The 2022-23 Budget: Department of Justice Proposals

The 2022-23 Budget: Department of Justice Proposals FEBRUARY 2022 Summary. This post provides our findings In addition, the department manages the statewide and recommendations on two of the Governor’s criminal history database and conducts background budget proposals related to the Department of checks required for firearm and ammunition Justice (DOJ)—(1) provisional language to provide purchase as well as other purposes. additional General Fund support, if needed, to the As shown in Figure 1, the Governor’s budget Ammunition Safety and Enforcement Special Fund proposes $1.2 billion to support DOJ operations which supports the DOJ Ammunition Purchase in 2022-23—an increase of $40 million (or Authorization Program and (2) a $46.4 million 3.4 percent)—over the revised amount for 2021-22. one-time General Fund backfill of the About half of the proposed funding supports DOJ’s DNA Identification Fund which supports DOJ’s Division of Legal Services, while the remainder Bureau of Forensic Services and provisional supports the Division of Law Enforcement and the language for additional General Fund support, California Justice Information Services Division. if needed. Two other budget proposals related to Of the total amount proposed for DOJ operations in DOJ, specifically to support the new Organized 2022-23, around one-third—$433 million—is from Retail Crime Enterprises teams and to maintain the General Fund. This is an increase of $37 million DOJ’s Task Force Program, are discussed in a (or 9.5 percent) from the estimated 2021-22 forthcoming publication. General Fund amount. OVERVIEW AMMUNITION SAFETY AND Under the direction of the Attorney General, ENFORCEMENT SPECIAL FUND DOJ provides legal services to state and local entities, brings lawsuits to enforce public rights, Background and carries out various law enforcement activities. Firearms and Ammunition Regulation. DOJ also provides various services to local law Under federal and/or state law, certain individuals enforcement agencies, including providing forensic are not permitted to own firearms and ammunition. services to local law enforcement agencies in Such “prohibited persons” include individuals jurisdictions without their own crime laboratory. (1) convicted of felonies and some misdemeanors Figure 1 Department of Justice Budget Summary (Dollars in Millions) Change From 2021-22 2020-21 2021-22 2022-23 Actual Estimated Proposed Amount Percent Legal Services $498 $585 $604 $19 3.3% Law Enforcement 218 307 337 30 9.9 California Justice Information Services 228 259 250 -10 -3.8 Totals $944 $1,151 $1,191 $40 3.4% 2022-23 Budget Series 1 (such as assault), (2) found by a court to be a DOJ at the time of sale to ensure the purchaser is danger to themselves or others due to mental not a prohibited person and to collect and report illness, and (3) with a restraining order against certain information (such as the date of sale and them. Additionally, federal and state law include the purchaser’s identification information) to DOJ. various regulations related to firearms and Proposition 63 and Chapter 55 authorized DOJ to ammunition. This includes background checks charge fees to cover its reasonable regulatory and when purchasing firearms and ammunition to enforcement costs related to ensuring purchasers ensure the purchaser is not a prohibited person, are authorized to buy ammunition (also known a ten-day waiting period before a dealer may as the “Ammunition Purchase Authorization give a firearm to a buyer, and requirements Program”)—most notably specifying an ammunition for the recording and reporting of firearm and purchase fee of up to $1 per transaction (which ammunition sales. DOJ is authorized to adjust for inflation). Such DOJ’s Bureau of Firearms (BOF) is the primary fees are required to be deposited into the entity for ensuring compliance with federal and Ammunition Safety and Enforcement Special Fund state law. This includes processing background and continuously appropriated to support the checks, licensing vendors, inspecting vendors, Ammunition Purchase Authorization Program. and seizing firearms and ammunition from Additionally, Proposition 63 and Chapter 55 individuals who are no longer permitted to own (1) appropriated $25 million one-time General or possess them. As shown in Figure 2, BOF Fund as a start-up loan for the Ammunition activities have generally been supported by Purchase Authorization Program and (2) required various special funds that primarily receive revenue that Ammunition Safety and Enforcement Special from various fees (such as fees charged when Fund revenues—after deducting DOJ costs—be an individual purchases a firearm). Funding for transferred to the General Fund to repay the loan. BOF enforcement teams that seize firearms and Finally, Proposition 63 specified that its provisions ammunition from prohibited persons shifted from could be amended by the Legislature as long special funds to the General Fund beginning in as the changes are consistent with and further 2019-20. The Governor’s 2022-23 budget includes its intent. $52 million to support BOF—$20 million from the General Fund and $32 million from various special funds. Figure 2 (We note that the 2021-22 budget Summary of Funding for the DOJ Bureau of Firearms included a one-time $10.3 million General Fund augmentation for (In Millions) grants to county sheriff offices to assist with the removal of $70 firearms and ammunition from General Fund 60 prohibited persons.) Special Funds 50 Proposition 63 (2016) and Chapter 55 of 2016 40 (SB 1235, De León). 30 Proposition 63—as amended by Chapter 55—implemented various 20 state laws related to the regulation 10 of firearms and ammunition. With certain exceptions, this 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 (estimated) (proposed) included requiring DOJ-licensed ammunition vendors to check with DOJ = Department of Justice. 2022-23 Budget Series 2 Consistent Operational Shortfall Since balance could potentially be reduced, and even Creation of Ammunition Safety and eliminated, if (1) revenues are ultimately lower Enforcement Special Fund. As shown in Figure 3, or (2) expenditures are higher than expected expenditures from the Ammunition Safety and in 2021-22 and 2022-23. As such, additional Enforcement Special Fund—which is one of the resources could be needed in the budget year special funds that supports BOF operations— to maintain Ammunition Purchase Authorization have regularly exceeded revenues since the fund Program service levels. was established. This was expected in the first Proposal Lacks Long-Term Solution to few years as DOJ would need to incur certain Address Ongoing Operational Shortfalls. one-time costs—such as updating its existing The Governor’s proposal lacks a long-term solution databases—to allow for the Ammunition Purchase to address the ongoing operational shortfalls in the Authorization Program to begin operations in Ammunition Safety and Enforcement Special Fund. July 2019 (as required by Proposition 63 and Revenues are averaging around $2 million annually, Chapter 55). The General Fund loan mentioned while expenditures have ranged between $3 million above was thus used to address these operational to $4 million annually. (We note that it is unclear shortfalls. However, as shown in the figure, the specific impact, if any, the pandemic may have projections indicate that the balance of the General had upon ammunition transactions which would Fund loan will reach zero by 2023-24—resulting impact both revenues and expenditures.) Absent in the insolvency of the Ammunition Safety and any DOJ changes to its operations, this means that Enforcement Special Fund. This insolvency prevents operational shortfalls in the Ammunition Safety and any repayment of the start-up General Fund loan. Enforcement Special Fund will persist. Governor’s Proposal The Governor’s budget proposes provisional budget language Figure 3 authorizing the Director of the Ammunition Safety and Enforcement Department of Finance to transfer Special Fund in Operational Shortfall Since Creation any amount of General Fund to the (In Millions) Ammunition Safety and Enforcement Special Fund if there are insufficient revenues in the fund to support the $25 Ammunition Purchase Authorization Net General Fund Loan Remaining Program in 2022-23. This transfer 20 could only occur 30 days after written notification to the Legislature. 15 Assessment Additional Resources Could Be Needed in Budget Year to 10 Maintain Ammunition Purchase Authorization Program. Under 5 Expenditures current projections, the Ammunition Safety and Enforcement Special Fund is expected to end 2022-23 Revenues with a fund balance of $1.7 million. 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 (estimated) (proposed) (projected) This represents about 88 percent of annual projected revenues or 44 percent of annual projected expenditures. However, this fund 2022-23 Budget Series 3 Recommendations fluctuations in revenues or expenditures. Some revenues might even be available to Modify Proposal to Provide General Fund begin repaying the General Fund start-up loan. Transfer as Loan. We recommend the Legislature modify the Governor’s proposal to ensure that • Increasing the ammunition transaction fee by any General Fund resources provided to the $3 (for a total $4 fee) could provide sufficient Ammunition Safety and Enforcement Special Fund resources to cover DOJ Ammunition Purchase be provided as a loan. While we find it reasonable Authorization Program costs and potentially to provide resources to prevent decreased service generate sufficient revenues to repay the levels in the Ammunition Purchase Authorization General Fund start-up loan within the Program, the intent of Proposition 63 and next 15 years. Chapter 55 was for fee revenues to cover the • Increasing the ammunition transaction fee by state’s reasonable regulatory and enforcement $5 (for a total $6 fee) could provide sufficient costs related to ammunition purchases. As such, resources to cover DOJ Ammunition Purchase the additional General Fund resources should be Authorization Program costs and potentially provided as a loan—consistent with the $25 million generate sufficient revenues to repay the start-up loan authorized in 2016. General Fund start-up loan within the next Change State Law to Increase Ammunition five years. Purchase Transaction Fee. We recommend We note that fee increases can impact purchaser the Legislature change state law to increase the behavior—for example, significantly higher fees can ammunition purchase transaction fee. Such a result in individuals buying more in one transaction fee increase will likely be needed in the future to which could then impact the total amount of address the Ammunition Safety and Enforcement revenue collected annually—which is difficult to Special Fund’s operational shortfalls and avoid predict. The above options assume little change in insolvency. Consistent with Proposition 63 and purchaser behavior. Chapter 55, such a fee increase would ensure that there are sufficient revenues to pay for DOJ’s DNA IDENTIFICATION costs for operating the Ammunition Purchase FUND BACKFILL Authorization Program. We note that such a fee increase would require 55 percent approval Background by each house in the Legislature as well as the Overview of Bureau of Forensic Services Governor’s signature. (BFS). BFS provides criminal laboratory services— The Legislature has various options when such as DNA testing, alcohol and controlled considering the fee increase. When weighing these substances analysis, and on-site crime scene options, there are various factors for consideration. investigative support. Ten regional laboratories Such factors include: (1) the maximum per provide services at no charge for local law transaction fee desired, (2) how quickly the enforcement and prosecutorial agencies in $25 million General Fund start-up loan should 46 counties that do not have access to those be repaid, and (3) when the desired fee increase services. BFS also assists the 12 counties and should take effect. For example, if a fee increase 8 cities that operate their own laboratories goes into effect quickly, it is possible that the where BFS offers services their laboratories Governor’s proposal may not be needed. Some lack. (Local agencies also contract with private potential options for increasing fees include: or other governmental laboratories for services.) • Increasing the ammunition transaction fee Additionally, BFS operates the state’s DNA by $2 (for a total $3 fee) could address laboratory as well as the state’s criminalistics the Ammunition Safety and Enforcement training institute. Special Fund’s operational shortfall and provide sufficient resources to address minor 2022-23 Budget Series 4 BFS Funding Sources. BFS receives support General Fund—to support BFS annual operations. from various sources, but primarily from the The budget specifically required DOJ consider an DNA Identification Fund—a state special fund option that would require sharing costs with local that receives criminal fine and fee revenue—and agencies that make use of BFS services based on the state General Fund. As shown in Figure 4, the specific type of forensic services sought, the the amount of revenue deposited into the DNA speed of the service, the size of the agency, and Identification Fund has steadily declined since any other factors DOJ chooses to include. As of the 2013-14. To help address this steady decline and time of this publication, DOJ reports that it is on to maintain BFS services levels, the state has track to submit this report by the specified deadline. provided General Fund support to backfill the Governor’s Proposal DNA Identification Fund since 2016-17. The Governor’s budget proposes $46.4 million Report on Alternative Ways to Fund BFS one-time General Fund to backfill the DNA Forthcoming. The 2021-22 budget package Identification Fund in 2022-23. The proposal also required DOJ submit a report by March 10, 2022 includes provisional budget language authorizing that identifies various options—other than the state the Director of the Department of Finance to Figure 4 Steady Decline in Criminal Fine and Fee Revenue Deposited Into the DNA Identification Fund (In Millions) $80 General Fund Backfill Criminal Fine and Fee Revenue 70 60 50 40 30 20 10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 (estimated)(proposed) 2022-23 Budget Series 5 transfer additional General Fund to the DNA Local Governments Lack Incentive to Use Identification Fund if revenues deposited into the BFS Services Cost-Effectively. BFS’s current fund decline further and are insufficient to support funding structure provides the agencies it serves with BFS. This transfer can only occur after 30 day little incentive to use its services in a cost-effective written notification to the Legislature. manner. Since BFS does not charge for its services, these local agencies lack incentive to prioritize what Assessment forensic evidence is collected and submitted for Proposal Addresses DNA Identification testing. Their submissions instead are generally only Fund Shortfall in 2022-23. The Governor’s limited by BFS’s overall capacity and service levels, proposal would address the projected DNA as determined by the amount of funding provided to Identification Fund shortfall in the budget year the bureau in the annual state budget. In contrast, and would maintain existing BFS service levels. counties and cities that use their own resources to We would note that the 2021-22 budget included support their labs—or those that decide they want provisional budget language allowing the Director to pay a private laboratory for testing—have greater of the Department of Finance to provide additional incentive to carefully prioritize what evidence should General Fund to backfill the DNA Identification Fund be tested and how quickly it should be done. if revenues decline further. As shown in Figure 4, Recommendations tens of millions of dollars could be needed if fine and fee revenues are not higher than currently Require Local Governments to Partially projected for 2021-22. Support BFS Beginning in 2023-24. Given the Proposal Does Not Address Long-Term substantial benefit that local agencies receive from Fund Solvency. The Governor’s proposal does BFS services, we recommend the Legislature require not address the long-term solvency of the DNA local governments to partially support BFS beginning Identification Fund. Because of the steady decline in 2023-24. We also recommend the Legislature in criminal fine and fee revenue, BFS expenditures provide DOJ with direction on how much of BFS exceed estimated revenues by millions of dollars operation revenues should come from local agencies annually. Because the DNA Identification Fund (such as one-third or one-half). This would generally will effectively have no fund balance at the end of reduce the amount of General Fund needed to 2022-23, this means that this fund is insolvent. support BFS costs on an ongoing basis. Additionally, this would also be more equitable than the existing BFS Provides Certain Local Governments system in which certain local governments receive Substantial Benefits. City and county law services at no charge, while others pay to operate enforcement and prosecutorial agencies are their own laboratories. predominantly responsible for collecting and submitting forensic evidence for testing as well as Under our recommendation, agencies that receive using the evidence to pursue criminal convictions in service from BFS would be required to pay for a court. However, certain counties and cities benefit portion of the services they receive—providing greater significantly more than others. Specifically, while incentive to prioritize workload to DOJ. DOJ would 12 counties and 8 cities currently use their own have flexibility in calculating each local agency’s share resources to support local criminal laboratories, of the BFS services it uses—including operation 46 counties generally do not have to use any of their and facility costs—based on consultation with resources for criminal laboratory services. This is stakeholders and after considering various factors because BFS is effectively subsidizing the agencies (including equity concerns). For example, DOJ could in these counties with tens of millions of dollars in require local agencies pay more or less based on services annually. various factors—such as the specific type of forensic service sought, the speed of the service, or the size of the agency. The delayed implementation date provides time for the implementation of a new funding structure and to allow agencies to adapt to the new funding framework. 2022-23 Budget Series 6 Consider Alternative Funding Options in Approve Governor’s Proposal to Allow for Forthcoming Report. As noted earlier, DOJ Implementation of New Funding Structure. indicates that it is currently on track to submit To provide DOJ and local governments time to the legislatively required March report identifying implement and adapt to a new funding structure, various options—other than the General Fund— we recommend approval of the Governor’s proposal to fund BFS operations. One of the options was in order to ensure existing BFS service levels required to include sharing costs with local are maintained. agencies. As such, the alternative options identified by DOJ in its forthcoming report can be used to inform the specifics of a new funding structure. Regardless of the alternatives (such as if a new fund source other than the General Fund is identified), we do recommend that the local agencies provide some support in order to provide greater incentive to prioritize workload submitted to BFS. 2022-23 Budget Series 7 LAO PUBLICATIONS This post was prepared by Anita Lee and reviewed by Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2022-23 Budget Series 8