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Budget and Policy Post
October 7, 2020

The 2020-21 Spending Plan:

Other Provisions



Statewide Infrastructure

Debt Service

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

Capital Outlay

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

Figure 1

Capital Outlay Appropriations in 2020-21

(Dollars in Thousands)

Departments

Amount Approved

Total Project Costs

Number of Projects

California State University

$509,004

$1,026,064

9

University of California

437,305

760,416

20

Veterans Affairs

335,199

343,506

3

California Community Colleges

239,675

1,491,383

48

Corrections and Rehabilitation

168,104

1,420,276

20

Water Resources

154,000

1,811,850

3

California Conservation Corps

61,582

69,932

1

Parks and Recreation

31,091

54,948

11

Judicial Branch

25,056

350,822

2

Forestry and Fire Protection

8,672

51,027

3

Developmental Services

1,555

12,815

2

Office of Emergency Services

979

24,396

1

Totals

$1,972,222

$7,417,435

123

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

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

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

California Public Utilities Commission (CPUC)

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

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

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

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

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

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

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

California Department of Food and Agriculture (CDFA)

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

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

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

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

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