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On Thursday, June 30, Governor Gavin Newsom signed a $308 billion State Budget and an additional 29 budget trailer bills. Over the June 25-26 weekend, the Governor and legislative leadership came to an agreement on the budget framework and supplemental budget bills were heard the following week. The expansive State Budget affects special districts in a multitude of areas including climate change, infrastructure, parks, housing, emergency response, and transportation.

Budget Overview

This historic budget includes a $97.5 billion surplus. With respect to reserves and an impending financial cliff, according to the Legislative Analyst’s Office, the Budget reflects the banking of $37.2 billion in budgetary reserves including the Proposition 2 Budget Stabilization Account, the Safety Net Reserve, and $3.5 billion in the state’s operating reserve, and allocates 93 percent of the discretionary surplus for one-time purposes avoiding the State Appropriations Limit  known as the Gann Limit.

The Gann Limit serves to constrain state spending with any excess revenues above the determined limit needing to be redistributed between schools throughout the state and taxpayer refunds. Therefore, the 2022-23 State Budget has been amended to include investments in state infrastructure and to provide relief to families in the form of $9.5 billion for the Better for Families Tax Refund and a total of $17 billion for the broad-based relief package providing a refund to Californians of up to $1,050 depending on family size and income level. The 2022-23 Budget will make substantial investments in homelessness, behavioral health, and additional protection from the impacts caused by drought and wildfire.

Below are highlights from the 2022-23 Budget and CSDA budget priorities that have been included:

Climate Change

The 2022-23 Budget will allocate an additional $39 billion over the next five years to expand zero-emission vehicles, climate resilience and innovation, and the encouragement of lithium production in the state. This investment builds upon the historic $15 billion in climate change investments made in the previous year’s budget.

Water Resilience, Drought, and Energy

With California heading into its third year of drought, the 2022-23 Budget allocates $1.2 billion to drought support and an additional $1.5 billion for long-term water resilience. Significant investments in water include $431.5 million in immediate drought support to urban water districts and smaller community water suppliers, and $500 million for drinking water, water supply and reliability, and flood control.

On March 18, CSDA, in a coalition with the Association of California Water Agencies (ACWA), California Municipal Utilities Association (CMUA), the California Water Association, and the California Association of Sanitation Agencies (CASA), submitted a letter to Assembly Member Richard Bloom and Senator Bob Wieckowski requesting an extension of the California Water and Wastewater Arrearage Payment Program. Although an extension was not explicitly provided in the 2022-23 Budget, the Budget includes $200 million to address residential water and wastewater arrearages.

In addition, the Budget plans to allocate $4.3 billion allowing the state to provide reliability insurance through reserves, an accelerated deployment of clean energy projects, and protection to ratepayers coming in many forms, including the arrearage budget allocation. The Budget also includes a total of $8.1 billion one-time General Fund to support clean energy investments and energy reliability support, including $1.2 billion for the California Arrearages Payment Program.

Wildfires

The State Budget reflects $1.2 billion to be allocated to the continuation of building forest and wildfire resilience, and includes new CAL FIRE staffing and operational enhancements to support these efforts in the form of $671.4 million to add new positions and the expansion of CAL FIRE programs.

On April 20, CSDA submitted a formal letter supporting the Sacramento Metropolitan Fire District’s $44 million Zinfadel First Responder Training Facility budget request. While the full amount of $44 million was not included in the 2022-23 Budget, the request was acknowledged in Assembly Bill 178 and the Governor and Legislature have allocated $13 million for the training facility.

Infrastructure

An emphasis has been placed on infrastructure in the upcoming year’s budget, making a massive commitment to higher education, broadband infrastructure, energy reliability, and creating a strategic reserve. The 2022-23 Budget includes a commitment of $47 billion in state funds over the next few years for infrastructure. These investments are in addition to the billions of dollars in new federal funding from the Infrastructure Investment and Jobs Act over the next five years. The State Budget prognosticates that, for every $1 billion invested in California infrastructure, roughly 13,000 quality jobs will be created in the state.

This significant budgetary investment reflects $14.8 billion allocated for transportation, $6.1 billion for zero-emission vehicles over the next four years, $1.2 billion for wildfire and forest resilience projects over the next two years, and $2.8 billion for drought resilience and response over the next four years, including other infrastructure-related investments.

Parks and Recreation

To provide equitable and safe access to the state’s natural resources, open spaces, and parks and recreational opportunities, the Budget includes $131.3 million. This allocation includes $50 million for future state parks infrastructure projects, $13.5 million to provide state park passes through local libraries in a pilot project designed to increase the number of passes available, and $25 million to fund cultural and art installations to promote cultural awareness and natural resource connectivity.

Housing

The Budget includes $2 billion for the development of affordable housing in California, building upon the $10.3 billion housing investment made last year. Furthermore, Senate Bill 197 (budgetary legislation relating to housing) amends Section 65589.9 of the Government Code to facilitate “pro-housing local policy” criteria including the reduction of development impact fees.

CSDA has engaged on several bills related to affordable housing, development impact fees, and the potential benefits and concerns related to these bills introduced in this session. A more detailed account of those bills and CSDA’s efforts to amend them can be found here.

Furthermore, the 2022-23 Budget includes $50 million in one-time State General Fund money to provide grants to reimburse pre-development and non-recurring closing costs associated with the construction of accessory dwelling units (ADUs), $400 million for the Multifamily Housing Program, and $410 million for Adaptive Reuse over the next two years.

Emergency Response

The 2022-23 Budget includes $2.4 billion for the Office of Emergency Services (Cal OES), which serves as the state’s primary point for all emergencies and disasters in the state. Of that $2.4 billion, $25 million will be provided to Cal OES to support projects related to regional response and readiness.

Transportation

The 2022-23 Budget includes roughly $15 billion for transportation infrastructure over the next four years. Of the $15 billion, the State Budget includes $1.2 billion to increase goods movement capacity on roadways, rails, and at port terminals, $1 billion for active transportation (walking and biking, increased safety, and mobility, etc.), and $200 million in climate adaptation programs to identify vulnerabilities associated with climate.

CSDA will continue monitoring budget updates throughout the duration of the Legislative session and keep our members informed of budgetary priorities moving forward.

If you have any questions, feel free to contact CSDA Legislative Analyst Cole Querry at coleq@csda.net.