Newsom Proposes 11 Percent Cuts to Climate Budget Amid $22.5 Billion Shortfall

California Gov. Gavin Newsom leaves the stage after delivering his budget proposal in Sacramento on Jan. 10, 2023. José Luis Villegas/AP Photo

Faced with a $22.5 billion budget shortfall, California Gov. Gavin Newsom has slashed $6 billion from the state’s proposed climate agenda budget to about $48 billion.

But even with the cuts, $48 billion is “an unprecedented investment in this space,” Newsom said in releasing his proposed 2023-24 budget at a press conference on Jan. 10.

The state had initially allocated $54 billion over five years for the climate agenda in the 2021 and 2022 budget acts, according to the climate budget summary (pdf).

About $3.3 billion of the proposed cuts will affect the state’s clean transportation programs. Newsom said the reason climate and transportation initiatives are on the chopping block is because of the “historic” and “unprecedented” magnitude of those budgets in the first place.

The 11 percent budget cut was proposed because of the “projected decline” in the state’s general fund revenues—but according to the summary, “most of these reductions will be restored” if there are sufficient funds by next January.

California Gov. Gavin Newsom delivers his budget proposal in Sacramento on Jan. 10, 2023. José Luis Villegas/AP Photo

In his speech, Newsom said California could receive up to $96 billion in additional funding through the Inflation Reduction Act (IRA) and Federal Infrastructure Investment and Jobs Act (IIJA) to supplement the budget.

Newsom said when the climate and transportation budgets were originally drafted, officials weren’t confident that so much federal funding would find its way to state coffers, but the Biden administration has started to come through.

“We already have been able to draw down a lot of resources from the federal government, because the Biden administration acted with urgency and acted nobly in terms of advancing the cause to [a] low-carbon future,” the governor said.

California has already received $48 billion of the projected federal funds, according to the governor. But, in case all of the money doesn’t materialize, Newsom proposed a new “resources bond.”

The $48 billion state budget will allow California to “fight climate change and protect communities from flooding, drought, wildfires and extreme heat,” according to Newsom’s press release.

The state also plans to “prioritize equity and investments in priority populations, which face disproportionate harm from pollution and the climate crisis,” according to the budget summary.

Zero-Emission Vehicles

Environmental groups have expressed disappointment with the budget cuts, claiming they could slow down the transition from gasoline-powered to electric vehicles and initiatives to fight climate change, which Newsom has repeatedly referred to as top priorities.

Cars recharge their batteries in San Francisco on March 9, 2022. Justin Sullivan/Getty Images

Several months ago, Newsom declared gas-powered cars—starting with 2035 models—will be banned in California in an effort to reduce reliance on fossil fuels. The new rule was approved by the California Air Resources board last August.

The governor has proposed cutting $1.1 billion from the state’s $10 billion zero-emission vehicle budget. The remaining $8.9 billion will be spent on programs such as “cleaning up” drayage trucks and school buses, accelerating the “equitable electrification of passenger vehicles,” as well as funding infrastructure and incentives for in-state manufacturing, according to the proposed budget.

Floods, Water Resources

Newsom has proposed cutting $194 million in “drought response and water resilience” funding from the initial $8.7 billion budgeted in 2021 and 2022.

The 2023-24 proposed budget earmarks new funding for flood preparedness and response, including $135.5 million for over the next two years to reduce urban flooding, and another $40.6 million was earmarked for Delta projects, including repairs and upgrades to levees.

The proposed budget was released amid heavy rainfall and devastating floods in northern California with more rain expected. More than 20 million residents, including those in San Diego and Los Angeles areas, were under flood alerts this week, according to the National Weather Service.

Klamath Dams Removal Project

Despite the proposed climate budget cuts, the state still plans on moving ahead with plans to remove four hydroelectric dams in the Klamath River basin in California and Oregon, in what was billed “the largest river restoration project in American history.”

The project is expected to “restore access to hundreds of miles of salmon and steelhead habitat unreachable for salmon and steelhead for more than a century and revitalize tribal communities.”

The 2023-24 budget includes $2 million from the state’s general fund, $1.3 million in ongoing funds, and five permanent positions for the California Department of Fish and Wildlife to establish programs to protect and manage wildlife, recreational opportunities, and tribal partnerships before, during, and after the dam removals, according to the summary.

Then Assemblywoman Shannon Grove (R-Bakersfield) speaks to lawmakers at the Capitol in Sacramento on June 20, 2013. Rich Pedroncelli/AP Photo

Republican Rebuttal

State Sen. Shannon Grove (R-Bakersfield) accused the Democrat-controlled government of mismanaging the state’s water resources.

“It is unacceptable that despite the record amounts of rain the state has received over the last few weeks, there is no additional money for water storage which means the budget is still not serious about addressing California’s food and water security. The governor needs to understand we can’t import 100 percent of the food the Central Valley grows,” she said in a statement.

Grove strongly opposed the governor’s “continued war on the state’s oil and gas industry” which, she said, provides good jobs for thousands of families and energy security for all Californians.

She also panned California’s agriculture, energy, and climate policies, urging Newsom and the Democrat majority to “prioritize the immediate needs of Californians, instead of focusing on their unaffordable green fantasy.”

Meanwhile, state Assembly Republicans held a press conference in Sacramento on Jan. 12 calling for better water infrastructure. They urged Newsom to prioritize flood protection and water storage and conveyance projects.

The Republicans contend that despite years of record drought, the governor’s proposed budget “fails to invest in critical infrastructure” to protect residents and capture water from recent floods.

In the Central Valley, farmers are being forced to use groundwater reserves instead of storing surface water, according to the Republicans.

The last water reservoir in California was built in 1979, said Assemblyman James Gallagher (R-Yuba City). He said there is a shortage of drinking water and water for irrigating crops in the Central Valley.

“We need new reservoirs,” he said.

Assemblywoman Laurie Davies (R-Laguna Niguel) urged Newsom to build new water reservoirs instead of constantly telling Californians to conserve water.

“It’s time that we actually make a move,” she said. “This should have been done years ago.”