By Jeanne Kuang and Yue Stella Yu | CalMatters

Tax credits for the parents of young children. A state-funded scientific research institute. Exempting service workers’ tips from state income tax.

Those are among the hundreds of proposals California lawmakers swiftly rejected Friday under the banner of cost savings, as they cited the state’s $12 billion budget deficit — a worsening figure due to the threat of unprecedented federal funding cuts and California’s ballooning spending on health care for low-income residents.

“We are in (a) very difficult budget environment this year, so consequently many good bills are going to fall by the wayside today,” said Assembly Appropriations Committee Chair Buffy Wicks, an Oakland Democrat, before beginning that chamber’s hearing.

“We are not in a year where we can be expanding programs, developing new offices, new agencies, new departments, and expanding our footprints.”

The Friday procedure is known as the “suspense file” — the state Legislature’s most secretive and fast-paced biannual hearing, where the chairs of the Assembly and Senate Appropriations committees quickly shoot down pricey proposals with little explanation, often acting more aggressively during years of budget woes.

The suspense files are where the appropriations committees send bills that would cost the state at least $50,000 in the Senate and $150,000 in the Assembly. The process was originally a way for lawmakers to consider policy proposals that cost the state money together by balancing them against each other.

But the well-accepted open secret in Sacramento is that it’s also an opportunity for lawmakers to quietly kill controversial bills, appease powerful special interests or just winnow down the number of bills they’ll have to debate on the floor. Lawmakers decide ahead of time, in secret, whether to pass the bills to the full Senate or Assembly, or to withhold them. The public hearings are a rapid-fire announcement of the decisions.

On Friday, the Senate Appropriations Committee axed 29% of the 432 bills on its list, although it kept a handful of those alive to work on next year. That’s more aggressive trimming than the committee did last May. 

“The state is facing a significant budget deficit and with that in mind, the committee had to make difficult choices on a number of bills to reduce costs,” said Senate Appropriations Chairperson Anna Caballero, a Merced Democrat, before the hearing. She opened the hearing with a defense of the arcane proceedings, explaining that the results would be posted online, but rushed out to catch a flight after the meeting without discussing her approach with reporters.

The Assembly Appropriations Committee killed 35% of the 666 measures on its suspense file, similar to last year. Lawmakers had been warned to keep the cost of their proposals down, Wicks said.

“We stressed heavily to members as they were putting together their legislative package this year to be very mindful of cost,” she told reporters.

The state’s fiscal future is anything but certain: As federal threats loom, Gov. Gavin Newsom earlier this month rolled out a $322 billion spending plan that included significant cuts to Medi-Cal, the state’s health care system for low-income Californians, and a 3% cut to public universities.

Health care expansions on the chopping block

On Friday, some Assembly measures that would have expanded health care services for Californians met their fate. That includes Wicks’ own proposal seeking federal approval to qualify some housing services as Medi-Cal benefits, a $40 million endeavor that Newsom previously vetoed. The committee also killed a proposal to allow more Medi-Cal enrollees to receive home-based care and another that would have allowed higher-earning immigrants in the country illegally to purchase insurance plans on Covered California, the state-run health care marketplace.

In the Senate, lawmakers shelved a proposal by Sen. Catherine Blakespear to impose campaign contribution limits on candidates for judicial office and school board races, which the influential California Teachers Association opposed. They axed Sen. Henry Stern’s proposal to expand the state’s contentious new mental health program CARE Courts to include defendants with bipolar disorder I, and Sen. Marie Alvarado-Gil’s bill to address mountain lion interactions that has pitted rural communities against animal rights and wildlife conservation advocates.

The Senate Appropriations Committee also killed two Republican tough-on-crime proposals, showing the limits of Democrats’ recent shift slightly rightward on crime. Until Friday, it had been surprisingly smooth sailing this year for Senate Minority Leader Brian Jones’ bill to block sex offenders from being released from prison through the state’s elderly parole program, and Sen. Kelly Seyarto’s bill to increase penalties for selling or giving fentanyl to minors.

The law enforcement-backed bills were opposed by criminal justice reform advocates, who still hold sway with the majority party and often argue it would be too costly for the state to imprison more people.

In a statement, Jones, a San Diego Republican, called the suspense file process “anti-democratic” and accused Democrats of “silencing the voices of victims and the public.”

Some measures are now postponed until next year. That includes two Assembly measures seeking tighter regulations on ticket sales for sports and musical events, amid fierce opposition from ticketing platforms such as Stubhub and from local chambers of commerce. The measures would restrict when those platforms can resell tickets, strengthen the disclosure of ticket information and require venues to accept proof of purchase as tickets.

Assm. Isaac Bryan, a Culver City Democrat who authored one of the measures, said Wicks never articulated her concerns with his proposal, even though Wicks told reporters Friday her staff had been in touch with Bryan’s office. “There was never an attempt to discuss the bill,” which led him to believe her concerns had been alleviated, Bryan said in a statement. 

Lawmakers also pushed off some issues to be debated further during budget negotiations between the Legislature and Newsom. That process will accelerate in the coming weeks before a mid-June deadline to pass a balanced budget.

Newsom’s film tax credit pushed to budget talk

They stripped out language in both Assembly and Senate bills to more than double the state’s film tax credit to $750 million. Newsom has pushed hard for the tax credit expansion to help the ailing Los Angeles industry and keep production in state, and he’s included the money in his budget proposals which lawmakers will debate separately.

Assemblymember Rick Zbur, a Los Angeles Democrat who authored the Assembly version of the measure, said the committee move was merely a technical one to separate budget allocations from policy changes.

“The increase in the size of the program will happen in the budget,” Zbur said. “I’m not that nervous about it.”

But to others, the move indicated that some lawmakers remain skeptical of spending so much on the program. Sen. Ben Allen, an El Segundo Democrat who sponsored the Senate bill to boost the tax credits, said he was “certainly disappointed.”

“It’s something we are going to push back against as budget negotiations begin to heat up,” he said in a statement.

An ambitious and highly technical proposal by Sen. Scott Wiener reining in the landmark California Environmental Quality Act to make it harder for opponents of development to sue to block housing projects also will be debated in the budget process.

In the Senate Appropriations Committee, lawmakers passed the bill but Caballero said they would continue negotiating it to help the state meet its housing needs “without compromising environmental protections.”