Gov. Newsom pitches $2.9 billion in climate cuts to help close budget gap

The climate change-fueled extreme weather California lived through a year ago helped trigger the $38 billion budget shortfall the state is facing today, according to Gov. Gavin Newsom.

Delayed income tax payments, he said, left the state flying blind when it came to how much revenue would be on the table this year.

So it was somewhat ironic when Newsom, during a press conference Wednesday, Jan. 10, proposed closing the gap in part by cutting $2.9 billion from climate programs.

Climate is the single largest category of cuts in Newsom’s draft $291 billion budget for the 2024-25 fiscal year that starts July 1. The shortfall also will be covered through the state’s use of cash reserves, borrowing, spending delays and smaller cuts to housing and education programs.

The proposed reduction in climate funds is half as big as the cuts Newsom backed last year to close a slightly smaller deficit. And the new numbers are significantly smaller than what some advocates feared they might see when the nonprofit Legislative Analyst Office predicted a $68 billion budget gap for this year.

The latest budget upholds some 90% of multiyear funding for climate projects, approved during surplus budget years two and three years ago. Newsom noted that state cuts also are more than covered by the flood of federal funding that’s come for climate programs in California thanks to the Biden administration’s infrastructure and inflation reduction acts.

In that way, the governor said this budget “substantially” upholds California’s commitment to climate programs, which he described as “second to none; we have no peers in that space.”

But on the heels of news that 2023 was officially the planet’s hottest year on record — with a record number of billion-dollar climate-related emergencies — climate advocates say cuts to programs that might curb global warming are shortsighted.

“For every ‘dollar’ saved right now, Californians will pay exponentially more in the devastation of communities, livelihoods and lives lost,” said Mary Creasman, chief executive of California Environmental Voters.

“We can’t backslide or slow down while the climate crisis speeds up. We need our state leadership to do more, not less.”

As California faced record-setting surpluses in 2021 and 2022, legislators passed budgets that allocated some $54 billion over five years to advance the state’s climate agenda. But with tax revenues down amid high inflation and fears of a potential recession, California last year cut that funding 11% by reducing money for zero emission vehicles, solar storage, drought and wildfire prevention, and dealing with “forever” chemicals.

This year, after a challenging stock market early in 2023 and delayed tax payments, Newsom is proposing to slash another $2.9 billion from climate programs, with cuts to projects aimed at clean transportation, rising seas, wildfire prevention, and grappling with extreme heat and water recycling. Locally, the budget takes away $10 million that was planned for Redondo Beach wetlands restoration work, among other things.

Another $1.8 billion in climate funding would be delayed, though not cut, under Newsom’s plan. This means some five-year programs to help add EV charging stations and solar power in homes, to boost reliability of the state’s electricity supply and more will be turned into seven-year programs.

Seeing the cuts and delays to hundreds of millions of dollars for zero-emissions programs was particularly frustrating to Adrian Martinez, a Los Angeles-based attorney for the climate advocacy group Earthjustice. He wants regulators to stop incentivizing so-called “cleaner” combustion fuels, such as ethanol and biogas from dairies, and instead use that money to help restore funds for zero-emissions projects.

The day before Newsom’s budget announcement, dozens of California lawmakers, climate advocates and environmental justice organizations also called on the governor to end tax breaks and subsidies for oil and gas companies. They argued in a letter to Newsom that such a move could save California billions of dollars and help close the budget gap without having to cut important programs.

Eliminating a loophole known as the Water’s Edge Election, for example, which sanctions the use of offshore tax havens for corporations such as Chevron, would save the state approximately $4.3 billion, the advocates wrote.

“California should not be forcing taxpayers to pay for extreme tax breaks to fossil fuel companies while they rake in record profits, especially not during our current budget deficit,” said State Sen. Josh Becker, D-Menlo Park.

“We need to prioritize investments in clean energy and climate solutions that get us to net-zero, not provide handouts to the worst polluters.”

Newsom’s budget did propose cuts to three oil and gas subsidy programs, which will save the state $22 million. Kassie Siegel, director of the Center for Biological Diversity’s Climate Law Institute, applauded the move.

“It’s critical to stop subsidizing the fossil fuel polluters who’ve caused the climate emergency and to make them pay for the damage,” she said.

Next up, the Legislative Analyst Office will release its review of the 2024-25 proposed budget. Then will come legislative hearings, where lawmakers could propose mid-year cuts that could narrow the budget gap and request changes to Newsom’s draft budget.

“The Assembly will carefully examine the Governor’s budget – including key investments in housing, education, and climate – while remaining vigilant about potential shifts in revenue,” said Assembly Budget Chair Jesse Gabriel, D-Encino. “Our budget subcommittees are ready to quickly begin their work with a focus on oversight, accountability, and protecting our most vulnerable Californians.”

Creasman said her organization looks forward to working with the governor and legislature to make 2024 “a year of innovative and courageous climate leadership.”

After the legislature weighs in, Newsom will release a revised budget in mid-May. Then the legislature has until June 15 to pass the new budget, which will take effect July 1.