May Revise Budget Update: Climate Resiliency and Emergency Response and Disaster Preparedness

By Alyssa Silhi posted 05-14-2020 05:17 PM

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Today, Governor Newsom released the May Revise to his proposed January budget for 2020-21. The January budget proposal contained significant investment in environmental and emergency preparedness and response spaces. Many of the proposals were of interest to special districts. However, in a matter of months the economic outlook has shifted drastically in light of the COVID-19 health crisis and impacts from response efforts and the May Revise reflects the sobering new economic reality.

California is now staring down 18% unemployment and a projected $54 Billion deficit. As such, the May Revise walked back most of the proposed investments the Governor released in January. Below is an update on where January proposals of interest stand now:

MAY REVISION

Climate Resiliency
The January climate budget included $12 billion over the next five years. Three key areas of the climate budget were a proposed climate resilience bond, cap-and-trade expenditures to continue the transition to a carbon-neutral economy, and a new Climate Catalyst Fund.

• Climate resiliency bond: The Governor is no longer endorsing a climate bond being placed on the ballot in November of 2020, which was proposed as a $4.75 climate resiliency bond, due to the debt service of a general obligation bond against the General Fund. (Note: the effort in the Assembly continues to move forward as of this writing and has been repositioned as an “Economic Recovery, Wildfire Prevention, and Safe Drinking Water Act.”)

• Sustainable Groundwater Management Act: January proposals have been withdrawn from the Governor’s budget, including a $40 million General Fund investment. The Department of Water Resources will allocate $26 million of existing Proposition 68 bond funds to local agencies in critically overdrafted basins to help defray the cost of implementation projects. Additional funding for SGMA-related projects may be considered for inclusion in future infrastructure investments.

• Cap and Trade Expenditure Plan: $965 million Cap and Trade Expenditure Plan, which included a $25 million ongoing investment to provide support for programs, including support for the Fifth California Climate Change Assessment remains but has been reconfigured to a pay as you go program based on actual Green House Gas Reduction Fund auction proceeds to authorize budget act expenditures based on actual proceeds received at each quarterly auction. Additionally, as proceeds are anticipated to be much lower, the proposed budget mechanism will prioritize initial auction proceeds for the following programs:

Air Quality in Disadvantaged Communities: AB 617 Community Air Protection Program and agricultural diesel emission reduction.
Forest Health and Fire Prevention, including implementation of the requirements of Chapter 391, Statutes 2019 (AB 38).
Safe and Affordable Drinking Water.

• Climate Catalyst Fund: The January budget proposal included a $1 billion General Fund investment ($250 million in 2020-21, with additional funding in later years) for a Climate Catalyst Fund. This has been withdrawn from the Governor’s budget for this and future years. However, the Administration notes it remains committed to leveraging private capital to support a Climate Catalyst Fund.

Other Environmental Proposals
The May Revision continued to prioritize funding for the Cutting Green Tape proposal in the Department of Fish and Wildlife, proposing $4 million to increase the scale and pace of restoration work, incorporate efficiencies into grant programs, and incorporate the use of programmatic permitting options.

Emergency Preparedness and Response
The January budget proposal continued to build on emergency response and preparedness funding priorities from 2019-20, including improving the resiliency of the state's critical infrastructure, minimizing impacts of PSPS events, and wildfire prevention efforts.

• Wildfire Forecast and Threat Intelligence Integration Center: The January budget included $9 million ($8.8 million General Fund) and 22 positions across Cal OES, CAL FIRE, the Military Department, and the PUC to begin implementation of the Wildfire Forecast Center. The May Revise maintains $2 million General Fund to enhance the state’s emergency response capabilities through improved forecasts for tracking and predicting critical fire weather systems, which improves situational awareness of fire threat conditions in real-time, reduce this proposal by $6.8 million General Fund across various departments.

• California Disaster Assistance Act (CDAA): $16.7 million one time General Fund to increase the amount of funding available through CDAA was proposed in January. The May Revise proposes a total of $38.2 million one-time General Fund (maintaining $16.7 million included in the Governor’s Budget and an additional $21.5 million) to increase the amount of funding available through the CDAA, which is used to repair, restore, or replace public real property damaged or destroyed by a disaster or to reimburse local governments for eligible costs associated with emergency activities undertaken in response to a state of emergency proclaimed by the Governor. This augmentation increases total CDAA funding available in the Budget to $100.8 million.

• Community Power Resiliency: A proposed $50 million one time General Fund to support additional preparedness measures that bolster community resiliency remains in the May Revise. This proposal will support a matching grant program to help local governments prepare for, respond to, and mitigate the impacts of power outages and these measures will support critical services including schools, county election offices, and food storage reserves. Special districts were explicitly eligible in the Budget Change Proposal included in the January budget and CSDA will work to ensure special districts continue to have access to any proposed funds that move forward.

COVID-19 Response Funding
The May Revise includes some funding for cities and counties for COVID-19 response from the state’s allocation of CARES Act funding but does not include special districts.

The CARES Act provides a direct allocation of $9.5 billion to California and $5.8 billion to cities and counties with populations over 500,000 (includes 15 counties, 5 cities, and the city and county of San Francisco). CARES Act funding has been determined through treasury guidance to provide relief to states and local governments at the city/county level of government and the state has used that guidance and allocated $450 million to cities and $1.3 billion to counties to be used toward homelessness, public health, public safety, and other services to combat the COVID-19 pandemic.

What does this mean for special districts? With dismal economic projections and uncertain conditions, the budget process this year will be as swift as it is clumsy as state leaders struggle to implement a balanced budget by the July 1 constitutional deadline without a clear picture of the state’s fiscal position. There are many budgetary demands on increasingly limited resources, and the state is leaning heavily on anticipated federal assistance to preclude severe ongoing program cuts. To date, special districts have not been included in access to federal stimulus funds through congress or state flow through funding to date and CSDA is actively advocating state and congressional leaders for access to financial assistance and fiscal tools and will continue to do so on your behalf. However, several of the funding proposals outlined above that remain in the May Revision continue to pose a potential benefit to special districts and CSDA will continue to monitor developments and engage in those deliberations.

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