Feb. 23, 2018 – -Every year the non-partisan Legislative Analyst Office (LAO) evaluates the Governor’s proposed budget and reports on several key items.  Last week the LAO released their review of the Governor’s proposed expenditures on the Cap and Trade revenue and on the Governor’s proposal to integrate SB 623, the new assessment on fertilizer and drinking water to pay for clean water programs.

The 2018-19 budget plan for state natural resources and environmental protection departments would provide a total of $11 billion for these departments and includes significant new spending proposals. The following are highlights of the LAO analysis:

Cap-and-Trade Auction Revenues: The administration assumes $2.4 billion in cap-and-trade auction revenue in 2018-19. While the Governor’s estimate is slightly lower than the LAO’s, it falls within a reasonable range. Based on this revenue estimate (and a projected year-end fund balance in 2017-18), the Governor proposes to spend $2.8 billion in 2018-19, including $1.3 billion in discretionary spending. The administration’s spending plan is like that adopted in the current year. However, it includes a few new programs, and it proposes to make $232 million of the spending ongoing, mostly for light-duty zero-emission vehicle (ZEV) rebates.

Governor Proposes New Programs: The administration’s 2018-19 budget includes spending on several new programs. This includes $1 billion to implement Proposition 68—a $4.1 billion natural resources bond that will be on the June 2018 ballot. The budget also includes a proposal to establish new charges on drinking water customers and certain agricultural entities to fund a financial assistance program to address unsafe drinking water, particularly in small and disadvantaged communities. In the report, the LAO identified several issues tor the legislature to consider as it deliberates the proposal, including consistency with current policies and the degree to which the proposal will generate sufficient revenues to address the problem. 

Budget Includes Significant Program Expansion: The Governor proposes increasing spending on several existing programs. This includes (1) $235 million in 2018-19 (and $900 million over eight years) on ZEV infrastructure, (2) $10 million in 2018-19 (and $185 million in total) to construct four new residential facilities for the California Conservation Corps, (3) $79 million to address a structural deficit in the State Parks and Recreation Fund and expand current services at state parks, and (4) $51 million to address a structural deficit in the Fish and Game Preservation Fund and expand various activities at the Department of Fish and Wildlife.

Click here to read full report.