With an anticipated deficit of $54 billion, the governor’s “May Revise” for his budget proposal was not going to bear much good news.
“There's been a pandemic that has precipitated a 22.3% reduction in revenue in just over 100 days,” said Gov. Newsom, setting the stage during a press briefing on Thursday.
The state is instituting a 5% reduction across all agencies and departments. For CDFA, this amounts to a loss of $23 million from Newsom’s January proposal. Nearly 90% of that cut will come from infrastructure spending, such as expanding offices and buying new cars.
CDFA’s SWEEP program for water efficiency grants was slashed from $20 million to zero. It was heralded as the administration’s direct help to farmers adapting to the Sustainable Groundwater Management Act.
Yet the FARMER program at the Air Resources Board remains a priority because of its noted success in reducing emissions through incentives for equipment upgrades. The caveat is the cap-and-trade revenue for FARMER and other programs was already expected to be down this year, and the exact amount for the coming year will likely change.
Another priority is the AB 617 program, which also incentivizes emissions reductions in agriculture, as well as other industries in vulnerable and low-income communities, like the city of Shafter.
Safe drinking water and wildfire funding are also priorities. Anything left from the cap-and-trade funding following these four programs will proportionately go to climate programs under CDFA and other agencies through a “pay-as-you-go” mechanism.
Also on climate initiatives, the administration has withdrawn its plan for a Climate Catalyst Fund for low-interest loans as well as its support for a climate resilience bond on the November ballot.
Among the few new programs left standing, CDFA’s Farm to School initiative keeps its $10 million.
On the regulatory front, the state switched many of its programs, particularly for water quality, to a fee-based structure during the Great Recession and those fees have continued to rise over the subsequent years. CalEPA Secretary Jared Blumenfeld mentioned fees will play even more of a role going forward.
"Many areas will have a more equitable fee structure, where the more you pollute the more you pay," he said on a press call Thursday.
Blumenfeld, who is known to be critical of conventional pesticides, also mistakenly referred to the Department of Pesticide Regulation, which is under his agency, as the Department of Pesticide Reduction.
With the May Revise out, the Legislature will now take up the debate, racing to meet a hard deadline of June 15 to pass a budget bill. More details will come to light through this process.