Governor Signs Budget: CSG Looks at What’s Ahead for Water, Climate, and Conservation

Last week, Governor Brown signed the 2015-16 State Budget and accompanying trailer bills, including the Resources Trailer Bill, SB 83, and the Water Trailer Bill, SB 88. These trailer bills provide further direction on expenditures in the budget, including those related to the drought. The budget includes $1.8 billion of Proposition 1 funding to various departments and state conservancies. These agencies have all been developing and approving guidelines to spend this money and in the next few months will begin grant rounds for conservation and water projects. With the Budget now passed, it’s a good time to reflect on the year so far and think about what lies ahead.

This budget marks the real beginning of Prop 1 expenditures and already we are beginning to see the strengths and weaknesses of that measure. The big question hanging over California is, “Are we in the fourth year of a four year drought, or the beginning of a much longer shift in weather patterns?”

Prop 1 includes funding for water conservation, water recycling, improving access to safe drinking water, and other investments that will improve the long term resiliency and sustainability of our water system. However, the requirements for guideline development and competitive grants in Prop 1 are so cumbersome that the Administration has been forced to look to other funding sources for immediate drought and conservation needs. The final version of the water bond stripped out provisions including emergency drought funding and other funding that we will ultimately need if the drought continues. And despite an urgency drought bill earlier in the year, relatively little funding is available for drought response. As the temperature heats up and drought impacts are felt more keenly this summer, expect to see increased pressure on the Legislature and the Governor to show additional leadership on water.

Last year saw an aggressive campaign by the oil industry and their surrogates to stop AB 32, California’s signature climate law. The “Stop the Hidden Gas Tax” ads dominated social media and the internet. This year momentum has shifted and major bills to extend the provisions of AB 32 and to expand renewable energy generation have passed both houses. The real test on these bills will be in August and early September. The environmental community, clean energy industry and labor have launched an all out effort to mobilize support. The key issue is where the utilities will come down. So far they are negotiating, but clearly want changes in the renewable energy package, many of which would be unacceptable to supporters of the bills.

Related to the climate package is the allocation of cap and trade revenue. The Governor and Legislature agreed to defer budget negotiations on some of the outstanding issues with cap and trade allocation until August. This could result in some convergence with the Governor’s special session on transportation funding. The special session will be looking at increasing the gas tax and other measures to increase funding for roads.

The 2015-16 budget contains over $1 billion in cap and trade revenue for programs that receive continuous appropriations as agreed upon in the budget negotiations of 2014-15, including High Speed Rail, Sustainable Communities and Affordable Housing, and Transit and Intercity Rail. An additional $1 billion or more in proposed allocations, including those for natural resources projects, will be negotiated throughout the summer to determine how this funding will be expended. In addition, the Legislature may re-open discussions on how much of the Sustainable Communities program is dedicated to using agricultural land and open space protection as a strategy to encourage higher density development.

CSG Blog
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Joe Caves
Conservation Strategy Group

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