California lawmakers held their ground against Gov. Gavin Newsom in a budget standoff, ultimately securing $450 million in climate funding for water, transit and clean air projects that had been left in limbo after the governor’s administration reworked the state’s carbon market rules earlier this year.
The compromise, contained in Assembly Bill/Senate Bill 113, passed the state Senate on a 29-4 vote and cleared the Assembly 60-11 on Tuesday, capping months of tension between Newsom and Senate Democrats over how to divide shrinking revenue from California’s cap-and-trade program.
The dispute traces back to changes state air regulators approved in May, which handed fossil fuel companies as much as $2 billion in free pollution permits after heavy lobbying from the oil industry. That decision came on the heels of last fall’s reauthorization of California’s carbon market — the 13-year-old system that charges polluting companies and funnels the proceeds into the state’s Greenhouse Gas Reduction Fund, which pays for a range of climate-related projects.
The Legislative Analyst’s Office warned that the May changes could slash the fund’s roughly $4 billion in annual revenue by half, jeopardizing programs that had counted on that money. Senate Democrats pushed back hard, accusing the governor of undermining climate priorities and threatening to hold up other budget items until a fix was found.
Earlier this summer, Newsom and legislative leaders agreed to direct the bulk of available funds — $1.25 billion — toward shoring up the state fire department’s budget, along with $115 million for electric vehicle incentives. But a broader resolution on climate spending was delayed until now.
Tuesday’s deal fills in some of that gap. It sends $230 million to public transit agencies across the state, $70 million toward wildfire prevention, $50 million for land conservation and $40 million for safe drinking water programs. Another $20 million will go to clean air monitoring efforts, $20 million to the University of California’s Climate Institute, $10 million to reduce emissions from farm equipment, and $10 million toward geothermal energy development through the Natural Resources Agency.
More than half of the $450 million comes from money left unallocated in the greenhouse gas fund. Lawmakers also tapped $100 million in interest earnings and borrowed another $100 million from the fire department’s budget, with plans to repay it next year.
The agreement offers a one-time boost to several programs layered on top of their regular funding, which typically fluctuates with carbon auction revenue. Taylor Valmores, senior legislative manager for the Community Water Center, said the state’s safe drinking water program will receive $171 million total this year, including $71 million from the greenhouse gas fund.
“What today’s proposal means is we get to have another year of working towards … serving Californians who are still waiting for that clean water,” Valmores said.
Still, not everyone believes the deal goes far enough. Michael Pimentel, executive director of the California Transit Association, said the $230 million earmarked for regional transit is welcome, but it does nothing to shore up other transit programs supporting bus and rail operations that could see steep funding cuts under the new carbon market rules.
“The bottom has fallen out from the market,” Pimentel said. “We have never faced a year where there has been this type of sudden, shocking decline in Greenhouse Gas Reduction Fund revenues.”
Other priorities, including affordable housing, received no new money under the agreement. Jordan Grimes, legislative director at the Greenbelt Alliance, which advocates for streamlining housing development, called the omission disheartening.
“It’s pretty deeply disappointing at a time when California needs to be doubling down on our affordable housing goals,” Grimes said.
Original source: CalMatters
