Newsom’s Proposed Budget Cuts and Delays Spending on Key Climate Programs
First step in budget process proposes a combination of spending cuts and delays to climate programs to help close the state’s budget deficit.
Governor Gavin Newsom released his proposed 2024-2025 budget, which includes significant reductions in spending for climate and clean transportation programs. The proposed $291.5 billion budget, released on January 10, aims to reduce the state’s $37.9 billion deficit by using the state’s reserve fund as well as cutting and delaying spending.[1] This includes $2.9 billion in climate spending cuts; $1.9 billion in climate spending delays; and $1.8 billion in shifts to other funds, primarily the Greenhouse Gas Reduction Fund (GGRF).
Overall, the proposed budget would reduce the state’s multiyear climate budget from the $54 billion over five years in the 2021-2022 and 2022-2023 budgets, as outlined in the California Climate Commitment, to $48.3 billion over seven years. Lauren Sanchez, Newsom’s senior climate advisor, said “$48.3 billion is a world-leading figure that exceeds [that of] many nations.” She also noted that the proposed budget protects 89% of the $54 billion climate budget. Newsom projected that California would receive more than $10 billion in federal climate spending and that spending on climate change programs “actually will grow because of the support of the federal government.”
The key cuts in climate programs in the proposed budget include the following:
ZEV Program Cuts
The 2021 and 2022 budgets committed $10 billion over five years to the state’s zero-emission vehicles (ZEV) programs. The proposed budget maintains $10 billion in ZEV spending and extends it over seven years. The proposed budget includes $38.1 million of General Fund reductions, $475.3 million in fund shifts to the GGRF, which is funded by the cap-and-trade program, and $600 million in delays across various programs.
Spending cuts: The proposed budget cuts $38.1 million General Fund for various programs including the Drayage Trucks and Infrastructure Pilot Project ($23.5 million), ZEV Manufacturing Grants ($7.3 million), and Emerging Opportunities ($7.3 million). The budget maintains $477 million previously allocated for these programs.
Funding shifts: The proposed budget shifts $475.3 million from the general fund to the GGRF in the current year for various programs, including ZEV Fueling Infrastructure Grants ($218.5 million); Drayage Trucks and Infrastructure ($157 million); Transit Buses and Infrastructure ($28.5 million); and Clean Trucks, Buses and Off-Road Equipment ($71.3 million).
Funding delays: The proposed budget also delays $600 million in spending from 2024-25 to 2027-28 across various programs. These include Clean Cars 4 All and Other Equity Projects ($45 million), ZEV Fueling Infrastructure Grants ($120 million), Equitable At-home Charging ($80 million), Drayage Trucks and Infrastructure ($98 million), Clean Trucks, Buses and Off-Road Equipment ($137 million), Community-Based Plans, Projects and Support/Sustainable Community Strategies ($100 million), and Charter Boats Compliance ($20 million). This delay enables a shift of $600 million in expenditures from the general fund to the GGRF for other programs.
Transportation Program Cuts
The proposed budget maintains the $13.6 billion in the 2022 budget for transportation programs and projects that align with the state’s climate goals, but proposes to delay $1 billion in funding for public transit improvements for one year.[2] The budget also proposes a $200 million cut to the Active Transportation Program.
Other Climate Program Cuts
Other proposed cuts to climate programs and projects, according to the Sacramento Bee, include:
$475 million to support clean energy and climate technology development;
$100.7 million for wildfire and home hardening programs;
$50 million for the Regional Climate Resilience Program at the Office of Planning and Research
$40.1 million for the Extreme Heat and Community Resilience Program;
$15 million from the Low Carbon Economy grant program in the CA Workforce Development Board;
$6.75 million for Forecast Informed Reservoir Operations for snowpack runoff predictions; and
$283 million from incentives for heat pumps and building emissions reduction programs.
Funding for New Climate Reporting Laws
The budget also proposes to delay funding to implement new laws until there is greater clarity on the state’s finances further in the budget process. This could delay implementation of the state’s new Climate Accountability Package, which implements climate-related reporting requirements on thousands of businesses doing business in California. This includes SB 253, which requires companies to report their greenhouse gas (GHG) emissions related to both operations and their supply chain, and SB 261, which requires companies to disclose their climate-related financial risks. (See GHG Emissions Reporting Bill Signed into Law and Climate-Related Financial Risk Act Enacted.)
A First Step in Budget Negotiations
Newsom’s spending cuts and delays are only the first step in the budget process. The California Constitution requires the governor to submit a balanced budget proposal to the legislature in January. The revision to the proposed budget in May could include significant changes in response to new economic and budget forecasts. The legislature is required to budget bill by June 15.