Senate Budget and Fiscal Review Subcommittee No. 2 on Resources, Environmental Protection and Energy

Senate Budget Subcommitee two on resources, Environmental protection and Energy will come to order. We are holding these hearings in the O Street building. Ask all Members Subcommitee be present so we can establish a quorum. Begin our hearing. First of all, thank you. Great interest in this Committee this year. Representative, by all the folks here today. Thank you all for being here. I'd like to start out with a few introductory remarks.

In the past few years, California has made significant progress by setting new goals to fight and prepare for climate change. And we have also provided unprecedented spending to achieve that progress. On wildfire and forest resiliency, for example, we have ambitious goals to improve our resiliency and are aiming to scale up forest management to meet the state and federal 1 million acre annual restoration target by 2025. To get there, we've committed over $2.8 billion in forest health and wildfire resilience in recent climate budgets.

In clean energy, we have high standards as well. SB 100, requiring all retail electricity sold in California to be powered with renewable and zero carbon resources by 2045. And to meet that goal, we've invested nearly $8 billion for clean energy, energy reliability and energy affordability programs. And finally, regarding emissions, we have one of the world's most ambitious emission reduction goals, aiming at 48% below 1990 levels by 2030 and 85% by 2045. That is a goal that is going to be a stretch goal.

And in alignment with that, our recent climate budgets have included billions of dollars to decarbonize across transportation, buildings, energy, agriculture and other various sectors, as well as investing in key technologies and strategies that we'll need to get there. But in order to meet those goals, we need urgent policy and budget action to continue aggressively reducing emissions and protecting our natural resources. However, we all know that this can be a tough budget year ahead.

The LAO recently came out with an estimated deficit of $73 billion under their updated revenue forecast. All of the proposed cuts, shift and delays in our areas and other areas are going to be painful decisions. My priority is that this Subcommittee, working with my colleagues, that we make decisions carefully and thoughtfully with Administration so that we can continue to advance smart and impactful climate investments in a time of budget difficulty.

We will need to prioritize the most effective programs to maximize the impact of our state dollars in reaching our ambitious climate goals. With that, I'd like to welcome two new members to our Subcommitee, Senator Blakespear and Senator Allen. Welcome to sub two.

Thank you. And we welcome back Senator Dahle, who will be with us shortly. Would either of you like to say any open remarks before we get started. Okay, great. With that, let's establish a quorum.

Becker here. Becker here. Alan. Alan here. Blakespear here.

Blakespear here, Dahle.

Quorum is established today. We're here, and we'll focus on the Governor's Budget solutions and climate, natural resources, environmental quality and energy. The historical amount of funding that we approved in 2021 and 2022 budget acts spans across many areas, including zero emission vehicles, energy, water and drought, wildfire and forest resilience, nature based solutions, extreme heat, circular economy, and many more. Today, we'll first hear from the Department of Finance, followed by the LAO, and then members will have opportunity to ask questions.

We also have several departments are here and available to answer questions. Again, we thank all of you for being here. Our first presenter will be Sergio Aguilar, representing the Department of Finance, and he'll provide us an overview of the governor's climate budget solutions. Welcome, Mr. Aguilar. You can start when you're ready.

Good morning, Chairman. Sergio Aguilar, Department of Finance now I'm joined here with my colleague Stephen Benson, also from Department of Finance. So we're going to provide an overview of the climate budget and associated General Fund solutions. And as you mentioned, we do have colleagues from the various departments here with us today who will be available to answer any specific questions you might have on specific programs that are impacted and associated policies.

So the state faces a budget that must solve both for last year's deficit while also adjusting state spending to support continued fiscal stability. And even as the state faces a $37.9 billion shortfall, California continues to fulfill many promises made while responsibly managing finances. And while closing a shortfall of $37.9 billion poses a substantial challenge. It is more manageable because of the state's oversight in building some historic reserves, historic reserve levels in 2023.

So the 2021 and 2022 budget acts together allocated approximately $54 billion over five years across many different climate priorities to advance the state's climate agenda. And the budget maintains approximately $48.3 billion of that $54 billion investment, which is almost 90% over a seven year period. And of the $48 billion, approximately 36 has already been allocated to programs, and the remaining 12.4 is set to be allocated over the next four years.

Now, this budget prioritizes equity and investments in populations facing disproportionate harm from pollution and also the climate crisis. And the budget does include, in some cases, some additional spending. There's about $160,000,000 in additional new climate spending, primarily in flood and salt and sea. And the Administration also continues to leverage and pursue available federal funding for California, including funding from the Inflation Reduction act and the Infrastructure Investments and Jobs act. And as of the beginning of the year, the state's projected to receive at least $15.5 billion.

That includes both formula and also competitive funding that has been awarded from both of these large federal pieces of legislation across many different climate and environmental protection programs. And this number is expected to continue increasing as more federal awards are announced and as more opportunities are made available for California and entities in California to continue to apply. So, to address the projected budget shortfall, the budget proposes a balanced combination of solutions that includes $6.7 billion in General Fund solutions related to climate programs.

And of the $6.7 billion, $2.9 billion are reductions,$ 1.9 billion are delays to future years, and $1.8 billion are Fund shifts. And those Fund shifts are primarily to the Greenhouse Gas Reduction Fund. The budget also includes approximately $565,000,000 in additional non climate related General Fund solutions in natural resources environmental protection related programs, and of that, $350,000,000 is revenue borrowing, $175,000,000 are delays and then approximately $40 million are reductions.

So when looking at how the Administration considered the various General Fund solutions, the Administration had a general framework as we were looking at the various climate and resources programs and thinking through how to solve the budget deficit. So first we identified what programs had available funding that had not been committed yet.

So, as I mentioned earlier, about $36 billion has actually already been appropriated to departments, which a lot of the funding has actually already been committed and has been provided out in awards and grants and are no longer available.

So we looked at the status of all those previously appropriated programs to see how much funding is available by fiscal year and what has been committed, what awards have been announced, what upcoming awards are going to be announced soon to determine where there is still funding available, we looked at where there's potential to shift to other funds and also potential to leverage additional federal funds, and also looking at delays.

So over half of the climate solutions are either delays or fund shifts, which that enables us to protect those commitments by either delaying them to future year or moving them to the greenhouse gas reduction Fund so they could continue being supported. We also considered previous reductions and the overall level that has been maintained for some of these programs. So last year there was also a budget deficit and there were also some tough reductions that we had to make to certain programs.

So we took that into consideration as we were looking at what additional reductions could be made this year and solutions could be made this year in order to solve the budget deficit. Of course, looking at trying to prioritize programs that support equity and support populations that are more disproportionately harmed from pollution and the climate crisis, and also looking at protecting funding that addresses some of the more immediate climate risks, such as wildfire and such as water, which align with some of the most highest priorities.

And then again looking at federal investments. And there's some areas where there is more direct connection to federal funding that could directly support that related funding, and other areas where there's just broad investments from the Feds coming in certain policy areas to awardees throughout California that could also advance those same goals and policies, even though it's not coming through the state.

Ultimately, there were some tough decisions the Administration had to make in order to have a constitutionally mandated balanced budget, and I will now pass it on to my colleague Stephen Benson, who will, at a high level, cover by a climate programmatic area, some of the General Fund solution details.

Good morning, Stephen Benson, Department of Finance I will, as Sergio said, do some summary of the primary climate investment categories and how the General Fund solutions impact those. So starting with zero emission vehicles, or zevs, the 21-22 budget acts committed $10 billion over five years for investments in the state's ZEV Agenda, ranging from cleaning up short haul trucks to school buses to accelerating equitable electrification of passenger vehicles, coupled with infrastructure and incentives for instate manufacturing.

The budget maintains all $10 billion but over a seven year period, so essentially stretching it out over a couple of years, which includes targeted investments in disadvantaged and Low income communities. By increasing access to the benefits of clean transportation and continuing to decarbonize California's transportation sector to improve public health. The budget includes $38.1 million of General Fund reductions, $475.3 million in Fund shifts to the Greenhouse Gas Reduction Fund, and$ 600 million in delays across various programs. In the transportation area,

The 2022 Budget act included $13.8 billion for transportation programs and projects that align with the state's climate goals. The budget maintains $13.6 billion, or 99%, of these investments. The budget includes $200 million in General Fund reductions, $791,000,000 in Fund shifts and 3.1 billion in delays across various programs. For energy, the 2022 Budget act provided a total of 7.9 billion in energy investments to expedite the state's transition to clean energy, Fund critical grid reliability programs, and address energy affordability challenges.

In addition, Chapter 239 statutes of 2022, which was SB 846, proposed $1 billion over three years beginning in 23-24 to Fund initiatives under the Clean Energy Reliability Investment Plan, which is subject to future appropriation. The budget maintains approximately $6.6 billion, 83% of these investments of the planned 2022 energy investments. In addition to the $944,000,000 reduced in the 2023 Budget act, the budget includes $419,000,000 in General Fund reductions, $144,000,000 in Fund shifts, and $505,000,000 in delays across various energy related programs.

The budget also maintains the proposed $1 billion for clean energy reliability investment plan, with the remaining amount being proposed over three years beginning in 2025-26. For wildfire and forest resilience the 2021 and 2022 budget acts committed 2.8 billion over four years to continue strengthening forest and wildfire resilience statewide.

The budget maintains $2.7 billion, or 95% of those investments over five years to advance critical investments in restoring forest and wildland health and to continue to reduce the risk of catastrophic wildfires in the face of extreme climate conditions. The budget includes $100.7 million in General Fund reductions and $162.5 million in Fund shifts across various programs. It also continues the $200 million from the Greenhouse Gas Reduction Fund that was set up through initially through SB 901 and then sort of continued in a continuous appropriation SB 155.

For drought response and water resilience. The 2021 and 2022 Budget Acts committed $8.7 billion over multiple years to support drought resilience and response programs to help communities and Fish and Wildlife avoid immediate impacts of extreme drought while advancing projects and programs that will improve the state's resilience to future droughts and floods. The budget maintains $7.3 billion, or 84% of these investments over multiple years to bolster capacity of communities and ecosystems to endured droughts and floods.

The budget includes $796.8 million in General Fund reductions and $100 million in delays across various programs. The budget also includes $159.1 million in new investments to support flood protection, levee repair, and the restoration of the Salton Sea. For extreme heat, the 2021 and 2022 Budget Acts committed $649,000,000. The budget maintains $364,000,000, or 56% of these investments over multiple years for various programs and projects to support extreme heat.

The budget includes $40 million in General Fund reductions and $109,000,000 in Fund shifts across various programs. For community resilience, the 2021 and 22 Budget Acts committed 1.9 sorry billion of community resilience investments over multiple years to advance climate resilience and low income and underrepresented communities. The budget maintains 1.2 billion or 67% of those investments over multiple years to help continue to promote community resilience. The budget reflects 89.8 million in General Fund reductions across the various programs.

For nature based solutions, the 2021 and 22 budget acts committed $1.6 billion. The budget maintains 1.4 billion, or 89% of those investments over multiple years in a number of different programs. The budget includes $15 million in General Fund reductions across two programs. For coastal resilience, the 2021 and 22 budget acts committed to $1.3 billion over multiple years. The budget maintains $660,000,000, or 51% of those investments again over multiple years across various programs and projects.

The budget reflects 452,000,000 in General Fund reductions and 36.8 million in Fund shifts for various coastal protection adaption programs. For climate-smart agriculture, the 2021 and 22 budget acts committed $1.1 billion over multiple years for climate-smart agricultural investments and to help foster a healthy, resilient and equitable food system. The budget maintains $1 billion, or 89% of those investments. The budget includes $79.1 million in General Fund reductions and $24 million in Fund shifts across various programs. So that's it for the climate categories,

but the budget also does include a handful of General Fund solutions that are in the natural resources and environmental protection policy area, but not strictly the kind of climate packages as we've talked about them. So I'll touch on those just quickly here, too. Those include a delay of $175,000,000. General Fund for the Department of Toxic Substances and Controls Cleanup in Vulnerable Communities Initiative program the budget includes $85 million in funding for these programs in 25-26 and $90 million in 2026-27.

For underground storage tank Cleanup Fund, there's a budgetary loan in here that would be $150,000,000. It also includes a one year delay in the repayment of a prior budgetary loan of $50.7 million, that is, from the Underground Storage Tank Cleanup Fund to the General Fund, and these funds would be from balances within that fund that are not needed immediately for sort of operational programmatic needs in the short term.

Similarly, from the California Beverage Container Recycling Fund, the budget includes a proposal of a budgetary loan of $125,000,000 along with the deferral of a $25 million budgetary loan that already exists. And again, that would be a loan from the California Beverage Container Recycling Fund to the General Fund. And it's from balances in that Fund that are not immediately necessary for operational and programmatic purposes. In terms of outdoor equity grant program, the budget includes a reduction of $25 million

General Fund for outdoor environmental education and access programs that are supported through the Outdoor Equity Grants program that was established under Chapter 675, the statute 2019, which is AB 209. The budget maintains $90 million of General Fund previously allocated for that program. Urban waterfront funding the budget includes a reversion of $12.3 million of General Fund from various projects and urban areas that are adjacent to rivers and waterways throughout the state.

The budget maintains $142,000,000 General Fund that was previously allocated for that program. And then finally for Pesticide Notification. There's a reversion of $2.6 million General Fund related to Pesticide Notification Network that was previously appropriated in the 21 Budget act, and the budget maintains $7.3 million of the previously allocated funding for that purpose. So that completes our overview presentation. As previously mentioned by Sergio we have a lot of staff here from various departments to help answer questions.

So on the one hand, that'll be very helpful for making sure that we have the right people here to answer your questions. But on the other hand, it also means that there'll be a lot of people sort of coming up and down. So just apologies in advance for the musical chairs that will likely ensue as we go through the rest of the hearing. Thank you.

Thank you again, and we do appreciate so much of the staff and the team being here. Now we'll go to Ms. Ehlers of the LAO for your presentation.

Thank you. Good morning. Rachel Ehlers with the Legislative Analyst's office. I'll be speaking from this handout, which hopefully you all have, which is kind of talking points from this larger report, which hopefully you also have, and both are available on our website for others. So first, before diving in, just to give a little bit of context, as the chair mentioned, we are, and my colleagues from the Department of Finance, we are facing a challenging budget situation.

In January, our office estimated that the Administration addressed a $58 billion budget problem. The technical definitions of what's included in that problem kind of relate to Proposition 98 and scoring and baseline.

But in January, we thought there was a $58 billion problem, as the chair mentioned, based on updated revenue information from what the state has collected as well as economic factors, we've revised that recently to estimating that the state now faces a $73 billion problem to address across the three-year period that this budget will be covering the prior year, current year and forthcoming 24-25 fiscal year.

So in addition to that budget problem, across this budget window, even under the governor's revenue estimates, and even if you were to kind of adopt everything that the Governor has proposed, the Administration is estimating that we're facing $30 to $40 billion annual operating deficits in each of the three subsequent fiscal years after 24-25. So it's a pretty substantial budget problem ahead of us.

As part of the tools to address that we think looking at one time funding that was approved and planned as part of the recent budget package makes a lot of sense for several reasons. One is to the degree you reduce one time funding, you can preserve some of your other tools like your reserves, which likely will be needed in future deficits.

It also is kind of when these packages were put together, they were in the wisdom of the Legislature using one time surplus for one time programs rather than building up base programs with understanding that this was temporary while that temporary revenue ended up being less than we thought it would be so we think adjusting that temporary spending is both appropriate and necessary. But these are tools that are available to you kind of on a limited term basis.

If you don't reduce some of this one time spending, you can't get out three years from now and say, zero, I wish we hadn't spent that. We don't want to cut into ongoing programs. So there is some time urgency to consider that. So clearly, these are really important programs and efforts. Addressing the causes and impacts of climate change are a huge priority for the state, but so is the constitutional obligation to pass a balanced budget.

So that's really the context for the comments I'm going to go through. As your fiscal advisors, we feel that it's our obligation to give you options to try and address these competing goals. So that's what we're trying to do with my comments today, but also over the coming months to give you options to address these challenges.

So with that background, turning to page one of the handout, I'll also note that some of the numbers I will be giving you will differ some from the Department of Finance because we really have limited our discussion here to the programs and efforts that are in the purview of this Committee. Some of the climate budget numbers that the Administration cites include transportation spending, housing spending, higher ed spending that really haven't been part of kind of the Legislature's view of the climate and resources package.

So those are the numbers that we focus on here. So the recent budget packages and agreements, as noted, were really kind of unprecedented in terms of the amount of spending and particularly the amount of General Fund spending for these programs. The picture here on the bottom of page one shows that very large spike in General Fund over recent years. And this image reflects the governor's proposal for the coming year. So even with the proposed reductions, you can see how notable those increases were.

There were some adjustments last year to address the budget deficit, roughly $3 billion reduction, but still really unprecedented efforts for these programs that historically were supported mostly with special funds and bond funds. So turning to page two, I won't go into great detail here since the Department of Finance has already discussed these, but there are really three tools in the governor's proposal.

Reductions of roughly $2 billion across the budget window, and then another over 500 million in 25-26 delays, which is taking General Fund that was planned for the budget window and shifting it to a future year, over $1.0 billion there. And then Fund shifts shifting from General Fund to the Greenhouse Gas Reduction Fund, or GGRF. Because some of those delays come back in that spending is resumed across the multi-year period,

the proposal to save $4.1 billion in the budget window is eroded a little bit across the multi year period. So we estimate that the governor's proposal would save $3.6 billion in General Fund across the forecast period. So turning to page three here, I apologize the color didn't come through on the gray scale. But if you want to look in the other report, this is on page 12. This is a picture of all of Mr. Benson's testimony.

It shows you, for each of the thematic packages, what the governor's proposal contains. So a couple of things to draw out from this picture. First is how much dark there is. That dark color is how much is retained, how much doesn't have any proposal to be adjusted, the dotted lines or if you're looking at page 12 in the color report, it's the red and yellow. That's the proposed reduction. So you can see that that's a relatively small share.

Overall, the package retains 86% of the original intentions. Some of it is Fund shifts, as I mentioned, different source, some of it's different timing, but 86% would be retained. So that's one big takeaway is the kind of proportion of maintained versus reduced. I think another to draw your attention to is that does differ by thematic package. If you look at the top line for the zero emission vehicles, it's pretty much 100% maintained, maybe with a different timing or a different fund source, but really maintained.

Whereas if you go down towards the bottom to coastal resilience, the governor's proposal would cut about half of that intended funding. So there are definitely some policy choices here within the governor's proposal around where to capture savings and to preview what I'm about to say, as we turn the page, you have other options if you have different policy priorities. I'll also just note this other line in the middle, since that isn't well defined in this image.

That contains the largest piece of that is the clean energy reliability investment plan, or SERAP, which was an intention for $1.0 billion included as part of the Diablo Canyon reauthorization package. The governor's proposal would delay a significant portion of that, not cut, but delay. So that's part of the large gray there in the middle. The big reduction there on that other line is for the Climate Innovation Program, which was planned for the Energy Commission. That's roughly $500 million. It hasn't gotten off the ground yet.

That is a large reduction that's proposed under the governor's.

So turning to page four for our comments, overall, we think there are merits, significant merits in the kind of overall framework of the governor's proposal in that it continues to fulfill most of the state's objectives by sustaining a large chunk of that funding. It's, again, as I mentioned, focusing on reducing one time augmentations rather than base ongoing programs, which we makes a lot of sense and is less disruptive to the state efforts.

We haven't identified any instances where the Governor is going in and cutting programs for which funding has already been committed. So that minimizes disruption. Using GGRF to kind of help sustain programs that are priorities makes a lot of sense, and reducing funding that hasn't yet been provided. That said, there are some components that we think are going to complicate things for you if you adopt them, and primarily this is around those delays.

Shifting funding to a future year when you've already got really substantial budget deficits in future years is going to make that harder, kind of worsen those out year program problems, as well as perhaps set up expectations at the local level for funding that you may not be able to afford. Similarly, there's quite a bit of reliance on out year greenhouse gas reduction fund, $1.8 billion in the out years of future GGRF revenues.

There's a lot of uncertainty around GGRF revenues, but also uncertainty around your future priorities. And so we think trying to kind of minimize what you're committing to in the out years to preserve your flexibility would make a lot of sense. You do have other options. You have options for alternatives. You have options for finding additional savings to the degree you need them.

So some of that would be reducing some of the General Fund that the Governor leaves in for the budget year as well as the out years. That's funding that hasn't yet been committed. It hasn't even yet been given authorization to departments. So if you're looking for the least disruptive reductions, those are some of the categories that we would recommend that you start to look at.

We've also identified quite a bit of uncommitted money that has been appropriated over $1.0 billion across many programs that the administration has not yet kind of gotten out the door, committed to specific projects. So that's another area you could look at. You can also use GGRF differently to preserve your priorities as you're making General Fund reductions. I think we would note that the governor's proposal preserves the administration's priorities over some of the legislative priorities.

So as you're looking at putting your budget together thinking about what did you add in these budget agreements? And is that an area you might want to sustain as compared to some of the choices the administration's made? We wish we could say to you these are the programs that are the most effective, so we think these are the ones you should sustain. Unfortunately, there's not a lot of data and information around outcomes of some of these programs.

Some of that's because we're starting them for the first time, and some of that's just because we haven't collected that as a state. So that's an area to focus on too, to think about kind of informing future decisions. What information are we collecting. Next, the final bullet there leads to the pie chart on page five, which also is in color in our report and maybe easier to see.

This highlights some of the funding we have summarized that is coming to California or projected to come to California from the Federal Government for some of these similar topics. Again, this number is less than what you just heard from the Department of Finance because we exclude transportation and particular high speed rail from this picture, which is a chunk of funding the state is expected to receive.

So this is either funding that is committed to California through the formula programs at the federal level, or that entities in California have already been awarded through competitive programs. There's still competitive solicitations happening, so this number could grow, but this is sort of what we think can be with some amount of confidence assumed that it's coming to California. So the federal programs are not a one to one match.

Generally for our state programs, they may have different matching requirements or different allowable activities, but at least in broad categories, you can get a sense here of the types of other funding we're getting from the Federal Government that might help inform you as you're making your decisions as well.

And then finally, turning to the last page, following pretty closely to the comments on what our overarching recommendations are for you, we really think it makes sense to maximize General Fund savings from these one-time programs to preserve your flexibility and avoid having to cut into ongoing programs potentially, as the budget situation may worsen. We think you have options for alternatives or additions.

There may be some of these areas where taking early action makes sense to, especially if you want to look at capturing savings from funding that's already been appropriated to help pause, the administration is kind of moving ahead with allocating funding that's already been granted authority. So if you want to capture savings that we've identified from some of those programs that may require taking action soon, we think using GGRF to help prioritize and preserve your most important programs makes sense.

We advise caution on committing out your funds to preserve your flexibility. And then finally thinking about this oversight, it's not too late for some of these programs. We've just gotten started to start collecting information and making sure you are finding out what we're getting from the money we're spending and also getting information to help inform future decisions. With that, happy to answer any questions and we've got our great team from the LAO here as well to hop up if you need them.

Thank you. Good. Well, there's a lot in here, so I have a lot of questions and there's going to be a lot of public comment as well. I will start out with a few overall questions and then turn over to Senator Allen and then I'll dive into the come back to some of the specific programs. First, Department of Finance, what are your thoughts about LAO's most recent deficit update saying the deficit is growing significantly, as was mentioned? Do you agree with that assessment?

So, Sergio Aguilar, Department of Finance. So actually, earlier this month, Finance did release a monthly cash report which shows some preliminary General Fund agency cash receipts were about 5 billion, or 19.7% below the 24-25 Governor's Budget forecast for January. And then from a fiscal year to date perspective, it was about 5.9 billion, or 4.8% below from that fiscal year to date perspective.

However, while revenues are down through January, there still are many things that can change related to revenues in the economy between now and the May revision, which may ultimately increase or reduce the size of the problem. So really at this point, it is a little bit too early to speculate on the total impact, but we're definitely actively monitoring the economic condition and the impact that that has. And there'll be an update at the May revision to reflect the newest estimates.

And so our estimate is still the Governor's Budget forecast estimate. But of course, we do monitor cash receipts and we do see that there are changes, but more to come and details to be released in the May revision.

Got it. Of the total General Fund budget solutions, how much comes from climate programs, roughly?

So the total General Fund solutions are 37.9 billion. So that aligns with the budget deficit. And when looking at the climate area solution, so 6.7 billion of the 37.9 billion are in the climate area. But it's important to note only 2.9 billion are reductions. So of the 37 billion and statewide reductions, or almost 40 billion, 2.9 are climate program reductions.

And so generally when kind of looking at the climate area, this is an area where there is available one-time funding and also there were additional opportunities to be able to shift to other funds and then also to pursue other federal funds as well. So even with these reductions that we have in the climate area, which again 2.9 billion are reductions out of the entire 37.9 statewide solutions, we are protecting 48.3 billion, close to 90% of the original investments.

And then in addition to that, over $15 billion of federal funds at a minimum, based off of the current projections of formula and the competitive grants have already come in that we'd get. So ultimately there were some hard choices that had to be made. But climate remains a priority for Administration and we believe that is reflected in the amount that we're actually protecting and then also looking at the potential federal funds that are going to be coming into the state.

Good. We do appreciate that commitment. A few more General questions for the LAO, can you expand on why you believe delays complicate future budget situation and what are your recommendations in place of that?

Yeah, I mean, the advantage of a delay is you're not making a cut. You're indicating that this is still a priority and you hope to fund it at some point. I think our concern is just given the budget deficits that you're facing, even under the governor's estimates, that those expectations, those indications, those commitments may be really hard to fulfill and you will just kind of be back here again next year having to solve the problem all over again.

So if you alternatively were to set yourself up saying, okay, we don't think we can afford that in the future, so we're just going to go ahead and say we can't afford that in the coming years. And then if revenues do allow you to, then you can add that in, in your budget as the years come forward.

But setting yourself up for spending in a situation when you already have a $30 to $40 billion deficit we think just isn't the wisest course setting forward that kind of writing your fiscal ship now and then as you come into that year, what your priorities are, what your resources are, you can revisit the issue.

Okay, on federal funding, you mentioned it, disparity. It sounded like a lot of that was high speed rail. Was there other pieces to the federal funding?

Yeah, the biggest two pieces are transportation-related. High speed rail is 3 billion of it. And then there's another kind of large transportation piece. I think those, as we've reconciled, we're looking at the same data that the Department of Finance is, but I think part of it is just the universe of what we're considering before you.

Okay, so Department of Finance mentioned the federal funds. And so I'm wondering, how was the administration particularly thought about that? And a lot of the federal programs are similar to state programs. They're not dollar for dollar replacements. So how is Administration proposing to kind of braid federal and state programs to still reach our climate goals?

Yes, Administration has been engaged in some pretty extensive efforts over the past couple of years to try to leverage as much of the federal funding we can to the State of California. And we're collectively working both internally within the Administration to have different departments and agencies apply as also working with our local partners, nonprofits, tribal governments, and others to try to avail them of the opportunities as substat grant recipients. And over 15.5 billion to date is what we're kind of expecting coming to California.

This was definitely one of the factors that we did consider when looking at General Fund solutions and has been mentioned. Not in all cases, they're one for one or the same program. In some cases, it is very similar to what the state would have provided. Just as an example, when thinking about some of the federal water investments, there's over 400 million that was provided to the Water Board for cleanup of emerging contaminants, which includes PFAs.

And so one of the reductions that we have in this budget, the General Fund solution, is reducing 100 million of General Fund for PFAs, acknowledging that there's 400 million that's going to be coming in from the Federal Government over a couple of years to support that same effort. So that's kind of one example where there is a more direct program also coming funding to the State of California to support that.

In other cases, it's not a one for one, but we're always looking at how we could best leverage some of the funding. One example provide of how we've tried to braid some of the programs under the airborne, the HVIP program. They recently made some modifications to the program to be able to better help the local transit agencies be able to leverage some of the federal transportation Knox programs.

And so we're also trying to adjust where possible, our programs to be able to help others who are going to potentially use our funding as a match for some of the federal funds.

And so we're actively monitoring a lot of the solicitations to look at what are some of the guidelines coming out, out of the federal programs, trying to, as much as we can make sure that we're doing our part and also supporting the locals who are going to be applying as much as possible to extend. We could offset some of the lost General Fund by supporting the locals in their pursuit of the federal funds as possible.

And so there definitely is statewide efforts, and as we mentioned before, there are a lot more awards and solicitations to come. The 15.5 billion is just so far of what's already been announced. But there's, on a monthly basis, federal awards announced and also federal opportunities that are announced. And we provide a lot of letters of support to different entities in California who are applying to the Federal Government.

So there's a lot of different ways that we're trying to leverage and maximize as much of that federal funding as know, even acknowledging that there's, in some cases reduced General Fund that is available.

Okay, thank you for that. We have one more set of questions, and then I'll turn over to Senator Allen so we can ask some of the high level questions before we start moving people around, as you mentioned. In terms of program effectiveness, you referred to this, what do we know about which programs are most effective in reaching their goals? And do any programs stand out to you?

Yeah, as I mentioned, this has not been an area where the state has collected a ton of information. One area of exception, with a disclaimer, I guess, is around the expenditures from GGRF. That is an area where the Air Board does kind of monitor or estimate the cost effectiveness at reducing greenhouse gas emissions for the programs that are funded through that Fund source. We've raised some issues with their methodology and kind of the reliability of that, but at least there is that effort happening.

So some of what they found is the programs that provide rebates for light and heavy duty vehicles have kind of high cost effectiveness ratings for greenhouse gas emissions. So that's one category. I think, sometimes with bonds also, there's language that's written in for some of those programs to report on program outcomes, but it really hasn't been an area that the state has required much of for these recent investments.

So in terms of areas, we would think you might want to consider adding some language or potentially even setting aside money for a formal evaluation in particular around efforts we're trying for the first time. So one area we'd highlight is around extreme heat. That is a new climate challenge the state is facing. We haven't really spent a lot of money or done a lot of activity on that, and we don't really know what works with the exception of the funding in this package.

But we don't really know what works. We don't know whether it's planting trees or buying air conditioning units for families or setting up cooling centers for folks to go to. What is really the most impactful activity we can do on public health. And research has found that's going to be one of the most dangerous climate impacts on public health.

So because that's a new area, that could be an area that we really would want to learn from so that we know in future years where state investments make the most sense. So I think our guidance to you would be, of course, we're data nerds. We want to know everything about every program, but really focusing on where do we not know what the most effective activities are. And it might be worth, even in this budget context, setting aside some funding from the program budget to do some learning and some research.

Thank you. And for Director of Finance, how would you respond to that? How does Administration assess which programs are most effective, or are they being effective in different facets of climate change, whether it be extreme heat as mentioned, or proven coastal resilience? We'll talk about the GGRF Fund at another time.

Yeah, and Administration definitely looks at effectiveness and monitors some of the outcomes of the various programs to make sure that we are making investments in those areas that are making a difference and an impact. And there's, of course, dozens of programs that help support different climate goals, whether it's reduced in emissions, sequestering carbon, reducing different climate risks. And so there's various ways that we try to target the effectiveness.

One way is as while we're developing the eligibility criteria for many of the programs within what we're acquiring of the applicants and of the projects folding, some of that effectiveness measures and metrics within that.

And so when thinking about programs, funding from cap and trade building in the GHG benefits as part of that, when thinking about the Urban Greening Program as an example, really kind of looking at what programs have the most benefit for those communities that have the most significant threats to extreme heat, and the applicants are actually required in the application to identify the risks through the California Extreme Heat Assessment Tool.

Another example for the Delta Levies Program under Department of Water Resources, the applicants are required to do a detailed assessment of the lifetime climate vulnerability and adaptation kind of measures of their specific project. So we have kind of a lot of measures built in within first step of the application project or application process.

Then when the projects are actually going through, in many cases, there's also regular reporting that we require of the applicants or the grantees at that point in time where some are required to do quarterly or semiannually or annually reporting on how they're actually meeting those metrics and then in many cases also post assessment of effectiveness once the project is completed. We looked at what has been the total impact of these projects, and some actually also have to report after the fact.

And as mentioned before, the cap and trade program does have an annual report for all the cap and trade investments. And there's a lot of public information on those programs, but we definitely have information on other programs. If there's any specific program of interest, we could definitely kind of work with respective department that implements those programs to see what data it's available of reflecting some of the outcomes of the grants that have been provided.

Okay. Well, I'm a fan of Urban Greening, so I'm sure we'll get to that later. Let me turn it over now to Senator Allen to start on some questions.

I mean, thank you for your presentations and obviously really tough year, and I totally appreciate the comments about how we don't have great data. Of course, the challenge, I think, is we all know that the decisions we're making, we're trying to figure out how to both do our part, given the broader budgetary challenges. And the flip side is we really do know there's going to be impact.

I mean, these are all valuable programs that are being funded and a lot of these are really cost effective solutions to addressing all sorts of key goals that we have. And you just look at the list of things that are potentially implicated. I mean, our protection of coastal communities against the intensifying impacts of climate change, our climate goals, our outdoor access goals, 30 x 30.

And I know if I ask you how do we know how it's going to impact, you're going to say, well, we don't have enough data, which I'm sure true, but nevertheless, we know there will be an impact. So let me ask you a little bit about the possibility of a bond. Obviously, it's something that some of us have been working on. The Governor has mentioned it repeatedly through the course of the last couple of years as an outlet for some of these expenditures.

You know, there's no way, and now, of course, they're all trying to downplay the size of a possible bond, which means the smaller it is, the less it would be able to handle a lot of these costs that some folks may try to attempt to shift onto it. But tell me, given the, let me ask the know, the LAO. The LAO came out with this overview of state bond debt service, and there were a couple of factors that came that I noted.

One was that our total bond debt is relatively low and the debt service ratio is the lowest that it's been in the last couple of decades. I think something the total to annual debt service in '22, '23 was about 3.2% of General Fund expenditures. So obviously there's a lot of concern over the broader economic outlook and certainly the budgetary outlook.

But do you have thoughts on, given the state's current debt levels, how much some of the various ideas about a climate bond might impact our annual debt service payments?

Yeah, so a couple of points. First, there's no magic number that we can give you of what the right amount of debt and bond is. Some guidance, and I guess I will also note part of why our debt service ratio is so low right now is because our General Fund is so much higher than it was historically. So I think the numerator and denominator matter on that ratio.

Our rough kind of rule of thumb is that for every additional $1.0 billion of bond you authorize, it will kind of equate to about $85 million in annual payments for 15 to 20 years. So in terms of what the impact would be on the future, that's a rough rule of thumb to use. I think some of our general guidance around bonds and what to put in them is to think about the fact that they will be being paid off for decades.

So that should be projects or efforts that will benefit folks 30 years from now. So thinking about big capital projects as opposed to rebates for EVs or something like that. Thinking about public benefit, broad public benefit for the broad public taxpayer, given that they will be the ones paying that off. Thinking about where there might not be other funding available. So it's really filling a hole. Thinking about if there are areas that can leverage other funding.

For example, in the area of flood, there's a lot of federal money that typically requires a state match for Army Corps of Engineers Projects, for example. So if the state doesn't have money to punny up, we may not benefit from the federal program. So those are kind of off the top of my head, some of the guiding principles we've historically given around bonds. But again, I'm sorry, I can't tell you what the right magic number is. I don't think there is one.

The good news is, of course, there's also flexibility once a bond is passed, right? I mean, the Governor, Legislature, every year we're determining how many bond funds to authorize agencies to spend in a given year. And of course the debt is not incurred until the agency actually spends the money. So even if voters approve a lot of bonds, we ultimately decide together through this process, in fact, how much debt is actually incurred through the budget actions that we take.

That's absolutely true. What we don't have any flexibility around is paying the debt service. Once the bond has been set, that is locked in, that is first call on the General Fund Dollars. And so when you do face tough fiscal times, that is not an area of flexibility once you have locked that in. So that's an important consideration.

But we could, right, if we wanted to keep the debt service lower for a lot of variety of good reasons relating to these macroeconomic trends, the Legislature could appropriate fewer bond funds in a particular budget year, but with the key caveat that we still have the locked in responsibilities associated with previous expenditures on the bond.

Right. And sometimes because the debt service doesn't come due for several years, you may authorize it in a good fiscal time. And then once the debt service comes, the fiscal condition has worsened, but that's when the obligation comes due.

Well, look, I think you're spot on on what we need to be thinking about as we think about a possible bond. And that's the right analysis, right. It's long term expenditures that would benefit people who would be spending, who would continue to be paying for them a long time down the line. I think we look at these, obviously there's a reason why we were so relatively expansive. I mean, arguably everything we're doing is inadequate, right.

But we were very expansive over the last couple of years in this space and we're clawing it back so dramatically. And I understand that in some respects, but I really do worry about all the impacts this is going to have, given all that we know about.

The money that's spent now on climate mitigation, what an incredible multiplier effect it has on the future, including on future losses. Right. I mean, in many respects, our long-term economic viability and health and vibrancy will depend on some of the upfront investments that we do now with regards to mitigation and resilience. We all know how tough the budget is. We spent last couple of days in retreat, in both physical and metaphorical retreat when it comes to these tough numbers.

And of course, you keep giving the shortfall numbers that you're given, though we all know that there's a very different argument out there about how much bigger the shortfall is than what DOF is saying these days, or at least was relying on. So with that, I'm so happy that the pro tem put me on the Budget Committee in this really easy budget year and look forward to the rest of the discussions.

We're glad to have you help us solve this problem. All right, we're going to get now some specifics. We understand there might be some shuffling around. I wanted to start off with energy, and both of you actually may have some comment on this. We discussed the Governor's Budget posed a delay CERIP funding as follows: 400 million in 24-25. 400 million 25-26, to 100 million in 25-26, 300 million in 26-27 and 500 million in 27-28.

So as we're gathering the appropriate folks, I'd love to understand what is the rationale for completely delaying the CERIP funding altogether when the Diablo Canyon Plant Extension General Fund loans have gone as planned?

Thank you very much. Steve Wells of the Department of Finance. I just want to say, you know, in regards to the CERIP funding and then the Diablo Canyon, the CERIP funding, we have $100 million in current appropriations. And I think we had talked earlier about some of the criteria that we use to determine where we would move things around have to do with. Is there an active appropriation available so that these programs can continue?

So the $100 million that was appropriated in the 23-24 budget is still active and most of that funding is still available. So we felt it was appropriate solution to then move the funding out that did the additional year over what we had planned before. As far as the Diablo Canyon, some of those funds needed to be spent in order to the ongoing efforts to re-certify and keep Diablo Canyon open. So it's more of a timing issue of when the funds were needed.

I'm just trying to make sure I understand that, because I think when we voted on, it was tied to the extension. Just sort of tell me one more time again.

Those funds are available upon appropriation. Again, part of the plan is to still have those funds be available, just, we're moving appropriation out to 2025 and 26.

Okay. In mid-January, the Federal Government finalized approval of $1.1 billion to help PG&E keep operating Java Canyon. However, in February, the Administration requested additional 400 million through the Joint Legislative Budget Committee notification process. So given the Federal Government award, why are the additional state funds needed at this time?

Good morning, Cherry. Morning, Senator. My name is Delphine Hou, the Deputy Director of statewide water and energy at the Department of Water Resources. So thank you for your question. So wanted to kind of separate the two things.

So, first of all, according to the Department of Energy, from what DWR understands, and of course, I just want to caveat that by saying that DWR is not party to the agreement between PG&E and the Department of Energy, but from what we understand, based on public information, that those funds based on that credit award would not come about until I think the earliest 2025. So that's based on the DoE timing of looking at PG&E submitted costs.

So there is a long process there that PG&E would have to go through with the Department of Energy. Therefore, right now, PG&E is in the middle of that license renewal. They have submitted their application to the Nuclear Regulatory Commission back in November. It was deemed sufficient, which means that the plant can continue to operate beyond its current license expiration date.

So because of that, PG&E is actively doing everything it needs to do in order to make that license extension, but also do inspections and other work that's necessary to report back to the Nuclear Regulatory Commission to support that license extension.

Okay, what is the fund repayment schedule? Kind of for the money that the company's already received and possibly the additional dollars requested.

So again, that's dependent on, for example, where the Department of Energy and PG&E have negotiated and in the most recent public information that DWR has seen, the timeline for that is 2025 that we understand.

Okay. And of the dollars, how much of these General Fund loans we're discussing is going to running the Diablo Canyon directly and how much of it is going to PG&E and to stakeholders.

I'm sorry. Can you-

Directly to running the plant plan operation.

I see. So per SB 846 and also memorialized in the loan agreement, these funds for PG&E is to be used for Diablo Canyon. And also per all the requirements in there, that for the costs to be kind of eligible and reasonable, they are not to be used for shareholder payout. So that's directly in SB 846 and then memorialized in the loan agreement between DWR and PG&E.

Got it. And sorry, I was focused on. So do we have a loan repayment schedule for the money that's already been loaned from the state. Do we have a repayment schedule?

The schedule is dependent on, for example, the Department of Energy agreement that PG&E has negotiated directly with Department of Energy. And so again, the most public information that we have seen recently is a 2025 date.

Okay, well, I'm sure we'll be following up on this. While you're here, what is the current status of the central procurement function, and when does Administration expect to need DDW to deploy this option?

Sure. Thank you for the question. I will have to say that I'm probably only half the answer, so this also depends on my colleagues, perhaps at the California Public Utilities Commission. Canoe Pine. But right now we are starting to follow the integrated resource proceeding that we expect to have that central procurement discussion. But as specified in AB 1373, the CPUC has until September 1, 2024 to determine if there is a need, at that point in time for central procurement of resources. So DWR has,

we've started preparing to engage in that discussion, but ultimately it will depend on the CPUC process and public process and proceeding.

Okay, good. Well, we'll follow up on that as well, I'm sure. On the strategic Reserve, how was that utilized last summer, and how is the Department planning for the upcoming summer?

Yeah, thank you for that question. So for the Reserve itself, I do want to note it's a little confusing because there's several assets and they've come into the Reserve at different points in time. But in terms of just last summer, we had our core state power augmentation program units, and those were available for dispatch during the extreme events in July. So there were three of them.

The first one was the energy emergency alert on July 20, and then there was two later ones of, I guess the CalISO term would be a watch declaration, July 25 and 26th. And each of those events were very different from each other. So the units were prepared for that as well as the additional imports that DWR supported that were above the market cost that we worked with, the investor owned utilities. So those were the two core aspects of what was available in the Reserve last summer.

Moving into this coming summer, we have again the same state power augmentation program units. So it's about 120MW. We no longer have authorization for imports for this coming summer, but instead we do have over 3000MW, I'm sorry, over 2000MW through cooling resources, those entered into the Reserve. January 1, 2024. We also have three additional units that DWR had been constructing, two of which are ready. Another one is nearing construction completion. So coming up for the summer, we should have a total of 3150MW or so of generation available.

And are there programmed impacts of. There's, I think, a $55 million delay. Will that have impacts?

At this point in time from what we see, it's unlikely to impact DWR's ability to oversee the program and our assets or to execute additional contracts. So we've planned this out fairly carefully across the multiple gears of the Reserve.

Well, as we discussed in previous hearings, I look forward to making sure that in the future we can work together, procure more clean energy. In that if we have a Future Reserve, I'd like to move on to our, thank you, our zero mission vehicle program and may require some different folks up here. I'll just wait a moment so folks can get settled. Let's just start because I have a little bit of a comment here for Clean Cars For All.

The budget proposed to delay 45 million for Clean Cars For All from 24-25 to 27-28 last year, we did take strong action to address price gouging by oil refineries that many felt were artificially raising price. But let's not forget the bigger picture. The best way to insulate people from higher gas prices is to get them off of gasoline and move them to zero emission transportation solutions.

And I'm concerned that some of the programs that we're delaying here are the ones that have been tailored to help those people who are most sensitive to fuel prices, whether it be Low income consumers under clean cars for all or small fleet truck drivers under HVIP. These are people we know are most sensitive to fuel prices and affected by them.

So my first question is, can we provide an update on statewide and local air district run programs and what is the timeline for implementation for the statewide program?

Yes, thank you for the question. Michelle Buffington, the Chief Budget Policy Officer at the California Air Resources Board, for an update regarding where we are with the Clean Cars For All program. I would say that we have delivered 13,000 vehicles to date, which have resulted in about 100,000 tons of ghd emissions, 104 tons of nitrous oxide emission reductions, and 17.4 tons of rogue emissions reductions.

The new joint statewide Clean Cars for all and financing assistance program is currently under development and is expected to open in mid 2024. We anticipate high demand for the program and in addition, the majority of the district run programs are currently open and running.

Okay, does Administration have a plan for how we can ensure that the programs that are delivering incentives to low income Californians have enough funding to support operations as we kind of navigate through these next couple of years?

Thank you, Chair. Christian Beltran with the Department of Finance. So that's really the basis of why we're proposing to shift a number of the different funds to the out years. So we really want to stay committed to make sure we're appropriating resources for the clean cars for all program, but also other equitable focused programs such as the equitable at home charging. We're still planning on appropriating $60 million of GGRF in 25-26 for that program, $40 million in 26-27 and then $80,000, 27-28.

So we still are definitely prioritizing some of those programs and have plans to continue to try to fund those to the extent resources are available.

Okay, well, I guess I'll move on to the Clean Vehicle Assistance Program, but we'll have the chance to dive into all these at future hearings. But I also look forward to making sure that we talk about and continue our conversation about how to target these incentives at super users, people that we know now are the ones who are driving the most, and that may also fall into these other categories that we're talking about. So I look forward to that discussion.

In terms of the Clean Vehicle Assistance Program, legislatures allocated more than 1$33,000,000 to financing assistance program for low income consumers, often referred to as CVAP. It's my understanding this program hasn't been operational for several years. Can you explain what is delaying implementation and how much funding is still available, for the program?

Sure, thank you again for the question. So you are correct that the Legislature has had appropriate us $133.5 million for these programs focused on providing financing assistance to low income consumers that we actually at CARB, split that into two programs. One that was the statewide, which is the CVAP program that you're speaking of, and one that went to a local pilot project, and both of those were operating as pilot projects throughout from 2016 till today. I think when you're referring to that, it hasn't been available.

There have been some starts and stops based on the appropriations as they had come in for the statewide program, but both programs were operational as of summer of 2023, which is when they exhausted their last rounds of funding. We are currently in a pause, and let me step back for just a second. That has covered $53 million of the $133.5 million that has been appropriated to us.

The remaining funding was combined into a joint solicitation that included both our Clean Cars for All Program and our statewide financing assistance program. And we were taking a lot of lessons learned from those two pilots and incorporating them into this new statewide program which we intend to launch in mid 2024.

Is there anything public available about the lessons learned that you referred to?

Yes, you would be able to find examples of those lessons learned in our funding plan, that they were discussed during our public process. This previous year when the board moved and adopted our funding plan. But I will point out that the two main areas were that what we had determined from those pilots is that a needs-based approach. We needed to evaluate a much more rigorous needs-based approach than what was the first come, first serve of the original statewide financing assistance program.

And so both determining that model on how to serve low income consumers and prioritize those most in need, along with making sure that we could pace the funding and have it available throughout the whole program for those individuals, were the two main things that we were focusing on from the comments that we learned in the pilots.

Yeah, I'd say those are critical. How many low-interest loans has this funding resulted in?

The local and statewide pilots resulted in over 500 clean vehicle grants and about 100 loans. Direct loans. There were multiple financing mechanisms that were available to consumers when they came in and the programs were both very high touch, meaning that when low income consumers came in, they had a financial support to help them talk through all their finances to understand what worked best for them. So about 100 of those applicants did go down the loan path.

Yeah, seems kind of like a small. Number given the funding though.

The 100 Loan directly from the program. But there were still 5000 grants that went to individuals who came in through the financing assistance program. And if you're interested in more details and facts about kind of the outcomes from that program, we do post those online and they're publicly available and I'd be happy to share them with the author.

Okay. Yeah, just dive in again. All these things. We'll have a chance to dive into more, but it's among the most critical top priorities we have if we're going to make the transition, is to make sure that we are providing incentives in the right places and that we can help low income consumers, lower income consumers get into these electric vehicles and benefit from this technology and then have the appropriate charging infrastructure as was also alluded to. So I'm sure we'll come back. Thank you.

The Administration does use GGRF to backfill the ZEV package. And what's the rationale there? And do we know about these programs cost effectiveness in terms of reducing emissions and which ones have been the most effective when you think about the ZEV package overall?

Brandon Merritt, Department of Finance one of the main considerations for the Administration is that the Greenhouse Gas Reduction Fund is an appropriate Fund source to backfill General Fund solutions in the zero emission vehicle package. Given that the statutory focus of GGRF is on the reduction of greenhouse gas emissions, and further, given that the investments in the zero emission vehicle package are primarily geared towards achieving those same greenhouse gas reductions.

This makes GGRF an appropriate fund source with an appropriate nexus for General Fund solutions within this dev package.

And Chair Becker, Christian Belcher with the Department of Finance. If I could also add some more context in terms of the rationale, these appropriations also help in terms of addressing kind of the ongoing market conditions that we're seeing as well in terms of the vehicle prices, the ongoing higher interest borrowing costs associated with purchasing a new vehicle. It also helps in addressing a lot of the emission goals focused on busy corridors that really do impact our disadvantaged communities across the state.

And then lastly, it also helps continue to, these programs continue to see very high demand across the board. So that's kind of the rationale as to why we really wanted to focus GGRF into this space. And then last but not least, to your other question in terms of the cost effectiveness. I think this was mentioned earlier in the testimony from my colleague at the LAO. There is the California Climate Investments annual report that does track some of the cost effectiveness of these programs.

So happy to provide that to you and your staff. There's a specific appendix towards the back that we can provide that.

But that tracks for existing GGRF programs, correct?

Yes and we do have some data on the clean cars for all and some of the other ZEV programs as part of that report.

Okay, good. And off top of your head, which ones been most effective?

In the zero emission vehicle realm? Not in front of me right now.

Okay. Well, thank you all. Like to move on to coastal resiliency. Thank you. And the governor's solution reduces coastal resilience funding by $452,000,000 and also shifts $37 million to GGRF. Obviously, this topic is of great interest to my district and many throughout the state. How much of the original funding to the Conservancy for Coastal Resilience has been appropriated?

So the General Fund solutions for the conservancy are a total of $392,000,000, which maintains $489,000,000 for these programs at the coastal conservancy. And of that $489,000,000, basically all of it has been committed or authorized for projects.

Okay, can you give examples of some of the projects the conservancy has funded to help bolster coastal resilience?

Yeah, I could do that for hours, but I won't. Yeah, I won't. But that's a great question. Some of the ones to highlight include Tory Pine State beach in San Diego, a grant to develop nature based solutions to build resiliency to sea level rise and coastal hazards for that state beach. The Valamar Sewer and Water relocation project in San Mateo county. So a grant to the RCD to plan and do environmental review and permitting to relocate public sewer infrastructure that's located on an eroding cliffside.

We just gave a large grant to the Los Cerritos Wetlands Authority in Long beach for the Southern Los Cerritos Wetlands restoration project.

We have grants for the Tijuana Estuary restoration, City of San Diego Coastal Resilience master planning, Ormond Beach restoration in Oxnard, Surfers Point managed retreat in Ventura, the South San Francisco Bay shoreline project in San Mateo, Santa Clara and Alameda counties, Bellinas Lagoon, a project to move back a section of road and restore wetlands to adapt to sea level rise and coastal resilience planning for frontline communities in Humboldt Bay. So those are some examples. There are well over 250 projects.

Thank you, Ms. Hussle. Those are good examples. Will the conservancy be able to take on new coastal resilience and adaptation projects with the proposed cuts?

No. We have allocated all of the General Fund money for coastal resilience and sea level rise and the GGRF funding that we were appropriated. So we will not be able to take on additional projects at this point.

And is there federal funding or what are the other sources available for these kinds of projects?

Yes, our staff are working very hard to apply for and secure federal funds. We have applied for 11 different grants just this fiscal year, including two grants that are each $75 million through NOAA, one for San Francisco Bay wetlands restoration and sea level rise resilience, and one for wetlands restoration along the Southern California coast. The total amount for that grant program is about $600 million. This was the program. President Biden came out to Palo Alto and announced this program.

So I don't know that California is going to receive $150,000,000 of the total $600 million. But we are working very hard on those two grants as well as nine other grant applications.

Good. Yeah, I was there with him in palace. So grateful to the Biden Harris Administration for all of us funding. Let's make sure we get our share. Jessica, can I ask you lastly to kind of pine on the scale of the need for coastal adaptation projects?

Yeah. And I know last year I mentioned $110 billion figure just for San Francisco Bay if we wanted to secure everything in place. And I think that assumed just over a four foot sea level rise. So I know 110 billion is not the most helpful number, and that's just San Francisco Bay. I think for the entire California coast, you're looking at more than doubling that number.

I think it's a mix of what are we trying to secure in place and what are the methods that we're using to do so. For the coastal conservancy, our interests are really in nature based adaptation to the extent possible, and in working with communities that have less capacity to, to conduct sea level rise adaptation planning and implementation on their own.

And jump in for anything in terms of SB 1 implementation. How is that going? And I guess, how would you characterize that? How is that going right now?

Yeah. Thank you, Chair Becker. So the Ocean Protection Council was originally appropriated this funding in recognition that the potential loss or damage to public infrastructure, health and safety, and natural habitats due to sea level rise is significant and urgent, as you all know. So we launched our Senate Bill one grant program to provide critical investments to local, regional, and tribal governments to develop sea level rise adaptation plans and projects. We've had significant public outreach for this program.

It's been underway, and many stakeholders and local jurisdictions have expressed a lot of interest and need for this funding to support sea level rise adaptation planning and on the ground projects. So disbursement for the entirety of funding from our 2022 and 23 and our 23-24 appropriations were approved by our council at their August meeting last year. They include a technical assistance program to provide direct application services to underresourced communities to apply for those funds.

The proposed General Fund solution will require OPC to delay awards for our 2023-24 funding as that General Fund is proposed to be shifted to GGRF. So we have launched this competitive solicitation. We have a technical assistance provider, and we are beginning quarterly rolling awards starting as we speak. And so we've got a significant amount of funding to start moving that program.

There are some reductions here as well. How will that affect these efforts?

Yeah, so those reductions will obviously reduce the amount of funding that we can provide to local communities to build resilience to sea level rise. We know from some research that our council has invested in, at least just on the open coast, the majority of coastal jurisdictions, up to 63%, lack comprehensive, consistent, and scientifically robust sea level rise adaptation plans that are adequate to make sure that we're prepared in the face of sea level rise and associated flooding and erosion and damage.

We understand that the estimated cost of developing sea level rise adaptation plans can be anywhere from $250,000 to up to $1.0 million, depending on the scope and scale of the plan, whether we're looking at a city or county or regional level. So those proposed solutions and reductions will result in fewer state funds available for local governments to develop sea level rise adaptation plans and projects, leaving those communities without adequate resources to plan and inform investments in adaptation projects.

Thank you, Ms. Eckley. These are critical to so many of our communities, so we look forward to diving in more as the year goes on. Thank you.

Thank you.

I did want we'll maybe come back, have some watershed and water storage questions, but I make sure I covered sustainable agriculture, so maybe we could have folks come up.

Discuss proposed cuts to several programs that I know are certainly impactful in my district and folks are very much looking forward to the budget proposal reduces 23 million across a couple of CDFA programs, 14 million to the farm to community food hubs program, which is really an important effort around aggregation, distribution, infrastructure that's needed to increase purchasing of local farmland, sustainable climate smart, equitably produced food and again, something I know my district was very much looking forward to 9 million for the Healthy Health Refrigeration Grant Program.

Then there were some shifts around the livestock methane reduction program. So what's the rationale for limiting the 14 million for farm to community food hubs? That leaves only, I think, about $1.0 million remaining.

Julianne Rolf Department of Finance. So this program is new. And so the rationale was when looking at programs to cut, keep the current existing programs and see which ones could be cut that haven't started yet. And so the 14 million isn't affecting anyone because no grants have been given yet.

Chairbreaker Christian Belcham with the Department of Finance just to add some additional context, there no grants yet had been advertised at this particular point when the Administration decided to propose this as a reduction.

However, we are requesting to retain some of the funding related to some of the administrative costs that have already been underway at CDFA and specifically those funds are going to continue to Fund setting up somewhat of the framework of the program as we continue to look and see if we can Fund this program in the future. So there's still some groundwork level of basic work happening at CDFA and I'm happy to turn it over to my colleague to provide more context for that.

Thank you. Arma Cozina with the Department of Food and Agriculture thank you so much for the question. So, prior to the program, as my colleague at DOF mentioned, prior to this program being identified as part of the General Fund solution, administrative dollars were being spent in the current year to set up the program, including the Farm to Community Food Hubs Advisory Committee.

So retaining the $1.0 million in administrative funding allows for the recently hired staff Member to continue building that groundwork, including interviewing stakeholders, developing other resources for food hubs in the absence of grant funds, working with applicants who had applied to be part of that Advisory Committee and developing materials for a program if it is funded sometime in the future.

It should also be noted that the staff Member helps to support food hub efforts as part of the farm to school program, which will have a track for food hubs as part of that program.

I appreciate that. I would just dispute that people aren't affected because people were planning and anticipating this program. Regarding the health refrigeration program, can you provide an overview of reward grants and how that program is going so far?

Absolutely. Thank you. The Healthy Refrigeration grant program announced awards of approximately $9 million in funding to 103 grantees in December of 2023. So the grants will support 43 corner stores and small businesses. That's about $2.7 million of the funding. $4 million will Fund 15 cities, counties, tribal governments or nonprofits that serve an estimated 168 stores. And $2 million will go to 45 food donation programs.

The grant round was extremely oversubscribed, so CDFA received 322 applications totaling over $61 million in funding requests for the $9 million that was available. Given the demand, many of the awards were for partial funding only. In addition, $900,000 was awarded in 2022 for technical assistance providers who provided support for applicants, including technical expertise regarding equipment, energy efficiency and climate friendly refrigerants outreach assistance, especially in rural areas, urban food deserts and among non English speaking store owners, application assistance and grant implementation.

And then CDFA is contracting with the Nutrition Policy Institute at the University of California Agriculture and Natural Resources, which will evaluate the effectiveness of the program and just give continual update on how that program is going moving forward.

I wanted to turn to the nutritional incentive program, which, again, these generally aren't huge numbers, and this is a significant program. I hear about a lot in my district. And this program, as you know, prize incentives for purchase of California grown fruits and vegetables at certified farmers markets. And it also includes a market match program. So we get people on calfresh to take advantage of these farms, work it. So it's a huge kind of win win.

And this budget reduces it by 33 million, returning only a couple of million for administrative costs. And the Federal Government doesn't understand, apprise a one to one match in federal funding to state investment through this program. And so if we're not spending, we can't draw down the federal Fund. So why would we be reducing that, considering we are leaving federal funds on the table?

Yeah, appreciate the question, chair. So ultimately, the Administration has had previous funding associated with this program before. In the previous budget, I think we had 10 million in 21 and then 10 million in 2022, maybe 22 and 23. I have to triple check that. But ultimately, this was one of those difficult decisions where the General Fund resources just were not there.

The timing of the federal dollars were also in question in terms of when the Federal Government would actually get the grant program rolling in terms of the match that you're referring to. And so when looking at the broader sustainable agriculture packages, where we have many programs that are still ongoing and operating very efficiently, this was one of those that we just had to make the difficult decision to reduce.

Well, I know we'll come back to it. I can tell you I believe it's a very important program and I think that this would be a mistake. So we'll come back to that. I also last year spent a lot of time on anteric methane, which is the largest source of methane emissions in the state and one that we've made almost no progress in reducing.

So given that, what's the rationale for reducing the Interg Methane Incentive Program by $23 million, only retaining about 9% of the original amount.

So, Senator Becker, this one in particular is a critical program. But as I think implied in the question, the 23 million is not the full amount that we're retaining to that we previously appropriated for the program. We still are trying to retain some dollars associated with the administrative cost to again continue the important work associated with that program.

There is some staffing hours that have been already funded through that dollar amount, and there's still some work going on at CDFA related to that program in the case that there are resources in the future. But again, my colleague from CDFA can also provide some extra context as to how they're still making things work.

Thank you for the question, chair. Yeah, I can provide a little bit more context around how that remaining 8.7% or $2 million would be spent. So, essentially, that funding would help support CDFA staff who are developing the scientific framework for interic methane reduction through feed additives, regardless of whether or not there's incentive program funding available. So, as you're aware, SB 1383 requires that the state reduce methane emissions 40% by 2030.

And regardless of whether we have an incentive program, we'll need to have a methodology to evaluate the use of feed additives and strategies to meet that goal. So the first FDA reviewed product is anticipated to come to market this year. And as such, there will be work to do to translate the existing research and practice adoption into expected reductions in California.

So this funding will support our collaboration with the California Air Resources Board and researchers to develop a reliable tool for accurately measuring the methane emissions reduced by this program. And this is likely to be a lengthy process requiring considerable input from experts at CDFA. So it would involve facilitating collaboration across public, private, academic and government sectors and presenting seminars and public events on the topic. And it will also help us to model emissions reductions from feed additives to understand how.

So it will help us to model emissions reductions to help us understand how we'll meet SB 1383 goals, as my colleague mentioned, make sure that we have a framework in the event that incentive dollars are available in the future. And very importantly, it'll help California dairies to access federal incentive dollars that may be available for those funds.

Well, that's useful to understand the ongoing work, but overall, I think there's really the opportunity for California to lead here, and I think we will have to have additional funding as well. But I appreciate you talking about the scientific basis and the work that is ongoing there. Let's see. I'll just have probably one more set of questions, and you may be able to answer this as well, Ms. Casino. This is around the urban greening program. Thank you.

This program got brought up earlier and the budget proposes shift 24 million from, as I understand it, from General Fund to GGRF. And due to the Fund shift, the Administration has paused evaluation of grant requests for this program, as I understand it. So could you tell us a little about the urban greening program and what are some examples of the projects that have already been funded? Sorry.

Brian Cash with the Natural Resources Agency, the Urban Green program projects, they reduce GHg emissions and provide multiple benefits by creating more sustainable, healthy and vibrant communities. Projects establish and enhance parks, an open space using natural solutions and to increase tree canopies, improve air and water quality, reduce energy consumption, and construct non motorized trails.

Some examples of some of these projects are creating a new community center, a new community park with trees and other landscaping, a walking path, lighting benches, transforming a vacant lot into a 1.25 acre public park with drought tolerant landscaping, bioretention basin, planting trees in the tenderloin and south of market communities in San Francisco, greening school campuses, that's one of the ones that we are most proud of, is actually getting more green space in the schools, especially in the Los Angeles area, and then acquisition of vacant land for future development of public parks.

What do you anticipate the demand for grants I mentioned? I think that we've paused evaluation now with these shifts, what would you estimate in the demand for grants? Yeah, for this current round, we received 89 applications requesting $132,000,000 and we have 23.7 to award after the shifts. 23 million? Yeah. Okay. It's about a fifth or so. Yeah. It's a very popular program. Yeah. And these are really win, sort of like the CN.

These are real win win programs and that have multiple benefits so I think we'll come back to discuss this as well. Thank you. Thank you. Mr. Cash, I'd like to turn at Senator Alan. Do you want to calm. Yeah.

Yeah. Okay. Bring up the Cal recycle, folks. Yeah, sure. Hey, everybody. Sorry. This is something that to some extent has been happening for a little while, but just talking about the bottle Bill Loan Fund.

Sorry, the bottle Bill Fund, that's become a loan of sorts to the General Fund. So the current proposal, I think, in the budget is like 125,000,000 loan along with a one year repayment deferral from the bottle Bill Fund to the General Fund.

And I know that there's a lot of this going on across the board within the budget, but I guess I wanted to ask whether, and maybe we can ask DOF or power cycle, but the extent to which concerns have been raised, that $125,000,000 loan, in addition to the deferral of the existing $25 million loan from last year, could possibly trigger proportional reductions, interfere with Cal Recycle's plan schedule for using the money in that Fund to improve recycling programs.

And of course, this was money that was collected from consumers for the purposes of improving our recycling. So I wanted to get to the bottom of that question.

Yeah, thank you, Senator Allen, for the question. Christian Beltran with the Department of Finance again. So I think it's important for us to kind of just clarify some of the language that's included in the Budget act and what was also included in last year's budget act pertaining to the loans that you're referring to. These loans were never and can never intend to make programmatic impacts to the point of proportional reductions.

So it's important to note that in the language itself, the Administration is required to make payments back from the General Fund back to BCRF in the case that there is significant program impacts that are projected as a result of the loan. So over the last few months, finance and the cower cycle team have been working very closely on reconciling the Fund and their overall revenues and projections that we assume in our Fund condition statement of the Fund.

And through that kind of reconciliation process, there's been some preliminary data that kind of suggests that maybe the current year loan is not necessarily still viable at this point in time. And so since that has occurred, we have actually paid back the current year, 100 $1.0 million loan. And in the budget year specifically, the preliminary data suggests that it's possible that that loan is also not viable. But we are working very closely and still reconciling the Fund condition statement to see if it is still viable.

But just want to again pinpoint that these loans could never lead to the proportional reductions or lead to an insolvency of the BCR Fund. And it's critical to kind of note that.

Mean is there a future scenario where the General Fund can't pay it back?

Is that something that, not that we're aware of. We're pretty confident in terms of repayment. I mean, we were just able to repay the current year loan back just a few days ago without any real major concerns in terms of the cash balance of the General Fund versus what's in BCRF.

So in terms of the budget year loan, again, this is a proposal at this time at the May revision, the Administration will come back and just make sure that we are on the same page in terms of where the Fund condition is at that point and be able to see if that loan is still viable at that point.

Yeah, I think we need to be really, if we're going to do this, we have to be very clear about the integrity, absolutely of this Fund. And it was established for a particular reason. It's not money that, this was money that was explicitly collected from consumers for the purpose of improving our recycling rates. I'd love to turn it over to Cal recycle. From your perspective, how do we make sure this doesn't interfere with all the planned recycling programs?

There's a lot of ambitious things afoot at Cal Recycle. There's got to be at some point where further borrowing from the Fund or delayed repayment is going to interfere with your schedule for use of the funds. What's that look like to you? How can we all be in touch about the impacts, both of this sub and an EQ? Because obviously we care a lot about the work that's underway there.

Well, first and foremost, I just want to say that the Administration as a whole is committed to implementing the reforms that the Legislature has passed over the last couple of years to improve our recycling systems, including the appropriations that were made last year for glass recycling, the appropriations that were made to implement Senator Atkins dealer Cooperatives, and the influx of new materials coming into the system through wine and distilled spirits.

And so we are working right now, and unless you really want us to go into great detail about the schedule on getting out those appropriations for the various programs, but we are working on getting those dollars out the door right now and so want to assure the Legislature that the Department is fully implementing those reforms and ensuring that we are utilizing the funds as intended in this program to achieve better and more accessible and more convenient recycling throughout California.

I will say that not unlike 2008, when the Fund was under stress before, we are seeing higher levels of redemption over the last two years that are increasing the amount of money coming out of the Fund. On about average, a 1% increase in redemption is the equivalent. In a month is the equivalent to $13 million. So as we start to see those numbers inch up, the money coming out of the Fund will be going out as it was intended to in this program.

Additionally, obviously, the appropriations that we made to reform the system, as those dollars are going out the door, those dollars will be coming out of the account. We do feel that the Fund is being depleted at a faster rate than it previously was in the last couple of years. And I think it is worth a conversation and ongoing discussion with the Legislature about the appropriate use of that.

I'd love to. Obviously, this is an area that means a lot to me and I'd love to be part of that conversation. Can I also just ask you, Rachel, the grants for automation under the Fund? I think I saw something about basically grants for reverse vending machines backdrop, all that sort of work. I saw something about how only, I think 40 million was put out of 140,000,000 available. I'd love to get your thoughts on the timeline.

Yes, absolutely. So one of the tricks here was that the, I think roughly 140,000,000 that is meant to go to automation was also intended to help Fund some of the reforms and utilize that innovative technology for the reforms. For instance, the dealer cooperative language. So we are currently working on those regulations, hoping to have them out, but working on those regulations for how the dealer Cooperatives will be implemented.

And part of the funds were intended to go to the dealers to help them utilize that technology in implementing the dealer cooperative. So we want to make sure that the dealers know what the rules of the game are and can build out a plan, much like an EPR plan, for how they will utilize that technology before they had to come and apply for the money. So we were very intentionally holding a portion of that to the summer.

We did a workshop in February to engage with the retailers and dealers and ask them, "How do you envision this working?" and then we plan on opening that grant cycle this summer.

Okay, thank you.

So the reforms and the money came at the same time, but we had to build the plan for the reforms so that the money could be utilized in the most efficacious way.

Okay, thank you. All right. Any further questions? Otherwise, we're going to move on to a public comment. Thank you. We should thank Rachel for her service. Absolutely, yes. Wish her best on her new. Yeah. You know that we're focused and interested in the program going forward, so thank you for all of your service. Absolutely. Excellent. We will now turn to public comment. I see folks are already lining up.

We will ask people to keep your comments to one to two minutes since we do have a lot of folks. Again, thank you to the Administration and to LAO for all of their testimony to date. Go ahead.

Good morning, Chair Becker, Senator Allen and staff. Rico Mastrodonato with the Trust for Public Land. I have a lot of sympathy for the cuts and decisions you have to make this year and beyond, but what I want to implore is that in our view, we are way behind on adapting to things that are happening to us right now. Whether you're talking about the coastline, as we heard today, coastal conservancy has no money to do new projects. Urban greening has no money.

The green schoolyard has no money. These are extreme heat intervention programs. And you just heard from Rachel earlier that there is no bigger danger to climate change in contemporaneous California than extreme heat. So we need to look at these environmental programs, these nature based solutions, as essential services, not something else, and should be among the last things that we cut in a year where we have to make difficult decisions. So thank you very much.

Thank you.

Good afternoon, chair Becker. Member Allen Paul Mason with Pacific Forest Trust. I just wanted to highlight for a minute some of the reductions in the water and drought package in particular. I find it a little bit striking that we talk about these eight and $9 billion packages. An awful lot of that are investments in things that feel like baseline investments in infrastructure and water treatment plants and water services and things that are important.

I don't want to diminish that they're important, but they don't really strike me as the climate investments that we need to be making to prepare for the world that is coming at us really quickly.

So when I look at the reductions and see that they're overwhelmingly like $440,000,000 in cuts to watershed resilience programs that are going to be the things that we need to be doing to prepare for the extreme storms that are coming in literally outside or that hammered Southern California earlier this year, and that's money that would go both to Southern California and the Sierra Cascade region.

Those are the things we need to be investing in now so that 30 years from now, we actually have watersheds that are going to buffer these extreme storms and protect our water supplies. So I'm not so optimistic to think that we're going to restore all of these cuts in this conversation.

But as we are looking at a climate bond and other ways to make sure that we actually are doing these things, let's make sure that we're restoring the cuts that we're seeing here and really investing in the things that will prepare us for the climate that's going to happen regardless of any of the other reductions in ghgs that we make. Thanks.

Thank you. I had a whole page of questions on the watershed climate resilience, so I'm glad you brought that up. Thank you.

Thanks. Good afternoon. Mike Robeson here on behalf of the Glass Packaging Institute, just really on the last item that was brought up on the loans from the beverage container recycling Fund to the General Fund, and really just appreciate the Committee getting this on the agenda and bringing some light on it. And for Senator Alan bringing it up in Committee, I truly appreciate it. I think if I understood the testimony from the Department of Finance correctly, some of our concerns might be alleviated.

I need to go back and watch and see if I understood it all correctly. But again, thank you very much for bringing it up and bringing this as part of the agenda. Thanks. Thank you.

Chair Becker. Senator Allen, Bill McGovern with the Coalition for Clean Air. For most Californians, our air is so dirty that it's illegal under the Clean Air Act. And that's especially true for residents of disadvantaged or Low income communities. For that reason, we have standards to make a transition to zero emission transportation.

And that's why we need to preserve the zev funding, particularly for equity projects like you talked about, with clean cars for all and cleaning up the heavy duty fleets that are spewing diesel exhaust into our communities. And let's be clear, a three year delay is tantamount to a cut. You're not setting aside money for 2027. We don't know who will be the Governor in 2027. But I'm not here just to complain. I have a solution. California is receiving billions of dollars in federal transportation funds.

Congress allows for up to 50% of those funds to be shifted from one program to another. So, for example, we could shift funds from national highway performance to congestion mitigation and air quality and solve some of these clean air problems. So I know that a lot of that is in a different Subcommitee, but I urge you to work with them and your staff to take a hard look at how we could be shifting these funds.

Thank you. Thank you. Thank.

Good afternoon. Kendra Harris with The Climate Center. I know it's a tough budget year. We're looking at cuts across the board for a number of programs, but I urge you to consider, before we take these cuts to equitable clean air programs, we must significantly expand the Governor's proposed cuts to oil and gas subsidies by eliminating fossil fuel industry subsidies and cutting out other debt and infrastructure investments.

And also, people living with polluted air, which is only made worse for the climate crisis, continue to suffer from systematic marginalization that makes them sick and can lead to early death. It's estimated that 7500 deaths can be attributed to air pollution each year in California. The state's clean air safety that is already chronically underfunded in this budget threatens to completely zero out promised investments and programs that are working to save lives and improve quality of life in these marginalized communities. Thank you.

Thank you.

Good afternoon, Chair Becker and Senator Allen, thank you so much today for all the conversations and for your comments. Rachel Mueller here on behalf of NextGen California, we strongly urge that this Committee reject the governor's proposed $35 million budget cut to the California Nutrition Incentive Program, CNIP, and we hope you will seek to maintain this program at current levels. CNIP is a powerful tool to fight food insecurity that provides incentives to California's most vulnerable low income families.

These families rely on CNIP to purchase local, fresh and affordable fruits and vegetables, oftentimes when they would otherwise be unable to do so. We also fully support protecting the farm to school program. Additionally, in tight budget years, it's more important than ever that California strengthen the programs that support resilience and continue to demonstrate creative leadership on critical issues such as climate.

Therefore, we also urge you to fund implementation of SB 253 and SB 261, the two climate accountability package bills, to bring the resources of the private sector to bear on climate efforts at near negligible cost to taxpayers. Thank you so much for your time.

Thank you. Thanks for bringing up the bills that we've passed last year, and we're hoping that these all get funded. Thank you.

Mr. Chair and Members. Brendan Twohig on behalf of the California Air Pollution Control Officers Association. As the state contends with a significant budget deficit this year, we ask for your continuing prioritization of funding state budget programs that cost effectively reduce criteria air pollutants, so public health benefits, and also greenhouse gas reductions. We also think that the GGRF should be reserved for programs that meet this criteria rather than for backfilling more expensive programs with less benefits in these areas.

Two air district administered programs. As you know, the AB 617 Community Air Protection Program and the Farmer Program cost effectively reduce both GHGs and criteria air pollutants, and both are providing significant benefits for disproportionately affected communities. So just since we're talking about reductions, the Air Protection Program is proposed to be reduced from 300 to 250 million.

We ask for restoration back to 300 million, and then the Farmer Program is actually zeroed out. And that's already after a $75 million cut, a 50% cut last year. So we're asking you go back to two years where it's 150 million. Again, keeping in mind how cost effective these programs are, and we have scarce resources. So appreciate your time and consideration, and thank you very much.

Absolutely. Thank you.

Thank you, Chair and Members. Nicole Hutchinson on behalf of CALSTART. First, I want to acknowledge that you and the Governor are facing difficult choices given the budget deficit. However, addressing air quality and the climate crisis is one of the most meaningful ways to preserve public health in the long term and avoid harm to California's most vulnerable communities. We appreciate that the electric school bus funding has been preserved in the Governor's proposed budget, as this funding will reduce exposure to harmful emissions for our schoolchildren.

However, we are concerned by the delays in funding for other ZEV categories, including investments in infrastructure, medium and heavy duty ZEVs, and clean mobility options. Given the disproportionate negative impact heavy duty vehicles have in terms of public health, and given regulatory timing with ACF, it's important that the Administration and Legislature prioritize investments in medium and heavy duty ZEVs this year.

Similarly, ensuring that California has sufficient infrastructure in place to support both the light and heavy duty ZEV market is essential to meeting our climate and air quality goals. And finally, the scoping plan highlights the importance of reducing VMT in order for the state to meet its climate goals. However, this will be the third year in a row that community-based projects which reduce VMT are being delayed or scaled back.

These innovative projects empower under resourced communities to overcome mobility obstacles and transform their communities in the way they travel. We urge you to reconsider these delays for these important programs. Thank you for your time and consideration.

Thank you.

Good afternoon, Chair Becker and Senator Allen. This is Megan Cleveland with The Nature Conservancy. Despite record-breaking state budgets, California's investments in natural resources and nature-based climate solutions has not matched the pace and scale of the need. The governor's 2024-25 budget proposal would reduce state spending for natural resources to less than 3% of the state budget. As the Senate crafts its budget proposal, we urge you to protect these investments and restore critical investments to nature-based climate solutions and biodiversity conservation.

We particularly advocate for the restoration of the funding to the Coastal Protection package, which is slated to be cut by nearly 50%, significantly reducing funding to the State Coastal Conservancy and the Ocean Protection Council, to address sea level rise, increase ocean protection and ocean resilience.

Finally, as California faces a sizable budget deficit for the second year in a row, we urge the Legislature to provide strong leadership, which Senator Allen has been doing, to advance a robust climate bond that will provide much needed funding for nature-based climate solutions. The critical investments provided by a bond will not only help to protect California's iconic habitats and rich biodiversity, but also help Californians adapt to increasing impacts of climate change. Thank you.

Thank you. We're certainly working on that. Thank you. Next up.

Hello. Good afternoon, Chair Becker, Senator Allen. My name is Michele Canales with Union of Concerned Scientists. I wanted to touch briefly on the ZEV package. Much of the state continues to be out of attainment with federal air quality standards, exposing millions of Californians to harmful air pollution. Tailpipe pollution from transportation is a huge reason why. So we urge Legislature to avoid cuts and delays to vital zero emission vehicle incentives as much as possible.

Further, we encourage the Legislature to target the funding that it does have for zero emission vehicle incentives to replace the oldest cars on the road, where the state can get the largest emissions reductions per dollar spent. A report we released with the Greenlining Institute last year showed that pre-2004 vehicles make up 19% of cars on the road but emit 73% of the smog forming NOx emissions. These cars and their pollution are also disproportionately concentrated in disadvantaged communities and should be replaced as soon as possible.

Lastly, the state needs to get serious about land transition in the Central Valley to move towards a more sustainable future for the communities that live there. A good start would be funding programs like the multi-benefit land repurposing program and making sure that this funding is maximizing public benefits. Thank you.

Thank you.

I guess good afternoon. Kim Delfino. I'm representing Defenders of Wildlife, California Native Plant Society, Sonoma Land Trust, Mojave Desert Land Trust, Sierra Forest Legacy, Sierra Funds, Sierra Institute, Audubon California, and the more than 100 organizations in the Power in Nature Coalition. I would align my comments with the comments made by Megan Cleveland with The Nature Conservancy about the importance of investing in nature-based solutions and climate resiliency.

I think you already heard how important this funding is. It's a relatively small amount of money in the budget, but it has significant impact, and it has impacts that last well beyond into future years. These are also programs at the State Coastal Conservancy, WCB, Department of Conservation, Department of Fish and Wildlife, CAL FIRE, that are already oversubscribed. And even if funded this year, we're going to run out of money in the next year or two. Some programs aren't even accepting new applications at this point.

So we would urge that you protect this relatively small amount of money in the budget and also look at creative funding solutions such as, as already pointed out by Senator Allen, a bond, a climate bond, because we really don't have a way of paying for many of these programs past next year. And yet we have goals such as 30 x 30, which we're supposed to be meeting over the next several years, but no money to actually achieve those goals.

Finally, I would just say on the fire package, which we didn't really hear much about, there is a proposal to cut about $5 million out of the science and monitoring funding, which we would strongly urge rejecting. As pointed out, figuring out the effectiveness of treatments is important. We should not be cutting that funding. And there's also been some suggestions about perhaps cutting back on prescribed fire and tribal engagement and cultural burning. Those are really important programs. They have a significant impact.

We've made a lot of progress in the last several years in the state, and we would hate to see us back away from that progress. So thank you very much.

Thank you.

Thank you, Chair Becker and Senator Allen. Alex Lieber, on behalf of the Environmental Defense Fund, CalTrout and Trout Unlimited, echoing the previous three comments before me about the cuts to natural resources, watershed health, the multi-benefit land repurposing program, and really appreciate Senator Allen flagging the importance of the climate bond. Given the cuts we have in front of us, it's all that much more important that we have an equitable and robust climate bond on the ballot this November. Thank you.

Thank you.

Mr. Chair. Senator Allen. Bart Broome with the Santa Clara Valley Water District, also called Valley Water. I want to speak first about the Coastal Resilience package. The South San Francisco Bay Shoreline Project was mentioned as one of the projects that was funded by the program. That project is just very partially funded. Phase one of a three-phase project is struggling to meet funding shortfalls now.

And just to underscore the importance of the Coastal Resilience Program, these are basically life safety projects because they're protecting the regional wastewater treatment plant for one and a half million people. There's a disadvantaged community of Alviso. And then the phases 2 and 3 protect Palo Alto, Mountain View, huge amounts of critical infrastructure, both job-creating businesses, NASA Ames Laboratory, major highways. And so I just want to underscore that the coastal resilience funding is life safety. It's not just protecting coastal homes.

This is something that's much more important than that. And then regarding the Dam Safety Program, the analysis suggested that perhaps the Dam Safety Program could be eliminated by removing the last $50 million. The Governor proposed to take 50 million. It suggested you could take another 50 million. I just want to underscore that projects like the Anderson Dam Seismic Retrofit Project are absolutely critical to life safety, to the water supply for the entire region. And the state's contribution to the Anderson project, which is $2.3 billion so far, is negligible.

It's of national importance. It is, according to federal regulators, the highest dam safety priority in the nation. And the only program that the state has that can actually substantially contribute to that project is the Dam Safety Program. So I urge you to either reject or reduce those cuts. Thank you.

Thank you. We got to protect that dam safety program. No, thank you. I appreciate it. I appreciate it. That's true.

Hi, my name is Angela Georgens. I'm an undergrad student at UC Davis as well as an intern with Environment California, the statewide environmental group that works for clean air and a healthy future for all. We're asking that you please restore California's clean air safety net. The proposed funding delay, in reality, is a $600 million cut from our clean air programs, including those promoting clean cars, trucks and buses.

California has the worst air pollution in the country, and tailpipe pollution is a top contributor to this pressing issue. We support ending oil and gas subsidies. In tough budget times, the last thing we should be doing is subsidizing oil companies when they are making record profits and polluting our environment. And finally, as a young person born and raised in California, I urge you to find more ways to protect our health, the environment and the future.

Clean energy and climate programs are investments we make for our kids and grandkids. If you cut now, young people like myself, as well as California's future generations, pay more later, not just in terms of money, but also in cost to our health and our environment. Thank you.

Thank you.

Good afternoon. My name is Mariela Ruacho from the American Lung Association. We urge the Legislature and the Governor to protect California's clean air safety net. Communities across the state have suffered for generations from tailpipe pollution. I want to echo comments made by Coalition for Clean Air on the need to meet federal clean air standards and invest in equitable zero emission programs.

Our state of the air report found that 98% of Californians live in an area with unhealthy air, and poor air quality affects the health of everyone, especially children, seniors, and those with preexisting conditions. The budget proposal for clean air and equitable programs are zeroed out. Before cutting funding for these programs, we need to look at eliminating fossil fuel industry subsidies and cut out other highway expansion investments that increase air and climate pollution. So again, we urge to continue to fully fund clean air programs. Thank you.

Thank you.

Mr. Chair. Senator Allen. Beth Olhasso on behalf of WateReuse California. We know you're both very supportive of water recycling. Want to address the cuts in this budget to water recycling funding. The multi-year cuts to this program total over 60% of what was originally allocated. This year's cuts are requiring the state board to take funds away from projects that were already committed, including one in your district, Senator Becker.

There's a resolution at the State Board at the end of the month to give the Deputy Director the authority to take away or eliminate the funding because they just don't have the promised funds anymore. So really problematic for projects that have moved down the road, and now their funding is getting taken away. So really hope we can restore, we're not even asking to restore all of it, just to cover those projects that were in the funding plan that had money committed.

So we need about $115 million to cover those projects because we do understand it's a tough budget year. We're not asking for more just to cover those projects that were once allocated funding. So thank you.

Thank you.

Good afternoon, Chair and Senator Allen. My name is Tasha Newman, and I'm here today on behalf of the California Council of Land Trusts, representing more than 70 land trusts throughout the state, and on behalf of the California Association of Resource Conservation Districts, representing 76 resource conservation districts throughout the state. We definitely want to align our comments with The Nature Conservancy and other groups who have expressed concern over cuts to natural resource climate resilience dollars.

And, in particular, we would like to express our great concern for the proposed cuts to the coastal resilience funding through the Coastal Conservancy. And we would just like to finally mention that we support a future natural resources bond, hopefully one for this November.

As we speak, land trusts and resource conservation districts and others are working to implement the goals of 30 x 30 and the climate smart land management strategies and they have ramped up based on the funding that was available, that we were hoping would continue to be available. And so with possible budget cuts, we think that a bond is definitely necessary and we would support that. Thank you.

Thank you.

Good afternoon, Mr. Chair. Senator Allen. My name is Edson Perez and I'm with Advanced Energy United. We represent advanced energy and transportation technologies that have already created over 500,000 jobs in California. And I wanted to highlight a couple of programs that will help us maintain our grid, prevent blackouts, and prevent the worst health effects of extreme heat events like the LAO mentioned. They're just going to keep getting worse. So the first one is the Distributed Electricity Backup Assets, or DEBA, Program.

I want to uplift it because it's been flagged as a potential target for funding clawbacks from its funding from prior years. This program is going to be a critical way for distributed energy assets like energy storage, demand flexibility software, smart appliances, microgrids, and others to show their true potential in making the grid more resilient. Right now, the Energy Commission is vetting applications and it's going to decide its first round in grantees soon so that this program can help us weather these upcoming summer months.

So we should not cut it off its legs as it's just taken off if we want to continue leading and developing innovative technologies while at the same time making the grid more reliable. And second is the Demand Side Grid Support Program. This was also flagged by the LAO as an option for funding clawbacks, but this program has already proved itself over the summers of 2022 and 2023 in helping us weather the hottest days. So just these both programs.

For them, providers need predictability about funding levels and program length for it to be economically feasible for them to participate. So without that, we're kind of setting up these programs to fail. So I just want to make sure to highlight that. And finally, just also want to echo the comments from those who have mentioned the importance of the zero emission vehicle package funding. California is right now at a pivotal moment in determining whether we'll meet our transportation electrification goals.

We hear from fleet owners that they want to comply with the new regulations, but they have a hard time planning out their zero emission vehicle purchases and how they're going to charge everything. So just want to highlight the importance of this package and thank you for your consideration.

Thank you.

Good afternoon, Chair and Senator. Will Brigger with Climate Action California. We submitted a letter along with 70 plus groups around the state and the nation asking for funding for SB 253 and SB 261 from last year. I know it's a tough year. The Administration decided to propose nothing for that implementation. But here's the good news. One is, it's a bargain. Most of the work is on the reporting entities to report their emissions.

Secondly, there is a fee, which the initial fiscal analysis predated the fee being adjusted so that it can be ratcheted up to cover the costs. The other piece of good news is it may not be as expensive as proposed. When I worked at CARB, I know we implemented kind of the best in class Rolls-Royce of reporting programs in the mandatory reporting of greenhouse gases, the most exacting program known.

It might be possible to do these on a less stringent basis, less expensive basis, that doesn't require as many people as that mandatory reporting program requires. In any event, whatever make or model can get funded for this, this is not a can, I don't need to tell this group, the climate is not a can we can kick down the road. I'd like to see that funded. Thank you.

Thank you. Appreciate it.

Mr. Chair, Members of the Committee. Louie Brown here today on behalf of the California Grocers Association. I want to appreciate the conversation regarding the loan from the beverage Container redemption fund. We are opposed to that loan. We've seen some of the most significant changes to the bottle bill in its 30 year history over just the last couple of years.

And as we move to a transition which includes a dealer cooperative and the expansion of opportunities for people to redeem, we believe those funds in that fund are necessary to stay there to support it. Without those funds, the entire infrastructure is penalized. We've seen it happen before. It's unpredictable to look at what may happen in that system, and therefore, we think that those funds should remain where they're intended to be, which is for the consumers and redemption. Thank you.

Thank you.

Good afternoon, Mr. Chairman, Members. Ross Buckley on behalf of the South Coast Air Quality Management District. We greatly appreciate the funding being provided for the 617 program and the Governor's proposed budget for air districts implementation and incentives, especially given the budget shortfall. We request the continued prioritization of the AB 617 funding, which the LAO has previously confirmed is highly cost effective at addressing air quality, public health and climate challenges. Currently, the 617 program is severely underfunded.

The number of communities statewide has continued to grow, but there are not enough resources to support those existing communities. To further this point, the south coast region contains almost two thirds of the EJ communities in the state. We cannot, however, add additional 617 communities due to the lack of resources. To help address this, we respectfully ask the 617 program funding be restored to last year's level.

This will, one, help cover actual program costs and, two, cost effectively reduce emissions that help meet federal air quality standards and protect the health of disadvantaged communities statewide. Thank you.

Good afternoon, Mr. Chair and Mr. Allen and staff. Abraham Mendoza on behalf of the Community Water Center. We're an environmental justice organization that works directly with impacted communities along the central coast and in the San Joaquin Valley to fulfill the human rights of water in California. In the 2023 budget cycle, the Legislature delayed approximately 200 million in funding from drinking water and wastewater projects.

Now that funding was restored under the Governor's January 10th budget proposal, and we're urging yourselves in the Legislature to preserve that funding, as we received several reports that a number of these shovel ready projects and others in the development pipeline were immediately halted when those cuts were proposed.

Secondly, several of our advocacy partners recently joined us in authoring a letter expressing concern over the LAO's alternative recommendation that the state utilize safer funding and federal SRF dollars to backfill state resources and budget funding. Safer funding provides more than just infrastructure, it provides technical assistance for more than 350 water systems that are going through consolidation, and it also provides provision of direct emergency aid to communities like bottled water delivery.

We urge the Legislature to protect safer so that a pipeline of projects providing access to safe water for underserved communities can continue to be developed. And lastly, under the current proposed house budget agreement, Congress reduces SRF funding allocations to the State Water Board from 91 million to 4 million, and 113 million to 4.5 million, respectively.

Our state can't depend on Congress to align their spending priorities with ours, and we need to preserve these investments and ensure that progress is not lost on delivering safe, clean and affordable water to all Californians. Thank you for the time.

Thank you.

Good afternoon. Marissa Wu with the Greenlining Institute. For the second year in a row, the Governor's proposed budget debilitates equity focused clean transportation programs that critically mitigate the impacts of pollution and increase access to clean mobility options for low income communities of color in California. Equitable transportation programs are not optional nice-to-haves. Disadvantaged communities disproportionately carry the burden of pollution across the state, which I appreciated that you uplifted earlier, Senator.

These programs are too often first up on the chopping block as funding has increasingly and unsustainably depended on GGRF in recent years. These clean transportation programs, which were already underfunded since their inception, have been forced into a disruptive stop-and-go cycle creating uncertainty for our communities. We urge the Legislature to ensure no further cuts or delays to investments for cleans transportation and mobility programs like clean cars for all clean mobility programs and medium heavy duty programs.

It is also critical that we create a stable and dedicated funding source for these programs to ensure that we get back on track for California's climate goals and are fighting emissions and improving public health for low income communities of color. Thank you.

Thank you.

Hello, Chair Becker. Can you hear me? Yep. And Senator Allen, staff. Nice to meet you all. My name is Dylan Finley and I am here on behalf of the Sierra Business Council and the Sierra Consortium. We wanted to let the Committee know that we are happy with the governor's proposed funding to various wildfire and forest resilience programs. This includes the regional Forest and Fire capacity program, which is utilized for a wide range of activities. We appreciate the work of this Committee and staff and hope to see continued investments in wildfire forest resilience programs in this budget. Thank you.

Thank you. Good afternoon, chair Becker and Senator Allen. My name is Kirk Wilbur. I'm with the California Cattlemen's Association. Wanted to briefly speak to the Department of Fish and Wildlife Budget. Specifically urge you to renew funding this year for the department's Wolf Livestock Compensation Fund, in addition to helping make whole ranchers who may be impacted by wolves reemerging on the landscape.

There's two vital functions of that program. One is it reduces Wolf livestock and Wolf human conflicts by allowing for nonlethal deterrence. Financial assistance that furthers the department's goals of Wolf conservation in the state. It's also good for wolves themselves and good for the safety of livestock herds. But most importantly, that program increases tolerance of wolves in the rural landscape, which has allowed that species to thrive in California, a priority, I think, for most folks in the State of California.

So we would ask you to renew funding for that program this year. That initial outlay of $3 million carried that program for 29 months. A much more modest amount of funding this year would still allow the most vital portions of that program to continue on for the next year at least. So just urge you to consider some amount of funding for that program, which has now been fully encumbered based on its prior funding allocations. Thank you. Got it. Thank you.

Good afternoon. Melanie Morelos with the Greenlining Institute. We are in full support of funding SB 253 for CARB in order to prevent any delays to the deadline statutes that are already in line. We also know that the SEC ruling has likely come out next week and scope three emissions disclosures is likely not to be placed in new ruling. So it's very imperative that we get it right here in California.

I also want to mention that we're very disappointed that the regional climate Collaborative program was cut by $10 million. There's over 270 organizations that have been spending a lot of time applying for this program, including SGC that was just about to roll out those awards this month. But since it was not included in the Jan budget, it makes it really hard to get out that money that was already ready to go.

And last thing I'll mention about the RCC program is that it's directed towards very critical underserved communities that are in desperate need of state and federal climate investments. The last thing I'll say is we really urge the Senate budget and the Assembly budget to restore as much money as possible for the transformative climate communities program that you're very familiar with, Mr. Becker, as much as the 200 million that was cut in previous budget negotiations. This is a nationally recognized program established here in California serving rural unincorporated communities and tribal communities. Thank you.

Thank you.

Good afternoon, Senators Taylor Roschen on behalf of a coalition of agricultural associations, we were disappointed that the farmer program at CARB wasn't proposed to be funded in the Governor's Budget. State investments in farmer have leveraged billions of dollars in federal assets and matching funds from farmers across the state to invest in diesel tractor emission upgrades, including the transition to zero and near zero ag emission equipment. The program provides immediate and durable emission reduction benefits and air quality benefits to the state's most disadvantaged communities.

And I know the LAO spoke today about how do we show the value for our investment. Since 2018, the program has turned over 12,000 pieces of agricultural equipment, reduced 368,000 metric tons of co, 216 thousand tons of particulate matter and 26,000 tons of nox. So considering this year's investment should be really focused on demonstrated success and financial efficiency, we encourage the Legislature to Fund farmer. We'd also like to echo support for supplanting funding for the FPIP program for food processors and refunding inter methane reduction programs. Thanks so much.

Thank you.

Good afternoon, Mr. Chair, Senator Allen, Tricia Geringer with Agricultural Council of California. Thanks for sticking it out with some of us here at the end. Definitely want to echo the prior speaker, Ms. Roshan, her comments in support of the farmer program. But I'm also here in support, as she mentioned, the Food Production Investment program, otherwise known as FPIP, at the California Energy Commission. Really importantly, this program is over 80% of the funds from this program is going into projects in disadvantaged and Low income communities.

Unfortunately, there is no new dollars in the Governor's Budget. And as the Lao's analysis had noted, there is a reversion of 19 million from existing dollars, General Fund Dollars. So as understanding the challenging budget year and as you consider and weigh your options, we would ask that funding be supplanted from GGRF for any losses to the FPIP program. Given this is a small but mighty grant program for local food producers to lower their emissions, improve energy efficiencies while they process food grown right here in California.

Importantly, FPIP is in the top 10. It's ranked in the top 10 out of all the California climate investments programs in terms of total GHG reductions and cost per ton of GHG. So we hope you'll consider the effectiveness of the program, the fact that there isn't a federal alternative, and also that it's benefiting priority populations. So thanks for your consideration.

Thank you. Senator Becker, Senator Allen, Michael Bocadoro, on behalf of our Ag and dairy clients, very much appreciate your questions and comments regarding the ... early adopter program, which of course you created last year. We share your concerns with the loss of funding. We look forward to working with you on restoring funding to that program, whether through GGRF or some other creative solution. The timing for that is critical.

As you heard from CDFA, we are finally going to have a product available for use to begin reducing interic methane in the dairy and livestock industries in the state. Critical that we do that as we prioritize funding for climate. Important to keep in mind the importance of continuing to reduce methane.

We know that's our only hope of achieving the Paris climate accord by 2030, is being able to offset some of the continuing to accumulate carbon dioxide emissions in the atmosphere by substantially reducing methane in the short term. And so these programs become even more critical. And so I hope we maintain focus on reducing methane, but look forward to working with you to get that funding restored. Thank you. Great.

Thank you, Mr. Chair. Senator Allen, Chris Reardon, California Farm Bureau. Two issues really want to chat with about. First is the wolf compensation Fund that we talked, gentlemen talked about earlier. Look, we're seeing wolf populations grow in this state and they have over the last three to five years now we find wolf packs in Tulare county. So when you look between we are in the northeast part of the state and Tulare county from a ranching perspective, we know they're going to fill in in those different parts of the state as well.

If we lose this resource for these funds, there is no way we're going to be able to compensate for some of these challenges many of our ranchers are going to face with an increased population of wolves in the coming years. So wanted to make sure to put that on your radar. It's important for us. We know, like everyone else, has indicated a tough budget year, but at least some ability to sort of keep this program going till things get rosier, so to speak.

Secondly, the farmer program, it's a really important program for many of us in agricultural. We think it's a relatively minor investment. Yes, it was 150,000,002 years ago, 75 last year. But we look at the implications of what it means for many of these communities and their investments in new technologies to transition. So I think where folks want to be related to zero emission vehicles, it's a really important program.

Incentives and programs we found in agricultural are overwhelmingly supported and been consistent with what we've done historically in this state. So I wanted to bring these two issues up. And then just lastly, what Mr. Boca drill talked about, the interic and methane reductions important as well, particularly in areas. And I know you've been a leader on this issue, too, so look forward to working with you as well. Thank you. Good. Thank you.

Good afternoon, chair Becker and the Committee. My name is Michael Claiborne. I'm a directing attorney with Leadership Councel for Justice and Accountability in addressing the budget deficit. The state cannot deprioritize environmental justice or undermine ongoing work to meet basic needs in disadvantaged communities. As such, we request funding for three priorities of communities I work alongside. First, we appreciate the governor's proposal to restore 200 million for drinking water and wastewater infrastructure in disadvantaged communities, which was delayed in the 2023 budget.

Contrary to the LAO's analysis, this funding will primarily go to Fund sewer extension projects for disadvantaged communities that are served by failing septic tanks and sewage lagoons. There's nothing more basic and essential than adequate sanitation and access to safe drinking water and even the 2023 delay slowdown projects in communities I work with, like .... Second, we oppose cuts to equitable building decarbonization, a program that is essential to meeting our ambitious climate targets and to ensuring that low income households can access critical investments.

We further oppose cuts to funding for the Salton Sea projects to address the air quality crisis in the eastern Coachella Valley that is quite literally shortening the lives of folks I work with. As a final point, we align our comments with the 150 plus organizations, environmental and environmental justice organizations calling for an equitable climate resilience bond that comports with Justice 40 principles by ensuring that 40% of the bond goes directly to priorities of disadvantaged communities. And we thank Senator Allen for his leadership on this issue.

Thank you. Thank you. Good afternoon. My name is Sam Greenlee. I'm the Executive Director of Alchemist CDC, a food systems nonprofit serving the Sacramento region. I'm here to speak on behalf of the statewide Save Market Match Coalition to ask for the full restoration of the California Nutrition Incentive program, also known as CNIP, in the budget. Last year, organizations across the state organized tree new funding for CNEP and secured $35 million in the budget.

This number represents years of grassroots nonprofit work locally and across California, building an effective safety net for California's small farms and Low income families. It's not simply a onetime allocation, but the renewal of a long running, successful program. The proposed $33 million in cuts to CNIP would undercut this work, kill the program, and leave no possibility of a future return. It would leave thousands of families without fresh fruit and vegetables and accelerate the loss of California's small and midsize farms.

It will also leave tens of millions in matching federal funds on the table. In fact, at this very moment, CDFA is missing out on about $12 million from an open federal nutrition incentive application because it simply lacks authorization from Department of Finance to make use of budgeted funds as state match. I ask you to reject the proposal to cut CNIP and reinstate all 35 million that was originally approved in the 202324 Budget act. Thank you. Thank you.

Good afternoon, Chair Becker, Senator Allen, Eddie Caramel, on behalf of Valley Clean Air Now implementing the clean cars for all program in the San Joaquin Valley. As you all know, that's the region with the worst air quality in the entire United States.

I'll just align my comments with you, Senator Becker, as well as Bill McGavin from Coalition for Clean Air and Members of Greenlining of just how important it is to maintain, particularly those equity investments in the ZEV package and look forward to continuing to engage with you all and the Administration to ensure that those end up in a final budget vehicle. Thank you.

Thank you.

Good afternoon, Mr. Chair and Senator Allen. Jamie Morgan, on behalf of the American Heart Association and also representing end child poverty, like to align my comments with Mr. Greenlean. We are a Member of the Save Market Match Coalition and just want to urge you to preserve funding for the program. We know that a healthy diet is key to preventing chronic diseases such as heart disease, and this is truly a critical food safety net program, and we just like to urge you to preserve the funding. Thank you.

Yeah, absolutely. Thank you. Good afternoon, Mr. Chair, Senator Allen and staff. My name is Darryl Little, Jr. On behalf of the Natural Resources Defense Council for California to continue reducing greenhouse gas and air pollution, we must remain steadfast in addressing transportation by investing in public transit and active transportation. Doing so will reduce pollution from both cars and trucks while creating safer and more accessible communities for California.

We call on the Legislature to reverse the proposed 200 $1.0 million cut to active transportation by allocating 200 million funding from the state highway account or by leveraging the statutory flexibility of formula federal surface transportation funding. We would also like to see the reversal of the proposed $283,000,000 cut to building DCAR projects programs. The building DCAR programs at the CEC make technologies accessible and are critical to helping Low income consumers with decarbonizing their homes.

NRDC would also like to see the reversal of the proposed cuts to California's coastal resilience budget. We must remain committed to mitigating the impacts of sea level rise, storms and coastal flooding. Additionally, we respectfully ask the Legislature reinstates $33 million in funds for the Nutrition Incentives program, $14 million in funds for the Farm to Community Food Hubs program, and $13 million in funds to the underserved and small producer program.

We also request full funding for the farm to school incubator program for which CDF is currently soliciting applications. These programs serve Low income families as well as smaller and underserved farmers. We also request that funding for the livestock methane Reduction program be shifted instead to the Alternative Manure Management program at CDFA, which is chronically oversubscribed, underfunded, and helps farmers adopt proven methane reduction strategies.

Finally, we urge the Legislature to continue to invest in the entire suite of environmental farming programs at CDFA that help fight climate change and drought while also helping farmers prepare for floods and wildfires. California became a national leader on environmental farming by making it easier and affordable for farmers to use sustainable practices. California must continue funding these programs that all farmers are able to make that transition. Thank you for your time.

Thank you. Afternoon, Chair Becker. Senator Allen, I'm Mark Fenstmaker here on two items. First, for Earth Justice, I want to echo the calls for preserving our zero mission vehicle budget and want to particularly raise our concern with the LAO's recommendation on eliminating the zero emission school bus funding. We really value that funding going forward as this is going to help us achieve our climate goals, our clean air goals, while reducing exposure for our schoolchildren. Second, on behalf of the Coachella Valley Conservation Commission, we'd ask that you reject the proposed cut to the Coachella Valley Mountain Conservancy's wildfire budget.

Wildfire threat in the desert is real and is often overlooked in our wildfire funding, and the CBMC is ready to go with this funding. They were set in January. Their proposal with that $9 million was to put it out in three different chunks, one for projects for disadvantaged communities, one for projects implemented by tribal organizations, and the last for projects implemented aligned with the local conservation plan. Thank you very much. Okay. Thank you.

Chair and Members, Kathy Mossburg, on behalf of the Public Health Institute and their project Roots of Change, want to align myself with my colleagues who've already spoken about the needs of the CNET program and just highlight in detail just a couple of pieces on that. Over the course of the CNIP program, we have brought in $30 million in federal funds. We're slated, as was noted before, to bring in more if we continue this program.

This program is a time tested 15 year old safety net program serving over a half a million Calfresh recipients with fresh fruits and vegetables every day. And we think we know it's a triple win for both food security, farmer support in rural California and health equity. And we really encourage this Committee to maintain the program. Thank you.

Thank you.

Hello. Happy Leap Day. Happy birthday to Senator of Blakespear, if she's listening. Melissa with California environmental voters. I want to say that I really want to urge the Legislature to send a strong signal now that funding for the two biggest climate laws that were passed last year in the country will be funded this year.

SB 253, the Climate Corporate Accountability act, and SB 261, the Climate Financial Risk Disclosure act, are new laws that are already creating ripple effects globally to set the bar for emissions reporting and transparency. Next week, the Security Exchange Commission is going to be releasing their climate disclosure rule, and the importance of these California laws will be made very, very clear. And the Legislature also needs to make very clear that it is a high priority to Fund the implementation of these two laws in this year's budget.

I also want to echo the comments made by Environment California to urge the Legislature to end oil and gas subsidies. The environmental community has identified almost 9 billion with AB dollars that we could instead be directing to climate investments that are right now subsidizing the oil and gas industry in the form of tax credits and tax expenditures. Finally, a climate bond this year is absolutely critical to address the very real threat to our lives and our livelihoods in the face of worsening climate change.

And for every dollar that we don't spend this year on climate, we'll be spending many, many times over in the form of emergency management and public health costs. Thank you.

Thank you. And we do like when our bills that we pass get funded. So thank you. Good coming down the home stretch here.

Yes. Not too much longer, I promise. Megan Mackleberg here on behalf of the mid Peninsula Regional Open Space District, East Bay Regional Parks District, the Land Trust of Santa Cruz County, save the Redwood League, the Sempervirens Fund and California State Parks foundation, all expressing strong concerns about the governor's proposed cuts to funding for the WCB and coastal resiliency. We additionally urge the Legislature to refrain from pulling back on funding for CNRA's tribal nature based solutions program. By pulling back this funding, we will be setting ourselves back years and implementing projects on the ground. Thank you.

Thank you.

Good afternoon. Jamie Minor, on behalf of West Basin Municipal Water District, just want to echo what Beth Elasso, on behalf of water reuse, said about the water recycling funds already being allocated almost out the door for a number of different projects and unfortunately are having to be pulled back. Obviously, water recycling is essential to updating our infrastructure, meeting our water supply targets, but also in an affordable way. So appreciate getting that funding restored just since those projects are so close to the finish line. Thanks.

Thank you. Good afternoon, Mr. Chairman and Members John Norwood, on behalf of the Almond Alliance and our 7600 Members and over 100 processors, we too are disappointed that the farmer funds were not included in the governor's proposed budget and would encourage the Subcommitee to review the success of this program to date in reducing emissions and providing immediate air quality benefits to the most disadvantaged communities. Many of our Members use these funds to retire old diesel based equipment.

I would just reiterate the comments made earlier about the success of this program in the San Joaquin Valley, where some 13,000 farm vehicles have been retired and a substantial reduction in emissions. So we understand the budget problems in California, but we think that the $150,000,000 requested by the industry is appropriate given the success of the program.

And just really quickly for one other client, on behalf of the independent insurance agents and brokers of California, we certainly support any funds that going towards fire resiliency, it's really one of the key ways that California is going to work its way out of the crisis in property insurance that we're facing right now. Dealing with fire resiliency will have a large effect on trying to bring the worldwide reinsurance community back into supporting admitted insurers in this state. Thank you very much. Thank you very much.

Here to wrap it up, Mr. Chair. Senator Allen, thank you so much for your time today. Kai Cooper, on behalf of ..., echoing the other comments made regarding full funding for implementation of SB 253 and SB 261, companies already comply with reporting laws and value these frameworks like the GHG protocol, and ultimately, filing fees will cover these implementation costs. Investors and companies deserve standardized disclosure rules and cannot afford a delay in the implementation of these laws. So thank you for your time today.

Thank you. That was a good wrap up. I appreciate it. I want to thank everyone for a public comment today. The staff recommendation for issue number one is to hold open. We have concluded the agenda for today's hearing. Senate budget Subcommitee number two is adjourned.