The California Staffing Professionals Association - CSP is a VITAL membership association providing support services to the recruiting & staffing industry in education, networking & legislative advocacy. We are the voice of the Staffing and Recruiting Industry in California.
Background Before adjourning for their summer recess on July 3rd the Legislature approved a budget for the 2024-2025 fiscal year and passed two bonds that will appear on the November ballot. The first is a $10 billion climate bond which will also fund other programs and projects that will pay for climate change impacts and intended in part to backfill cuts to state climate programs in recent years. The second, an education bond, would also approve $10 billion for school facilities repairs, setting aside $8.5 billion for new construction and modernization of K-12 schools and $1.5 billion for community colleges. Below is an overview of how the budget and the bonds came together.
The Legislature will return to the Capitol on August 5 to wrap up work on all legislative matters and then adjourn for the remainder of the year on August 30. Upon return, on August 15 the Senate and Assembly Appropriations Committees will decide the fate of hundreds of bills with fiscal impact to state operations. The bills that pass from those committees will then be voted on the Floors of each house before going to the Governor for consideration.
Budget In December, the Legislative Analyst’s Office (LAO) projected a $68 billion deficit for the 2024-2025 fiscal year. The Governor’s estimate in his January Budget were consistent with this projection, presenting a significant and daunting deficit. While California faced substantial deficits at the beginning of the pandemic, the 2024-2025 fiscal year presented the Governor and Legislature with the unique challenge of multi-year structural deficits for the first time in a decade. This is an unfamiliar situation for all but a few legislators who were in office at the beginning of the 2010s.
In an effort to get ahead of the challenge, the Legislature and Governor reached an “Early Action Agreement” which was passed and signed in April. This agreement achieved $17 billion in budget solutions to reduce the deficit and contained a mix of $3.6 billion in reductions, $5.2 billion in revenue and borrowing, $5.2 billion in delays and deferrals, and $3.4 billion in shifts of costs from the general fund to other state funds.
Not surprisingly, revenue estimates in the Governor’s May Revision identified further gaps in the budget. To close these gaps, the May Revision further proposed utilizing state reserve funds, including $12.2 billion from the rainy-day fund and $900 million from a safety net reserve. Another $21.5 billion would be drawn from these reserves over two years.
Then, at the end of June, the Legislature and Governor reached an agreement on a final budget for the 2024-2025 fiscal year. Totaling $297.9 billion across all funds, with $211.5 billion from the General Fund, the agreement addressed deficits for both the upcoming budget year and fiscal year 2025-2026. As part of the agreement, the Governor signed an emergency budget proclamation, which suspended a rule that funds be transferred from the General Fund to the Rainy Day Fund, as required by the state constitution. It also allowed the transfer of money from that stabilization account to the General Fund to deal with the budget emergency.
As has become customary in recent years, passing of the budget was a foregone conclusion once the Legislature and the Governor had announced that they had come to an agreement on June 22nd. The process was roundly criticized by Republicans, who argued that behind-closed-doors negotiation between the Governor and Democrats largely ignored the interests of the 8 million California residents they represent. Republicans further opposed pausing some tax deductions for businesses, reversing previous commitments on expanded health care spending, and arguing that the expansion of health care access for all low-income adults, regardless of immigration status, further exacerbated the deficit.
The hope by the Governor and Legislative Democrats seems to be that California’s revenues and economy will rebound to pandemic levels when the state enjoyed a $100 billion dollar budget surplus. Republicans argue that this budget merely kicks the can down the road and creates a substantial problem that a future Administration and Legislature will be forced to deal with.
However, in May the Legislative Analyst’s Office released an analysis of state revenues which projected that the budget will continue to experience modest operating deficits from 2025-2026 onwards. While the approved budget would reduce projected deficits significantly, the LAO emphasized that fiscal risks remain, including uncertainties related to revenue variations and potential impacts from upcoming tax proposals and ballot measures, which could affect the state’s budget stability in future years.
Bills of Interest to the Staffing Industry The 2024 legislative session started with more than a dozen measures of significant impact to the staffing industry. We have previously reported on the fate of AB 2741 (Haney.PAGA reform efforts, contracting by the University of California and other measures. The remaining priority bills of interest to the staffing industry are:
AB 2557 (Ortega) – Contracting by Local Government Agencies This bill is an attempt by public employee unions to limit the ability of local governments to contract for services, including services performed by temporary workers.
This bill includes provisions that would require staffing companies that contract with local governments to make records related to the contract, including personnel wages and employee information, available to the public.
ASA and CSP have opposed this bill throughout the legislative process and will continue to do so.
AB 2930 (Bauer-Kahan) – Automated Decision Tools This bill would regulate the use of Automated Decision Tools used to make consequential decisions, including decisions related to hiring. The goal of the bill is to prevent discrimination by the algorithms responsible for functioning of the ADT. ASA and CSP support the fact that hiring tools need to be free of discrimination. However, the details of the bill would make compliance unfeasible for a staffing company or any large employer. ASA and CSP are lobbying to have the bill amended in a manner to make compliance practical and operational.
Conclusion With a month left of the legislative session, it is possible new issues will still arise. We will keep you posted on updates to these and other measures.
California Staffing Professionals Association (CSP) is a VITAL non-profit membership trade organization managed by volunteer elected Officers who are comprised of Staffing and Executive Search Firm owners and managers. We invite your active participation!
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