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Winter 2024

Legislative Update - Winter 2024

By Brian White, KP Public Affairs

With the Legislature now back in session and with the release of a new proposed Governor’s budget, below is the latest legislative update.

In the face of rising concerns about a multibillion-dollar budget deficit, last week Governor Gavin Newsom outlined his proposed $291 billion spending plan for the 2024-25 fiscal year. Overall, the Governor’s budget plan seeks to address a $38 billion budget deficit, which is much lower than the previously projected $68 billion budget deficit the Legislative Analyst Office (LAO) announced back in December. Attached is a brief overall summary of the proposed budget prepared by KP Public Affairs. A summary of the Governor’s proposed budget prepared by the Department of Finance can be viewed here and full proposal can be viewed here. The LAO’s initial analysis is also here.

According to the Newsom Administration, the Governor’s budget projection reflects a more “optimistic interpretation of economic indicators” and lower estimates of state spending. During his press briefing, Governor Newsom said the “LAO’s projections were a bit more pessimistic” as they assumed lower revenues would be forthcoming in the short-term, which is not unexpected due to the state’s volatile tax system that relies heavily on high-income earners and capital gains tax for most of its revenues. In any event, a $38 billion hole will be a sizeable challenge to balance. However, by lowering the deficit projection, it provides the Governor with some cover so he can propose cuts, deferrals, delays and other budget maneuvers to try and spare certain programs, particularly in education and health care. The Governor also indicated he would declare a fiscal emergency so he could tap into the state’s rainy-day reserves to reduce cuts to key programs.

The 2021 and 2022 Budget Acts committed $2.8 billion over four years to continue strengthening forest and wildfire resilience statewide. The Governor’s proposed 2024-25 budget would maintain $2.7 billion of those investments over five years to advance critical investments in restoring forest and wildland health to continue to reduce the risk of catastrophic wildfires in the face of extreme climate conditions. The Budget would include $100.7 million in General Fund reductions and $162.5 million in fund shifts across various programs and would continue $200 million from the Greenhouse Gas Reduction Fund (GGRF), consistent with Chapter 626, Statutes of 2018 (SB 901) and Chapter 258, Statutes of 2021 (SB 155). Notable reversions and shifts in the Wildfire and Forest Resilience Budget Proposals include the following:

Wildfire/Forestry Expenditure Reductions—A reversion of $100.7 million General Fund for various programs with indirect benefits to fuels treatment or limited-term projects, including:

  • Biomass to Hydrogen/Biofuels pilot ($43.5 million)
  • Conservancy Project Implementation in High-Risk Regions ($27.7 million)
  • Home Hardening Pilot ($12 million), Monitoring and Research ($5.7 million)
  • Prescribed Fire and Hand Crews ($5.3 million), Forest Legacy ($3.6 million)
  • Interagency Forest Data Hub ($2.9 million)

Wildfire/Forestry Fund Shifts—A shift of $162.5 million General Fund to the GGRF across 2023-24 and 2024-25 to maintain critical investments in direct fuels treatment programs that restore forest health, build wildfire resilience and reduce greenhouse gas emissions from catastrophic wildfires, including:

  • Fire Prevention Grants ($82 million shift within 2023-24)
  • Stewardship of State-Owned Land ($34.5 million shift to 2024-25)
  • Department of Forestry and Fire Protection Unit Fire Prevention Projects
  • ($26 million shift to 2024-25)
  • Regional Forest and Fire Capacity ($20 million shift to 2024-25)

Climate Change
On climate change funding, the Governor is also proposing to delay $800 million of funding for the Clean Energy Reliability Investment Plan to $100 million in 2023-24, $100 million in 2025-26, $300 million in 2026-27, and $500 million in 2027-28. The budget also cuts $3 billion in spending for various climate change programs, however the Newsom Administration indicates it will also seek to secure $10 billion in federal climate change funds, most likely from the Inflation Reduction Act, to backfill the cuts with a goal of meeting the state’s multi-year climate investments to bring total climate spending to $58 billion over the next six to seven years. On the potential use of bonds to help pay for various state programs, the Governor’s top priority remains passage of a mental health bond (Proposition 1) that will appear before voters in March. The Governor is strategically avoiding raising any signal of support for a potential November climate bond, despite the fact there remains significant support among various legislators and stakeholders, and the state has enough bonding capacity to at least entertain a $10 billion bond. Legislative leaders will likely get closer to finalizing a potential climate bond with the Governor and stakeholders in the range of $6 to $10 billion but will be influenced by the updated tax receipts during the May Revise. They technically have until June 27 to place a bond on the November ballot.

What’s Next?
During the next few weeks, the Assembly and Senate Budget Committees will hold an overview hearing of the Governor’s Budget and then the Committees will break into subject area Budget subcommittees, where they will review the Governor’s proposals in greater detail. This will be an opportunity for the LAO to comment on the budget, as well as the public to make comments. The state Budget must be passed by the two houses and sent to the Governor by the Constitutional deadline of June 15, or the legislature must forfeit pay. In the meantime, legislators have also begun discussions on whether to move so-called “two-year bills,” which failed last year and had to pass their house of origin by January 31 to remain alive. Those bills are usually a big lift since they failed to gain momentum in 2023, which was the case for two forest-related bills that ultimately died in early January, including AB 397 (Essayli), which would have required the California Air Resources Board to include greenhouse gas emissions from wildlands and forest fires in the climate change Scoping Plan, and AB 1554 (Patterson), which would have provided a CEQA exemption for wildfire reduction project in areas within moderate, high and very high fire hazard severity zones. These bills will likely get reintroduced.

Other legislators pivoting to new ideas recognizing that February 16 was the deadline to introduce new bills for the year. True to form, we should expect to see more than 2,000 new bills introduced with legislators focusing on issues of homelessness, housing, retail theft, wildfire insurance, artificial intelligence, energy affordability and climate change. In addition, there is a possibility legislation could be introduced to address some forest management reforms for small landowners and more attention to biomass. Once all new bills have been introduced by February 16, KP will flag those of most importance but there won’t be any action on most of these bills until late March or early April since many are likely to be spot bills.

Last, it should also be noted that with Assembly Speaker Robert Rivas (D-Hollister) now in charge, new committee chairs and assignments have been made that will dictate the policy agenda (see committees below). It remains to be seen who will oversee some of the key Senate committees since Senator Mike McGuire (D-Humboldt) took over as the new Senate Leader on February 5, but we expect there will likely be less changes in key committees since experience will be needed to address the budget deficit, even though there will be at least 10 Senators who will term out in November. In the Assembly, there are at least 20 legislators who will term out or retire, which means we can expect at least 30 new legislators to be elected in November.

New Assembly Committee Members for Natural Resources
Assemblymember Isaac Bryan,
Chair (D-Los Angeles)
Assemblymember Heath Flora,
Vice Chair (R-Modesto)
Assemblymember Rebecca Bauer-Kahan (D-Orinda)
Assemblymember Laura Friedman (D-Burbank)
Assemblymember Josh Hoover (R-Folsom)
Assemblymember Ash Kalra (D-San Jose)
Assemblymember Devon Mathis (R-Porter)
Assemblymember Al Muratsuchi (D-Torrance)
Assemblymember Gail Pellerin (D-Santa Cruz)
Assemblymember Buffy Wicks (D-Oakland)
Assemblymember Jim Wood (D-Santa Rosa)

New Assembly Committee Members for Budget Subcommittee on Resources and Climate (#4)
Steve Bennett, Chair (D-Oxnard)
Damon Connolly (D-San Rafael)
Heath Flora (R-Modesto)
Lori Wilson (D-Fairfield)
Jesse Gabriel (Dem. Alternate) (Encino)
Vince Fong (Rep. Alternate) (Bakersfield)

Track Bills by visiting http://leginfo.legislature.ca.gov and use the Quick Bill Search function.

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Good News -- Exemptions and NTMPs

CAL FIRE has reversed its policy change regarding the acceptance of exemptions for NTMPs. Please refer to the link below to view the letter from the California Department of Forestry and Fire Protection (Ken Pimlott) to the California Board of Forestry and Fire Protection (Keith Gilless).

Should you have any questions, please send an email to the FLC Legislative Committee at legchair@forestlandowners.org.
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If you are interested in wathcing the panel debrief, the video is posted on the PPIC's website:

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