CASA Legislative Alert – Governor Releasing Budget

 

 
                             January 10, 2017

California Budget Update: Decline in Revenues Anticipated, Future Cap and Trade Allocations in Limbo

 

On Tuesday, January 10th, Governor Brown released his 2017-18 Budget proposal.  In his press conference outlining the plan, he explained that revenues were falling short of expectations, and as such, he was proposing a fiscally prudent budgetary approach with fewer one-time expenditures than previous years and additional investment in the State’s Rainy Day Fund.  

 

The Governor remains steadfast in his resolve to address climate change.  Included in his Budget proposal is a $2.2 billion Cap and Trade investment plan to fund existing climate change related programs throughout the state.  Of the $2.2 billion total , $1.3 billion not already dedicated to existing programs  may provide funding for CASA member projects. These include the Waste Diversion program under CalRecycle and the Healthy Soils program under the Department of Food and Agriculture, but the level of funding for each program has not been specified. None of the Cap and Trade funding will be allocated unless the legislature, by a two thirds vote, confirms the California Air Resources Board’s authority, to administer Cap and Trade auctions beyond 2020.

 

 Governor Brown is eager to pass legislation by a supermajority (2/3) vote, to eliminate any uncertainty about the validity of the Cap and Trade program, since some business groups contend that it constitutes a tax, making a 2/3 vote of the legislature necessary to implement it.  Despite Democrats holding 2/3 supermajorities in both houses, the political climate in Sacramento may make a 2/3 vote on this program challenging.  

 

The Governor is also proposing some additional drought response resources in his Budget proposal.  Further Proposition 1 funding is being allocated for several programs, including emergency drinking water and implementing the California Water Action Plan.  The Water Action plan prioritizes, among other things, increasing regional self reliance and integrated water management.  To this end, the Governor’s Budget includes an increase of $248 million from Prop 1 funding for the Department of Water Resources for integrated regional water management projects.  According to the Budget summary document: “This funding supports regionally driven multi-benefit projects that help meet the long-term water needs of the state, including assisting water infrastructure systems adapt to climate change, encouraging collaboration in managing a region’s water resources and setting regional priorities for water infrastructure, and improving regional water self-reliance.”  

 

The Senate and Assembly Budget Committees will now begin vetting the Governor’s Budget proposal through the meticulous subcommittee process.  In May, following the final subcommittee reports being submitted, the Governor’s office will release it’s updated Budget proposal or “May Revision,” which also includes updated revenue forecasts.  The unresolved differences between the Assembly and Senate’s versions of the Budget will then be sent to the Budget Conference Committee for final deliberation in early June, and the final Budget bill must be passed by the June 15th constitutional deadline.  

 

CASA will be advocating on many of these Budget issues throughout the Spring.  Stay tuned to hear how all of these proposals play out in the coming months.   
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