But the COVID-19 pandemic and a statewide stay-at-home order meant to slow the spread of the virus has put the state’s revenue outlook in a deep hole.
When asked about the reduction in spending related to the environment, Newsom said cuts to the state Environmental Protection Agency and Natural Resources Agency were necessary. However, he left himself room to negotiate with lawmakers.
“I think we’ve done justice in this budget in terms of protecting those core regulatory constructs as we can,” he said. “That said, I look forward to the give and take with the Legislature and any augmentation, perhaps, that’s needed or any blindspots that our administration put out. And let’s try to fix those as quickly as we can.”
Questions remain as to whether the federal government will help states suffering during the pandemic-induced economic downturn. Newsom and House Democrats want $1 trillion in aid for California and other states suffering budget shortfalls, part of the Heroes Act to be voted on Friday.
Jared Blumenfeld, secretary of the state’s Environmental Protection Agency, called the cuts painful and said the state is facing many difficult choices. But he called the revised budget “fiscally prudent.”
Cap-and-Trade Cuts
Newsom’s budget summary outlines “significant uncertainty” in how much money the state’s landmark climate change program will generate through its quarterly auctions.
The cap-and-trade program established caps on emissions and allows businesses to buy and sell credits on a state exchange.
The governor is proposing a $965 million budget for the program, down from $1.4 billion last year.
During his remarks on a conference call with reporters, Blumenfeld noted the plummeting emissions of planet-warming gases during the stay-at-home order.
“The good news is that emissions are decreasing,” Blumenfeld said. “However, there’s a lot of funding that has occurred in the past that may not occur in the future. As a result of that, we are going to have to make hard decisions.”
He said the state will prioritize initiatives to improve air quality in disadvantaged communities, fire prevention, and a program to clean up contaminated drinking water across the state.
Funds for New State Park
Instead of spending $20 million from a one-time budget surplus to pay for a new state park, Newsom now proposes spending just $5 million.
Newsom hasn’t said where the park would be, but Bay Area lawmakers have indicated it is likely a sprawling 50,000 acre ranch in the East Bay.
The Nature Conservancy and The Trust for Public Land pledged $30 million to acquire the ranch. It’s unclear if the combined money would be enough to purchase the ranch, which is currently listed for $68 million, down from $72 million.
“We believe this $5 million investment can be helpful to creating a new state park with a set of partners, and we want to keep that opportunity alive,” said Wade Crowfoot, secretary for Natural Resources.
Newsom is also proposing cuts to the park’s operating budget and removing a plan for a new grant-funded program to increase equitable access.
“We are pulling back,” Crowfoot said, but added that the state remains committed to working with stakeholders to keep access to parks as a priority.
New Climate Programs Killed
Gone from the budget are new programs meant to fight climate change. These include a $1 billion green loan fund intended to jumpstart small- and medium-sized climate-friendly businesses like electric vehicle charging stations, renewable energy projects and other programs that have a hard time attracting private capital.
Sponsorship of a $4.75 billion climate bond for wildfire, flood and drought resilience projects across the state has also been eliminated.
Kate Gordon, Newsom’s senior adviser on climate, is hopeful that because California designed the climate bond and the loan programs to leverage private investment, the initiatives could still move forward with support from the federal government, foundations or private investors.
Now that Newsom has released his May revision, lawmakers still need to pass the budget. The numbers could change again if the federal government provides relief to California.
