Assembly committee advances ‘CalAccount’ proposal to create zero‑fee state banking option

The Assembly committee on Thursday voted to pass AB 1365, a bill by Assemblymember Garcia that would establish “CalAccount,” a state‑facilitated, zero‑fee debit account designed as an on‑ramp for unbanked and underbanked Californians.

AB 1365 would create a program administered by the state treasurer’s office to offer checking‑style accounts with no monthly fees, no overdraft penalties and no minimum balances, and to build a retail network of private financial partners that provide fee‑free cash deposits and withdrawals. Supporters framed the bill as a way to bring households that currently rely on cash and alternative financial services into the mainstream banking system.

Assemblymember Garcia said the bill is intended to remove banking barriers for low‑income households and survivors of gender‑based violence, arguing that “CalAccount will be that solution by building on the successful model of programs like CalSavers and CalABLE.” Supporters included FreeFrom, SEIU California, Consumer Federation of California and representatives of the State Treasurer’s office. Testimony included personal accounts from workers who said overdraft and monthly fees had left them without funds for necessities.

Opponents — including the California Community Banking Network, California Credit Union League and California Bankers Association — said similar low‑cost accounts already exist through the BankOn framework, that the number of truly unbanked households is contested, and that the program could shift hundreds of thousands of customers out of existing banks and credit unions. State analysts and witnesses flagged implementation costs and enrollment assumptions: the committee analysis cited an implementation cost estimate of roughly $291.5 million for the first two years, and witnesses referenced a feasibility study that estimated up to $45 million in economic stimulus in year one. Several witnesses requested additional clarification on whether retail access (brick‑and‑mortar branch access, outreach and language services) would be sufficient to reach the intended populations.

Committee members asked about the program’s retail partnerships, how the state would incentivize banks and credit unions to participate, and whether the program would displace existing community providers. The author and supporters said participation would be arranged through a competitive contract process and that the program is designed as complementary to existing efforts; they emphasized targeted services for survivors, unhoused people and others who face access barriers.

On the roll call, the committee voted to do pass AB 1365 as amended and refer it to the Committee on Labor and Employment. The committee’s action included amendments requiring a feasibility and implementation plan before the state would expend funds; funding and appropriation decisions remain subject to subsequent bill‑analysis and budget processes.

The committee record indicates further work on implementation details will be needed if the bill advances, particularly to reconcile differing cost estimates and to document the retail and operational partnerships that would deliver cash access and onboarding services.