California Gov. Gavin Newsom (D) on Jan. 10 proposed a fiscal 2024/25 budget that further shrinks the $54 billion California Climate Commitment to $48.3 billion, while spreading the climate spending over seven years rather than five.
At the same time, the state’s climate efforts will be bolstered by $10 billion of federal funding, Newsom said during a press conference. “That’s helped supplement some of the modest cuts we’re making in this space,” he said.
The proposed budget would maintain about $6.6 billion of the $7.9 billion of energy investments included in the state’s 2022 budget act. That money is intended to fund critical grid reliability projects and speed the state’s transition to clean energy.
The governor’s release of a proposed budget in January is just the first step in the budget process. The governor and legislature will spend several months haggling over the budget before it is finalized.
Newsom’s budget proposes $291.5 billion in spending, including about $208.7 billion from the state’s general fund. It grapples with an expected shortfall of $37.9 billion, following a $31.7 billion shortfall for fiscal 2023/24.
The governor attributed the deficits to wide swings in state tax revenue from capital gains. Before the recent budget shortfalls, the state had two years of surpluses totaling about $176 billion. Now, he said, the state is “going back to what we have traditionally seen … after a period of unprecedented distortion.”
Another issue, Newsom said, is that last year’s extension of tax-filing deadlines to November, because of severe winter storms, masked the full extent of the state’s revenue decrease. “Now that the receipts are in, we must bring our books back into balance,” Newsom said in a budget message. Newsom’s projection of a $37.9 billion deficit differs from the state Legislative Analyst’s Office prediction last month of a $68 billion deficit.
The California Climate Commitment received $54 billion in funding through the budget acts of 2021 and 2022. But the 2023/24 state budget cut the investment to $51 billion, while sparing $10 billion for electric vehicle infrastructure and incentives. (See Newsom Expresses ‘Sense of Urgency’ on Energy Buildout.)
The fiscal 2024/25 proposal maintains the $10 billion for EV programs but spreads it out over seven years rather than five.
The budget proposal includes $2.9 billion in cuts to climate programs and $1.9 billion in spending shifted to future years. An additional $1.8 billion in spending will be shifted from the general fund to other funds, mainly the greenhouse gas reduction fund (GGRF), which is money from the state’s cap-and-trade program.
As a result, some programs set to receive GGRF money will see a delay in funding. That includes $45 million earmarked for equity programs such as the Clean Cars 4 All electric vehicle incentive and $120 million for ZEV fueling infrastructure grants.
The governor’s budget proposes cuts to some programs, such as a $40 million reduction to the Carbon Removal Innovation program at the California Energy Commission. That would leave $35 million for the program. Similarly, $22 million would be cut from the CEC’s Industrial Decarbonization Program, leaving $68 million.