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May Revision proposes $400 million loan from labor and workforce fund; unions and grantees urge rejection
Summary
The governor's May Revision proposes a $400 million loan from the Labor and Workforce Development Fund to the General Fund, repayable in 2029' 30; fund is mainly fed by PAGA civil penalties. LAO cautioned PAGA reforms may reduce future revenues; worker organizations and community grantees urged the subcommittee to reject the loan.
The California State Assembly Subcommittee 5 on State Administration heard a proposal in the governor's May Revision to loan $400 million from the Labor and Workforce Development Fund to the General Fund, with the administration proposing repayment in fiscal year 2029' 30 and provisional language that would allow earlier repayment under conditions.
Grace Henry of the Department of Finance said the loan would come from resources not projected to be used for current operational or programmatic purposes; after the loan and proposed requests the fund's projected 2025' 26 ending balance is about $119 million. Jay Sturgis of the Labor and Workforce Development Agency explained the fund's primary revenue source is civil penalties recovered through private actions under California's Private Attorneys General Act (PAGA) and that revenues have fluctuated in recent years.
Alexander Bentz of the Legislative Analyst's Office noted recent reforms to PAGA enacted in 2024 are expected to reduce future penalty revenues but did not quantify how much. "We do expect that this will reduce future penalty revenues to the fund," he said, and the LAO urged the legislature to weigh that risk when considering a multiyear loan.
Multiple public commenters'including representatives of the California Federation of Labor Unions and community outreach grantees for the California Workplace Outreach Program (CWAP) urged the subcommittee to reject the loan. Sarah Flock of the California Federation of Labor Unions told the subcommittee that the fund is supposed to be used for enforcement and outreach and asked why the administration would shift $400 million away from those purposes while wage theft and other violations remain widespread.
Several community groups and CWAP grantees described on-the-ground outreach and enforcement work with farm and hourly workers and warned that the loan would jeopardize those efforts. The subcommittee chair and Department of Finance staff clarified the CWAP program itself was not proposed for elimination in the May Revision.
Ending: The subcommittee took public comment and members pressed administration staff and the LAO for more details. No vote was taken; members signaled concern about how long-term revenue changes to PAGA might affect the fund's ability to sustain enforcement programming if the loan is approved.
