(The Center Square) – State officials told California lawmakers this week that “trade-offs” to funding environmental programs lie ahead as the Legislature moves ahead in determining a budget.
The challenging state budget condition – in which the nonpartisan Legislative Analyst’s Office projected the state faces as much as a $30 billion per year deficit – makes it difficult to fully fund environmental programs in the Natural Resources Agency, the California Environmental Protection Agency and the state’s Department of Food and Agriculture.
“The blanket under all of the comments is the state budget condition,” Rachel Ehlers, deputy legislative analyst for the Legislative Analyst’s Office, testified in a Wednesday meeting held by the Assembly Budget Subcommittee on Climate Crisis, Resources, Energy and Transportation. “The good news is the stock market has been booming and is continuing to boom. The question is just how long will that last.”
In a January budget released by California Gov. Gavin Newsom’s office, the projected budget deficit rested at just $2.9 billion, well under the November 2025 budget outlook released by Legislative Analyst’s Office, which projected an $18 billion budget shortfall. The latest budget outlook released by the Legislative Analyst’s Office in February shows that revenue estimates this year look to surpass the governor’s estimated revenue projections.
That updated, increased revenue stream, which the Legislative Analyst’s Office said is attributable to higher revenue from income, corporation and sales taxes, is fueled by a stock market boom caused by enthusiasm around Big Tech companies’ artificial intelligence technology. Many of those companies are based in California.
Despite the booming stock market, Ehlers testified on Wednesday, Newsom’s budget is heavily reliant on new borrowing, bringing the state’s “wall of debt,” as state officials call it, to roughly $34 billion. The Democratic governor’s proposal also called for pulling $10 billion out of state reserves.
“Usually, when a stock market is booming as it is, that’s a time you’re putting money into reserves, not taking money out,” Ehlers testified on Wednesday. “So there are a lot of concerns we have about this.”
That could mean financial repercussions to proposals for environmental, natural resources and climate change programs, Ehlers testified. Budget cuts, for example, could come to school nutrition programs that get funding from the state’s Department of Food and Agriculture, if lawmakers decided to prioritize other pressing needs, like paying for wildfire fighting efforts.
“We as a state want to be able to use the tools that we have like our aircraft when there are fires, and not have them grounded because we didn’t provide funding to be able to utilize them,” Ehlers testified on Wednesday. “That, to us, is the kind of example of something where it’s pressing, it’s immediate, and if it’s not funded this year, then there’s a problem.”
State officials with departments that oversee environmental programs want to see the state budget adequately provide for those programs, not just in the coming year, but long-term, department heads testified.
“We have real challenges – economic challenges at building more housing, environmental challenges in building more clean energy and restoration,” Wade Crowfoot, the secretary of the California Natural Resources Agency, testified on Wednesday. “I’ll tell you what I’m passionate about moving forward is maintaining this level of environmental quality and safeguards we have in California.”
The Wednesday budget hearing was one of about 60 hearings Assembly Budget Committee members expect to have between January and May, according to previous reporting by The Center Square. State senators also have conducted budget hearings in recent weeks in their own chamber, and have voiced concerns about finding money to pay for essential state services while also attempting to not make the state’s budget deficit worse.
“From wildfire resistance to water security, the investments we make today will really shape how California and whether California can respond to the climate crisis that we’re facing,” Assemblymember Steve Bennett, D-Ventura and chair of the Assembly Budget Subcommittee on Climate Crisis, Resources, Energy and Transportation, said at the beginning of the Wednesday budget hearing. “We will have to make sure we do all the things we have to do and we won’t be able to do many of the things we want to do. That’s just the reality of where we are at this point in time.”
