The 2025-26 Budget: Department of Justice

2025-26 BUDGET The 2025-26 Budget: Department of Justice GABRIEL PETEK | LEGISLATIVE ANALYST | FEBRUARY 2025 SUMMARY In this brief, we analyze the Governor’s budget proposals for the Department of Justice (DOJ) related to (1) the Bureau of Forensic Services (BFS) and (2) firearm-related workload. Recommend Rejecting Requested General Fund Backfill and Requiring BFS Users to Partially Support BFS. We recommend the Legislature reject the Governor’s proposal to provide an ongoing General Fund backfill—$37 million in 2026-27, declining to $35 million annually beginning in 2028-29—to the special fund supporting BFS to address declines in fines and fee revenues. Instead, we recommend the Legislature require (1) users of BFS services to partially support BFS beginning in 2026-27 and (2) DOJ develop a plan for calculating each agency’s share of the BFS services it uses. We find this new funding structure is a better option for maintaining support for BFS as it reflects the importance of such services to state and local agencies, provides greater incentive to prioritize what workload is sent to DOJ, and minimizes the impact on the state General Fund. BFS has sufficient resources in 2025-26 to maintain service levels while this new funding structure is implemented. Direct DOJ to Provide a Framework for Determining What Firearm Workload Should Be Funded by Fee Revenues. We raise no concerns with the Governor’s proposal for $19.2 million in 2025-26 (mainly from the state General Fund)—declining to $6.4 million ongoing beginning in 2027-28—to support 11 firearm and ammunition budget proposals as they implement legislative proposals or address increased workload. While some of the General Fund costs may statutorily be supported by the state’s firearm and ammunition special funds, the special funds are unlikely to be fiscally able to do so. Additionally, the legal landscape for what level of firearm regulatory fees are allowable is in flux and the General Fund has a limited capacity for ongoing commitments. As such, we recommend the Legislature direct DOJ to provide a potential framework for determining what firearm and ammunition workload should be funded by fee revenues. Such a report could help inform legislative decision-making on how such workload could be supported in the future— including what fee levels would be appropriate and how costs should be addressed in the absence of sufficient fee revenues. OVERVIEW Roles and Responsibilities. Under the Finally, DOJ manages various databases, including direction of the Attorney General, DOJ provides the statewide criminal history database. legal services to state and local entities; brings Spending Proposed for 2025-26. As shown in lawsuits to enforce public rights; and carries out Figure 1 on the next page, the Governor’s budget various law enforcement activities, such as ensuring proposes $1.3 billion to support DOJ operations in lawful ownership or possession of firearms and 2025-26—an increase of $5 million (or 0.4 percent) ammunition. DOJ also provides various services to over the revised amount for 2024-25. A little more local law enforcement agencies, including providing than half of the proposed funding supports DOJ’s forensic services to local law enforcement agencies Division of Legal Services, while the remainder in jurisdictions without their own crime laboratory. supports the Division of Law Enforcement and the www.lao.ca.gov 1 2025-26 BUDGET Figure 1 Department of Justice Budget Summary (Dollars in Millions) Change From 2024-25 2023-24 2024-25 2025-26 Actual Estimated Proposed Amount Percent Legal Services $609 $693 $690 -$3 -0.4% Law Enforcement 297 347 344 -3 -0.9 California Justice Information Services 264 273 284 11 4.0 Totals $1,170 $1,313 $1,318 $5 0.4% California Justice Information Services Division DOJ operations comes from a number of special (CJIS). Of the total amount proposed for DOJ funds and reimbursements, including from operations in 2025-26, $496 million (or 38 percent) departments for the provision of legal services. is from the General Fund. This is a decrease The proposed budget would provide DOJ with a of $12 million (or 2 percent) from the revised total of 6,185 positions in 2025-26, an increase 2024-25 General Fund amount—reflecting the of 107 positions (or 2 percent) from the revised net effect of a variety of technical and workload 2024-25 level. budget adjustments. The remaining support for DNA IDENTIFICATION FUND BACKFILL Background two largest users. Additionally, usage of specific types of BFS services varies by entity. For example, BFS Provides Criminal Laboratory Services. state entities proportionately seek a greater share of BFS provides criminal laboratory services such as alcohol or toxicology-related services. In contrast, DNA testing, alcohol and controlled substances counties and cities proportionately seek a greater analysis, and on-site crime scene investigative share of controlled substances, latent print, or support. Ten regional laboratories provide services criminalistics-related services. generally at no charge for local law enforcement and prosecutorial agencies in 46 counties that do not have access to those services. BFS also assists Figure 2 the 12 counties and 8 cities that operate their Counties and Cities Represent own laboratories where BFS offers services their Two-Thirds of Bureau of Forensic laboratories lack. (Local agencies also contract Services Workload with private or other governmental laboratories 2023-24, Processed Submissions for services.) Additionally, BFS provides service to various state, federal, and other entities. Finally, Federal or Other Entities BFS operates the state’s DNA laboratory as well as the state’s criminalistics training institute. Local Entities Use Most of BFS Services. State In 2023-24, BFS processed 36,422 submissions. Entities As shown in Figure 2, two-thirds of the processed County or submissions were for county or city local City Entities government entities. About 30 percent of the workload was for state entities, with the California Highway Patrol (CHP) and the California Department of Corrections and Rehabilitation (CDCR) being the 2 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET BFS Supported Primarily by DNA General Fund to the DNA Identification Fund if Identification Fund, Which Receives General revenues deposited into fund decline further and Fund Backfill. BFS receives support from various are insufficient to support BFS. This transfer can sources, but primarily from the DNA Identification only occur 30 days after written notification is Fund—a state special fund that receives criminal provided to the Legislature. fine and fee revenue—and the General Fund. DOJ Required to Report in 2022 on Potential As shown in Figure 3, the amount of criminal Funding Options Other Than General Fund. fine and fee revenue deposited into the DNA The 2021-22 budget package required DOJ to Identification Fund has steadily declined from provide a report by March 10, 2022 that identified a peak of $69 million in 2013-14 to $38 million various options—other than the General Fund— in 2023-24 (a decline of 45 percent). (This is to support BFS annually. The budget package consistent with the overall trend of decreased specifically directed DOJ to consider an option that criminal fine and fee revenue deposited into the would require sharing costs with local agencies that various state and local special funds eligible to make use of BFS services based on the specific receive them. The severity of the decline deposited type of forensic services sought, the speed of into a particular fund depends on various factors.) the service, the size of the agency, and any other To help address this steady decline and to maintain factors DOJ chooses to include. the level of services provided by BFS, the state DOJ Report Included Five Potential Funding has provided General Fund support to backfill the Options. In response to the above requirement, reduction in criminal fine and fee revenue deposited DOJ provided a report to the Legislature on in the DNA Identification Fund since 2016-17. March 10, 2022. The department identified the For example, the 2023-24 budget package included following options to support BFS operations: a three-year annual $46.1 million General Fund (1) a general tax increase, (2) allowing the surcharge backfill of the DNA Identification Fund. The budget added to criminal history background check fees to also included budget bill language authorizing also cover BFS costs (and adjusting the surcharge the Department of Finance to transfer additional accordingly), (3) increasing the specific fee added Figure 3 Steady Decline in Criminal Fine and Fee Revenue Deposited Into the DNA Identification Fund (In Millions) $100 General Fund Backfill 90 Criminal Fine and Fee Revenue 80 70 60 50 40 30 20 10 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 (estimated) (projected) www.lao.ca.gov 3 2025-26 BUDGET when individuals are convicted of criminal offenses …But Requires Trade-Off With Other Budget which generates the revenue deposited into the Priorities. The Governor’s proposal would DNA Identification Fund, (4) requiring the judicial commit the state to providing roughly $35 million branch to provide funding to support BFS as it General Fund annually over the next few years, similarly is supported by criminal fine and fee and potentially even more in the following years. revenue and forensic science is important to courts, This approach comes with significant trade-offs for and (5) requiring nonlocal government entities other parts of the state budget. Given the state’s (such as CDCR) pay for their share of BFS services. current fiscal position—with a budget that is roughly Additionally, DOJ discussed the benefits and balanced in 2025-26 and notable deficits projected drawbacks of various methods for implementing in the out-years—the state does not have capacity a cost-sharing model with local agencies. Such for new ongoing commitments. As a result, in future methods included establishing: (1) an hourly rate for years, this proposed ongoing spending will likely services provided, (2) a flat fee by type of service crowd out other areas of spending and require even provided, (3) a flat fee by county, and (4) a hybrid further budget solutions, such as reduced spending flat fee-hourly rate model. After its assessment for other existing state programs. of the cost-sharing model and alternative funding Governor’s Proposal Maintains Key options, DOJ maintained that it believes a General Weaknesses of the Current System. Both Fund backfill is the best approach for supporting the state and local governments have a role in BFS annual operations. supporting criminal laboratory services because these services are generally needed to investigate Governor’s Proposal and prosecute criminal cases at both the state Provides Ongoing General Fund Backfill of and local level. However, the current approach to DNA Identification Fund. Because the three-year, funding and providing these services—which the $46.1 million annual backfill provided in the 2023-24 Governor’s proposal would maintain and extend— budget will expire at the end of 2025-26, the has two key weaknesses: Governor’s 2025-26 budget proposes to provide an • Many Local Governments Rely on State to ongoing General Fund backfill beginning in 2026-27. Pay for All Forensic Service Costs. City and Specifically, the Governor proposes $37 million in county law enforcement and prosecutorial 2026-27, $36 million in 2027-28, and $35 million agencies are predominantly responsible for annually beginning in 2028-29. The 2025-26 budget collecting and submitting forensic evidence also maintains the budget bill language allowing for testing, as well as using the evidence to DOF to augment the backfill amount. Under this pursue criminal convictions in court. However, language, the General Fund would be permanently 46 counties and a number of cities rely almost responsible for backfilling the DNA Identification exclusively on the state for these services, Fund to ensure there is sufficient funding to which in turn costs the state tens of millions of support BFS. dollars annually. Assessment • Many Users Lack Incentive to Use BFS Governor’s Proposal Would Permanently Services Cost-Effectively. BFS’s current Address Ongoing Decline in DNA Identification funding structure provides the agencies it Fund Revenues… The Governor’s proposal serves with little incentive to use its services would fully address the ongoing decline in DNA in a cost-effective manner. For example, since Identification Fund revenues and provide BFS with BFS does not charge for its services, local a stable level of funding. This is because, under agencies lack incentive to prioritize what the budget bill language, the General Fund would forensic evidence is collected and submitted be permanently responsible for supporting any for testing. Their submissions instead are BFS costs that cannot be supported by the DNA generally only limited by BFS’s overall capacity Identification Fund. and service levels, as determined by the amount of funding provided to the bureau in 4 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET the annual state budget. In contrast, counties Our concerns with the remaining potential funding and cities that use their own resources to options can be found in an earlier publication: support their labs—or those that decide they The 2023-24 Budget: Department of Justice want to pay a private laboratory for testing— Proposals. have a greater incentive to carefully prioritize Recommendations what evidence should be tested and how quickly it should be done. Similar to local Forensic services are important to various governments, nonlocal government entities agencies in the investigation and prosecution of that use BFS services (such as CHP and criminal cases. Accordingly, it is important that CDCR) lack a financial incentive to prioritize BFS receives relatively stable funding to process what evidence is submitted for testing. its workload. This has been challenging in recent years due to the continual decline in revenue Alternative Approach Requiring BFS Users in the DNA Identification Fund. The Governor’s to Partially Support BFS Would Address Key budget proposes to stabilize funding by providing Weaknesses. An alternative approach that uses an ongoing General Fund backfill to the DNA a cost-sharing model by requiring BFS users to Identification Fund. In contrast, we recommend pay a portion of BFS costs would help address the an alternative approach that minimizes the impact weaknesses we see in the Governor’s approach. on the General Fund; increases BFS users’ roles First, since these forensic services are essential in the provision of forensic services, consistent to their law enforcement and prosecutorial with these services being essential to their law responsibilities, sharing the costs with these enforcement and prosecutorial responsibilities; and agencies—rather than having the state directly results in such users having incentive to prioritize bearing all of the costs—is a more appropriate the workload that is submitted. Specifically, we allocation of fiscal responsibility. In addition, recommend the Legislature reject the Governor’s requiring agencies to pay for a portion of the BFS proposed ongoing General Fund backfill beginning services they use would provide them a greater in 2026-27. We also recommend the Legislature incentive to carefully prioritize what evidence should require (1) users of BFS services to partially support be tested and how quickly it should be done. BFS beginning in 2026-27 and (2) DOJ to develop Other Potential Alternative BFS Funding a plan for calculating each agency’s share of the Options Identified by DOJ Raise Concerns. BFS services it uses. We discuss each of our In our review of DOJ’s March 2022 report, we recommendations in greater detail below. identified various concerns about the viability of Reject Governor’s Proposal. We recommend the other potential funding options identified. For the Legislature reject the Governor’s proposal to example, one potential funding option discussed provide an ongoing General Fund backfill to the in the report was to increase the specific fee DNA Identification Fund to support BFS beginning added when individuals are convicted of criminal in 2026-27. As noted above, the $46.1 million offenses which generates the revenue deposited backfill provided for 2025-26 remains unchanged. into the DNA Identification Fund. Given the state’s As such, BFS already has sufficient resources to complex formula for distributing criminal fine and maintain its service levels in the coming year while fee revenue, there is no guarantee that increasing a new funding structure (which we describe below) this specific fee will actually increase the amount of is implemented. revenue deposited in the DNA Identification Fund Require Local Users of Forensic Services to annually. This is due to the complex formula that Partially Support BFS Beginning in 2026-27. dictates the order in which special funds receive We recommend the Legislature require local criminal fine and fee revenue that is collected. governments to partially support BFS beginning Given the fund’s priority order in this formula, it in 2026-27. Agencies that receive services from is not certain that it would receive the expected BFS would be required to pay for a portion of the revenues as funds with a higher-priority order could services they receive, consistent with this being receive the bulk of any additional revenue collected. essential to their law enforcement and prosecutorial www.lao.ca.gov 5 2025-26 BUDGET responsibilities. Additionally, this would provide Require DOJ to Develop Plan for Calculating them with greater incentive to prioritize what User Share of BFS Support. To support the workload they send to DOJ. Delaying this change alternative funding structure identified above, we to 2026-27 provides time for the implementation of recommend the Legislature direct DOJ to submit a new funding structure and to allow agencies to a plan for calculating each agency’s share of the adapt to the new funding framework. BFS services it uses—including operating and Require Nonlocal Users of Forensic Services facility costs—and report on this plan no later than to Partially Support BFS Beginning in 2026-27. October 1, 2025 to allow for its consideration as Similarly, we recommend the Legislature require part of the 2026-27 budget. We also recommend nonlocal government agencies to partially support the Legislature provide DOJ with direction on BFS by paying for a portion of the services they how much of BFS operation revenues should receive from their operational budgets beginning in come from local, state, and other agencies (such 2026-27. For example, CDCR could be directed to as one-third or one-half), as well as whether pay for its share of BFS services from its operational the Legislature plans to directly appropriate a budget. This is consistent with these services specific General Fund amount to support a certain being important to CDCR’s law enforcement level of services for state agencies. While the mission. It would also provide CDCR with incentive Legislature would determine the amount of revenue to consider what evidence, and the amount of DOJ should aim for, we recommend giving DOJ evidence, that is submitted. (We note that this flexibility in calculating each agency’s cost share would be similar to the DOJ Legal Division billing of BFS services—including operation and facility state agencies for the costs of providing legal costs—based on consultation with stakeholders advice and service.) Alternatively, the Legislature and after considering various factors (including could designate specific portions of the General equity concerns). For example, DOJ could require Fund it provides to BFS as being exclusively agencies pay more or less based on various to provide services for each entity—effectively factors—such as the specific type of forensic capping the amount of service the entity would service sought, the speed of the service, or the size receive. Because this amount would be limited, of the agency. We acknowledge that developing it would similarly provide an incentive for these such a plan may be difficult. However, we believe entities to consider what evidence is submitted that the effort is well-merited as it would result in and why it is submitted. We note that adopting notable benefits by minimizing impact on the state this recommendation could require some level of General Fund and permanently addressing the key increased resources for state agencies that receive weaknesses with the existing system by increasing BFS services, such as CHP and CDCR. However, BFS users’ roles in the provision and use of such this would come at no net General Fund cost as it services in a cost-effective manner. would correspondingly reduce the General Fund backfill needed to support BFS. FUNDING FOR FIREARM-RELATED WORKLOAD Background background checks for individuals seeking to purchase firearms and ammunition, licensing Bureau of Firearms (BOF) Primarily firearm and ammunition vendors, conducting Responsible for Regulating and Enforcing vendor compliance investigations, ensuring lawful State’s Firearm and Ammunition Laws. DOJ’s possession of firearms and ammunition, and BOF is primarily responsible for the regulation administering various other firearm and ammunition and enforcement of the state’s firearm and programs. BOF engages in various activities related ammunition laws. This includes conducting 6 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET to these responsibilities. For example, BOF has (We also note that CJIS separately receives enforcement teams who are primarily responsible millions of dollars annually from several fund for investigating the illegal purchase or possession sources to maintain and update various databases of firearms and ammunition, as well as seizing them needed to support BOF’s activities, such as the from individuals who are prohibited from owning or Automated Firearms System, which tracks firearm possessing them. serial numbers.) Overall BOF Funding and General Fund Five Firearm or Ammunition Related Special Support Increased Over Past Decade. As shown Funds Support BOF Workload. Separate from the in Figure 4, support for BOF has increased over General Fund, five firearm and ammunition-related the past decade from $30.2 million in 2015-16 special funds support BOF workload. These to $62.1 million in 2024-25—an increase of five funds include: (1) Dealers’ Record of Sale $31.9 million (or 106 percent). During this period, (DROS) Special Account, (2) Firearms Safety and BOF also shifted from being fully supported by Enforcement Special Fund, (3) Firearm Safety various special funds and began receiving General Account, (4) Ammunition Safety and Enforcement Fund support in 2019-20. Of the total $62.1 million Special Fund, and (5) Ammunition Vendors Special provided to BOF in 2024-25, $24.1 million (or Account. State law authorizes DOJ to charge 39 percent) was from the General Fund and various fees related to firearms and ammunition $37.9 million (or 61 percent) was from various that are deposited into these funds to support BOF special funds. Most of the General Fund is used programs and activities. For example, an individual to support the Armed and Prohibited Persons purchasing a firearm currently pays fees totaling System (APPS) enforcement teams, which seize $37.19—a $31.19 fee deposited into the DROS firearms from individuals prohibited from owning Special Account (the “DROS fee”), a $5 fee into the or possessing them. This has been the case since Firearm Safety and Enforcement Special Fund, and 2019-20 when the budget package shifted full a $1 fee into the Firearm Safety Account. State law support of these teams over to the General Fund. also authorizes DOJ to administratively increase Figure 4 Bureau of Firearms Funding Increased Since 2016-17 (In Millions) $80 70 General Fund 60 Special Funds 50 40 30 20 10 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 (estimated) (proposed) www.lao.ca.gov 7 2025-26 BUDGET some of these fees to account for inflation as long exceeded expenditures—thereby allowing the fund as the fee does not exceed DOJ’s regulatory and balance to steadily grow. However, beginning in enforcement costs. State law authorizes revenues 2022-23, expenditures began outpacing revenues, deposited into each of these special funds to be shrinking the fund balance. The Governor’s used for various purposes. budget estimates $33.5 million in DROS Special DROS Special Account Is the Primary Special Account revenues in 2025-26 and expenditures Fund Supporting BOF. The DROS Special of $36.7 million, resulting in a fund balance of Account is the primary special fund supporting BOF $3.2 million at the end of the year. activities. This is because it receives the most fee Governor’s Proposal revenue. Additionally, the statutorily permissible The Governor’s budget proposes $19.2 million uses of the fund are quite broad. Specifically, the in 2025-26 ($18.6 million General Fund and DROS Special Account may generally be used to $640,000 from various special funds)—declining offset DOJ’s reasonable costs of firearm-related to $6.4 million ongoing ($5.8 million General Fund regulatory and enforcement activities pertaining and $519,000 from the Fingerprint Fees Account) to the sale, purchase, manufacturing, lawful or in 2027-28—to support DOJ firearm workload. unlawful possession, loan, or transfer of firearms. As shown in Figure 5, DROS Special Account As shown in Figure 6, the proposed funding would support 11 budget proposals—including revenues often fluctuate from year to year, generally eight related to workload resulting from recently reflecting changes in fee levels and the number of enacted legislation. firearms sold. DROS Special Account expenditures routinely exceeded revenues prior to 2019-20— Assessment resulting in the decline of the fund balance. To help Proposals Reasonable, but Some Could ensure sufficient revenues would be available Statutorily Be Funded by Special Funds… to support BOF workload, Chapter 736 of 2019 We generally find the requested budget proposals (AB 1669, Bonta) enabled DOJ to increase the to be reasonable as they support increased DROS fee charged from $19 to $31.19. For a couple workload and the implementation of new legislation. years after this fee increase, revenues generally Figure 5 DROS Special Account Nearing Insolvency (In Millions) $60 50 Expenditures 40 Revenues 30 20 Fund Balance 10 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-212021-22 2022-23 2023-24 2024-25 2025-26 (estimated)(proposed) DROS = Dealers’ Record of Sale. 8 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Figure 6 Summary of Governor’s Firearm Workload Proposals Workload Proposed Resources Description Recently Enacted Legislation Chapter 527 of 2024 $198,000 General Fund in 2025-26. Prohibits people found mentally incompetent to stand (AB 2629, Haney) trial in a post release community supervision or parole revocation hearings from possessing or receiving a firearm. DOJ seeks additional resources to update its existing databases to reflect such requirements. Chapter 529 of 2024 5 positions and $1 million General Fund in Establishes the Office of Gun Violence Prevention within (AB 1252, Wicks) 2025-26, declining to $952,000 annually in DOJ, which advises the Attorney General on gun 2026-27. violence prevention-related issues. By July 2026, the office is required to issue a public report on achieving sustained gun violence reduction. Chapter 538 of 2024 $165,000 General Fund in 2025-26. Requires the courts and law enforcement take (AB 2907, Zbur) additional actions to ensure that a person subject to a protective order relinquishes any firearm in their possession. These include querying a DOJ database, and providing a copy of the results to prosecutors. DOJ seeks resources to increase the number of results displayed for each query. Chapter 539 of 2024 1 position and $138,000 General Fund in Expands factors a court must consider when (AB 2917, Zbur) 2025-26, declining to $125,000 annually in determining whether to issue a gun violence 2026-27. restraining order. DOJ seeks additional workload this will generate for its Armed Prohibited Person System. Chapter 540 of 2024 $489,000 ($398,000 General Fund and Authorizes DOJ charge fees, beginning January 2026, (AB 3064, Maienschein) $91,000 FSA) in 2025-26 and $156,000 to cover certain costs related to approving devices for ($78,000 General Fund and $78,000 FSA) in its firearm safety devices roster and requires DOJ to 2026-27. manage the roster. Chapter 542 of 2024 $212,000 ($181,000 General Fund; $16,000 Adds gun storage requirements and requires DOJ (SB 53, Portantino) Gambling Control Fund; $15,000 Indian to (1) inform the public of the requirements and Gaming Special Distribution Fund) in 2025-26 (2) comply with the requirements itself. and $80,000 ($67,000 General Fund; $7,000 Gambling Control Fund; $6,000 Indian Gaming Special Distribution Fund) in 2026-27. Chapter 544 of 2024 $43,000 General Fund in 2025-26. Extends firearm and ammunition relinquishment (SB 899, Skinner) procedures that currently apply to domestic violence restraining orders to various restraining or court protective orders. Requires DOJ to add ammunition relinquishment language to some of these orders. Chapter 546 of 2024 1 position and $180,000 General Fund in Requires DOJ to annually report on staffing levels for (SB 965, Min) 2025-26, declining to $161,000 annually in conducting firearm dealer and ammunition vendor 2026-27. inspections, information about each inspection conducted, and specified information about the roster of handguns DOJ maintains. FITSM 17 positions and $11.4 million General Fund in Resources to continue development of FITSM, including 2025-26. solution planning, development, procurement, evaluation, and selection for the project which replaces 17 existing firearm and ammunition databases and systems. Carry Concealed Weapon 26 positions and $3.2 million ($2.7 million Permanent funding to address increased carry Program General Fund and $519,000 FFA) annually concealed weapon license workload from the beginning in 2025-26. elimination by the federal courts of the requirement to show good cause for such a license. Firearms Clearance 14 positions and $2.2 million General Fund in Resources to ensure the timely completion of firearm Section Workload 2025-26, declining to $1.9 million annually in and ammunition eligibility check workload. 2026-27. DOJ = Department of Justice; FSA = Firearms Safety Account; FITSM = Firearms IT Systems Modernization Project; and FFA = Fingerprint Fees Account. www.lao.ca.gov 9 2025-26 BUDGET However, a majority of these proposals that are State Typically Set Fees to Support requesting full or partial General Fund support Regulatory or Enforcement Activities… The state could statutorily be funded by DOJ’s firearm and typically establishes fees to fully support state ammunition special funds—most notably the entity costs to license, regulate, and enforce laws DROS Special Account as it has the broadest within a particular industry. A key example is statutorily permissible uses. This is because they the state’s licensing and regulatory activities for generally pertain to DOJ regulatory or enforcement various professions—such as lawyers, doctors, actions to ensure the lawful ownership or and accountants—overseen by the Department possession of firearms. of Consumer Affairs (DCA). Nearly the entire …While Some Could Not. At least three budget $753 million 2024-25 budget for DCA is supported proposals could not statutorily be funded by by fees charged to each profession. Such fees are these special funds and are appropriately seeking regularly adjusted or approved by the Legislature as General Fund resources. One of these proposals is needed to cover increased workload and costs. Chapter 529 of 2024 (AB 1252, Wicks), which would …But Recent U.S. Supreme Court Comment create a new Office of Gun Violence Prevention on Firearm Regulatory Fees Raises Questions that focuses on gun violence prevention rather About This Approach. In June 2022, the than regulatory or enforcement issues, meaning U.S. Supreme Court issued a decision in the New the activities are generally outside the permissible York State Rifle & Pistol Association v. Bruen activities for funding by the five special funds. case that found laws requiring individuals provide Another proposal is Chapter 539 of 2024 (AB 2917, “good cause” to carry a concealed weapon Zbur), which seeks additional resources for the to be unconstitutional. As a result, states that APPS System—for which support was previously want to regulate an individual’s ability to carry shifted to the General Fund, as mentioned above. concealed weapons (including California) must Finally, the third proposal is Chapter 546 of 2024 have “shall-issue” regulatory regimes, meaning (SB 965, Min), which seeks additional resources such states are required to issue carry concealed for data reporting. The required reporting generally permits to individuals seeking them if the individuals appears to fall outside of the regulatory or meet nondiscretionary criteria. The decision enforcement activities that can be supported by the included the following footnote: “Because any five special funds. permitting scheme can be put towards abusive Special Funds Currently Unlikely to Be ends, we do not rule out constitutional challenges Able to Support All Permissible Costs. While a to shall-issue regimes where, for example, lengthy number of the budget proposals could statutorily wait times in processing license applications or be supported by the five firearm and ammunition exorbitant fees deny ordinary citizens their right to special funds, these special funds are unlikely to public carry.” This footnote suggests that there may fiscally be able to support all of the permissible be a point where firearm regulatory fees become costs. If all permissible General Fund costs in these unconstitutionally high. requests were shifted from the General Fund to Concerns With DROS Special Account these special funds, more than $15 million would be Insolvency Led to Greater Use of General shifted in 2025-26—with at least $5 million shifted Fund… As shown in Figure 4 on page 7, support on an ongoing basis. The DROS Special Account for BOF followed a fee-based funding structure (assuming approval of the Governor’s proposals through 2018-19, with all BOF costs supported by and no additional changes) faces potential special funds. This changed in 2019-20 when the insolvency in 2027-28, even without shifting the state decided to shift full support for the APPS allowable cost of these proposals to the fund. Program from the special funds to the General The four other special funds similarly would be Fund, in part to address the solvency of the firearm unable to support all of these costs. This is because special funds. With the passage of Chapter 736 to they face structural shortfalls in which expenditures increase the fee deposited into the DROS Special exceed revenues, generally receive less revenue, Account, the Legislature took steps to shift more of or can only be used for a relatively narrow number the cost of BOF back onto special funds. Despite of activities. that action, DOJ firearm-related costs stemming 10 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET from increased workload, newly enacted legislation, especially critical given the multiyear deficits facing and the Firearms Information Technology Systems the state that leave no capacity for new ongoing Modernization (FITSM) project continued to push commitments, meaning any additional General the fund toward insolvency. (FITSM is a technology Fund provided for firearms regulation would project currently in progress that would replace likely require reduced spending for other existing 17 existing firearm and ammunition databases and state programs. For example, FITSM will require systems.) The looming insolvency of the DROS significant resources—potentially in the hundreds Special Account has led to DOJ increasingly of millions of dollars—in the coming years to be requesting General Fund resources to support completed. To the extent that fees are available firearm-related workload that can statutorily be to support BOF activities, it would minimize the supported by the special funds. In 2025-26, the need for General Fund resources. To the extent Governor’s budget projects that 51 percent of fee revenues are not available to support DOJ’s support for BOF will come from the General Fund. firearm-related workload, General Fund could be …Leading to Inconsistencies in How necessary—but would come at the cost of other Workload Is Funded… The increasing provision budget priorities. of General Fund has led to some inconsistency Recommendations in what is funded by the General Fund versus the We raise no concerns with the Governor’s firearm special funds. For example, the 2023-24 request to fund 11 firearm and ammunition budget budget package included $19.3 million in 2023-24 proposals as they implement legislative proposals (decreasing to $6 million annually beginning or address increased workload. However, we have in 2026-27)—mostly from the DROS Special broader concerns with how the state supports Account—for the implementation of five pieces firearm-related workload in the future—specifically of enacted legislation, increased or new baseline what portion of such workload is supported workload, and the continuation FITSM. In contrast, by regulatory fees versus the General Fund. the 2024-25 budget package included $16.2 million This is particularly important given the multiyear in 2024-25 (decreasing to $11.9 million annually deficits facing the state which mean that any in 2028-29)—mostly from the General Fund—for additional General Fund spending would require the implementation of five pieces of enacted reductions in other state programs. We discuss legislation and the continuation of FITSM. Both our two recommendations to address this broader budget packages included some budget requests concern below. to fund similar types of workload but this workload was supported with different fund sources in each Direct DOJ Provide a Framework for budget act. For example, FITSM was funded by the Determining What Workload Should Be DROS Special Account in 2023-24 and the General Funded by Fee Revenues. We recommend the Fund in 2024-25. The Governor’s budget proposes Legislature direct DOJ to provide the Legislature General Fund support for FITSM in 2025-26. with a potential framework by January 10, 2026 for determining what firearm and ammunition workload …Suggesting State May Want to Examine Its should be funded by special fund fee revenues. In Regulatory Fee Structure, Particularly Given developing this framework, DOJ can evaluate its Limited General Fund Capacity for Ongoing entire workload, the potential impact of FITSM and Commitments. The inconsistencies in how the other actions that can help improve efficiency, and state supports current firearm workload and the existing federal and state statute and case law. changing legal landscape suggests the state may The framework should provide clear explanations want to examine its regulatory fee structure to for how the identified workload should be funded, more consistently determine what regulatory and the calculation of appropriate fee levels and how enforcement activities should be supported by such calculations were reached, recommendations regulatory fees versus the General Fund. This would for how frequently the fees should be adjusted and then help the Legislature determine the appropriate the process by which they should be adjusted, fee levels for existing and future costs. This is www.lao.ca.gov 11 2025-26 BUDGET and any recommendations for statutory changes to determine what fee levels it is comfortable specifying the allowable uses for the special with—which could be higher or lower than those fund revenues. Such a report could help inform recommended by DOJ. If the fee levels are lower legislative decision-making on how such workload than current or projected costs, the Legislature could be supported in the future. would be better equipped to assess (1) how much Use Framework to Inform Future of this workload needs to be supported from the Actions. The Legislature could use the DOJ General Fund at the cost of other budget priorities framework to inform its future actions. This or (2) whether the cost of the workload needs to could include appropriately aligning firearm and be reduced—such as through statutory or other ammunition-related workload with the appropriate changes—to avoid such budgetary trade-offs. fund source. This would then allow the Legislature LAO PUBLICATIONS This report was prepared by Anita Lee, and reviewed by Drew Soderborg and Ross Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 12 LEGISLATIVE ANALYST’S OFFICE