Governor Releases 2023-24 Budget

The Governor released his initial Budget for 2023-24 on January 10.  The Governor’s Budget forecasts General Fund revenues will be $29.5 billion lower than at the 2022 Budget Act projections, and California now faces an estimated budget gap of $22.5 billion in the 2023-24 fiscal year. As a result of this deficit, there are many program cuts in the Governor’s Budget proposal.  Of particular interest to CLFP, is a proposed reduction of $10 million from the Food Production Investment Program at the CEC. This maintains approximately $65 million (87 percent) for support of projects that help with the decarbonization of the food production process.

An initial CLFP analysis of the Budget highlights is below:

Water

1. 2023 Drought Contingency—$125 million General Fund one-time as a drought contingency set-aside to be allocated as part of the spring budget process, when additional water data will be available to inform future drought needs.
2. Planning and Permitting for New Water Supplies—$4.7 million Waste Discharge Permit Fund in 2023-24, and $5.7 million Waste Discharge Permit Fund and $408,000 Safe Drinking Water Account ongoing to support planning and permitting for projects that produce new water supplies.
3. Modernizing Water Rights—$31.5 million General Fund one-time in 2023-24 to continue development of the Updating Water Rights Data for California Project to enhance California’s water management capabilities.
4. Watershed Resilience Programs—A reduction of $24 million General Fund in 2023-24 and a delay of an additional $270 million General Fund to 2024-25. This maintains approximately $470 million (95 percent) across various watershed resilience programs.
5. Water Recycling—A reduction of $40 million General Fund in 2023-24. This maintains approximately $760 million (95 percent) to support water recycling and groundwater clean-up.
6. State Water Efficiency and Enhancement Program—A reduction of $40 million General Fund in 2022-23. This maintains approximately $120 million (75 percent) to support farm water use efficiency projects.

Energy

1. Accelerating Adoption of Low Global Warming Pollutant Refrigerants—A reduction of $20 million in 2023-24 from the Air Resources Board Equitable Building Decarbonization program to Accelerate Adoption of Low Global Warming Pollutant Refrigerants. This maintains approximately $20 million (50 percent) for support of businesses adopting technologies with low global warming pollutant refrigerants.
2. Food Production Investment Program—A reduction of $10 million in 2023-24 from the Food Production Investment Program at the CEC. This maintains approximately $65 million (87 percent) for support of projects that help with the decarbonization of the food production process.
3. General comment from Governor on climate dollars: Further, the Administration will continue to pursue available federal funding, including the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), to offset the decrease of state funds for these climate-related programs. The Administration will also engage the Legislature to explore a bond.

Agriculture

1. The Budget maintains $1 billion (89 percent) of sustainable agriculture investments. The Budget includes $128 million in General Fund reductions across various programs. If there is sufficient General Fund in January 2024, reductions will be restored. See the Introduction Chapter for further information on this trigger.
2. Climate Smart Agriculture Programs—A reduction of $8.5 million General Fund in 2021-22 and $85.7 million in 2022-23 across various programs including Healthy Soils Program, Sustainable Cannabis Pilot Program, Pollinator Habitat Program, Conservation Agriculture Planning Grant Program, greenhouse gas reduction research, Invasive Species Council, and Climate Catalyst Fund. This maintains approximately $867 million (90 percent) for climate smart agriculture programs.

General Government

1. Made in California Program—$1.5 million one-time General Fund, to be spent over three years, to relaunch the Made in California Program and conduct outreach and engagement to increase participation in the program. The Made in California Program aims to support in-state manufacturing by increasing consumer awareness of in-state production
2. California Competes – The Budget proposes to provide $120 million one-time General Fund for a third year of the California Competes grant program. The California Competes grant program was initially created in the 2021 Budget Act to extend the success of the California Competes Tax Credit program to businesses that cannot fully benefit from a nonrefundable tax credit, but still present vital economic development opportunities that are at risk of taking place outside of California. The 2022 Budget Act included $120 million one-time General Fund for the California Competes grant program and added language to give priority to grant program funds for semiconductor manufacturing and research and development for grants awarded in 2023-24. The 2022 Budget Act also removed the cap that prevents any one grantee from receiving more than 30 percent of the program’s total amount of grants allocated in 2023-24.