improvement of facilities over which the department has jurisdiction, including equipment and furnishings.
This trailer bill implements budget actions related to transportation and:
SB 90 (Enrolled) — Public Employees’ Retirement
- Eliminates the Local Transportation Loan Account and the Transportation Deferred Investment Fund and shifts any remaining assets and liabilities to the State Highway Account.
- Includes $236 million in Prop. 42 loan repayment and repays outstanding transportation weight fees loaned to the General Fund.
- Makes an appropriation of up to $7.2 million for infrastructure improvements necessary to facilitate short-line railroads becoming more compatible in supporting modern rail freight traffic.
- Gives the Caltrans inspector general the authority to examine all records, files, documents, accounts, reports, correspondence, or other property of the department and external entities that receive state and federal transportation funds from the department.
This trailer bill makes various statutory changes to implement the California Public Employees Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS). In brief it:
AB 91 (Enrolled) — Income taxation: Loophole Closure and Small Business and Working Families Tax Relief Act of 2019
- Appropriates $2.5 billion from the General Fund to be transferred to the Public Employees’ Retirement Fund, for apportionment to prescribed state employee member categories, as directed by the Department of Finance (DOF).
- These supplemental payments would be applied to unfunded state liabilities for enumerated state employee member categories
- Appropriates $904 million General Fund in 2018–19 to be transferred to the Public Employees' Retirement Fund for payments relating to school employers' contributions and unfunded liabilities
- Appropriates $2.25 billion from the General Fund to the Teachers’ Retirement Fund for the Defined Benefit Program. This will result in employers having to contribute 1.03 percent less than the amount currently required for 2019–20 (estimated to about approximately $500 million) and .70 percent less in 2020–21 (approximately $350 million).
- The remainder of the amount (approximately $1.6 billion) provided would make a supplemental payment to reduce the employers' share of the unfunded pension liability.
- Appropriates a total of $2.9 billion Prop. 2 Funds in 2019–20 through 2022–23 to pay down the state share of the CalSTRS unfunded liability.
This trailer bill is regarding income taxation. These provisions are estimated to have net General Fund revenue impacts in 2019–20 of $1 billion and $680 million in 2020–21. In addition, the revenue generated by this bill is estimated to provide an additional $1 billion total to schools through an increased Prop. 98 minimum funding level. Specifically, it:
- Expands the California Earned Income Tax Credit (CalEITC):
- It will increase to the maximum eligible earned income to $30,000;
- Revises the calculation factors to increase the CalEITC for specified tax payers; and
- Provides a refundable young child tax credit to a qualified tax payer up to $1,000.
SB 92 (Enrolled) — Taxation
- Provides tax relief to small businesses, students, and individuals with disabilities:
- Eliminates differences in qualification criteria for Achieving a Better Life Experience Accounts (ABLE) between federal and California tax law. ABLE accounts are state-sponsored tax free savings accounts for disability-related expenses.
- Increases the following thresholds for small businesses:
- From $5 million to $25 million the amount of average annual gross receipts of a small business to be allowed to use the cash method of accounting;
- From $10 million to $25 million the amount of average annual gross receipts of a taxpayer exempt from provisions precluding the deductibility of certain property costs and determining whether those costs are inventory costs or are capitalized; and
- Exempts a small business with average annual gross receipts not exceeding $25 million from provisions that require a taxpayer to take inventories to clearly determine their income.
- Excludes from an individual’s gross income the amount of student loan indebtedness discharged on or after Dec. 31, 2017, due to death or disability of the student, as provided.
- Limits “like-kind” exchange treatment to real property, subject to limited exceptions for middle-income tax payers.
- Disallows the use of net operating loss (NOL) carrybacks by individual and corporate taxpayers.
This trailer bill measure includes a number of provisions related to taxation:
SB 93 (Enrolled) — Budget Act of 2018: Augmentation
- Exempts children’s diapers and menstrual hygiene products from sales and use tax collections for sales between Jan. 1, 2020 and Jan. 1, 2022. Requires the DOF to calculate and backfill losses of county realignment funds. Requires the Legislative Analyst’s Office to evaluate the effectiveness of this exemption, consider ways to make it more targeted and report to the Legislature on or before Jan. 1, 2021.
- Requires the Office of Tax Appeals at the Department of Tax and Fee Administration to establish a process for a person with a claim of less than $5,000, or an entity with gross receipts of less than $20 million filing a claim for less than $50,000, to opt to appear before a single administrative law judge.
- Makes minor technical and other changes to implement AB 147 (Burke), Chapter 5, Statues of 2019, which established California’s process for collection of use taxes following the Wayfair decision. Limits liability for uncollected taxes to three years for a qualifying retailer meeting specified conditions.
This trailer bill would appropriate $112.6 million to the California Department of Corrections and Rehabilitation (CDCR) for spending shortfalls encountered in the 2018–19 fiscal year.
SB 94 (Enrolled) — Public Safety: Omnibus
This trailer bill relates to the implementation of public safety related budget actions:
SB 95 (Enrolled) — Courts
- Transfers the Division of Juvenile Justice Facilities from CDCR to the Health and Human Services Agency and establishes the Department of Youth and Community Restoration as of July 1, 2020.
- Creates a committee of the Child Welfare Council to provide recommendations and input on the newly created Department of Youth and Community Restoration.
- Establishes the California Reentry and Enrichment Grant program to provide grants to community based organizations that provide rehabilitative services to incarcerated individuals within correctional settings.
- Provides a six month extension of AB 1065 (Jones-Sawyer, Statutes of 2018) extending it until July 1, 2021. AB 1065 created a new Organized Retail Crime felony in California law. This expanded the jurisdiction to prosecute cases of theft or receipt of stolen merchandise. This bill also required the California Highway Patrol to convene a regional property task force and authorizes a grant program, upon appropriation by the Legislature, to create demonstration projects to reduce recidivism to high-risk misdemeanor probationers.
SB 96 (Enrolled) — Emergency Telephone Users Surcharge Act
- This trailer bill allocates 25 of the 48 judgeships effective in the 2019–20 fiscal year, thereby reducing the total number of judgeships yet to be allocated to 23. This bill would also increase trial courts reserve amount from one percent to three.
This trailer bill amends the State Emergency Telephone Users Surcharge Act to fund 9-1-1 costs:
SB 103 (Enrolled) — State Employees Memorandum of Understanding
- Authorizes the California Office of Emergency Services to implement a monthly surcharge per access lines in the state for 9-1-1 system costs no greater than $0.80. These surcharges will fund 911 systems, including Next Generation 9-1-1 technologies.
This trailer bill provides legislative ratification of the memorandum of understanding agreed to by the state and Bargaining Unit 6, represented by the Correctional Peace Officers Association. It will give a three percent salary increase to approximately 27,694 full-time employees. The provisions of this bill will have implications for employee health benefits, compensation increases, night shift and weekend pay differentials and leave buy back.
SB 105 (Enrolled) — Corrections Facilities: Financing
This trailer bill increases CDCR's lease revenue bond authority for the construction of various Health Care Facility Improvement Projects. Specifically, this bill provides an augmentation of $49.85 million for these projects, bringing the total for these projects up to $1.14 billion.
The Legislature is expected to take up additional trailer bills this week and send them to the Governor in advance of the July 1 deadline for signature. It is unclear when trailer bills dealing with various housing-related planning, tax credits and infrastructure issues will appear in print. Bills must be in print for three days before a vote can be taken. It is not unheard of for Legislative negotiations on trailer bills to extend past the July 1 budget deadline. Trailer bills can also be passed either before July 12, when the Legislature goes on summer recess, or after they return on Aug. 12.