California’s Record State Budget Soars to $300 Billion

California is anticipating a historic budget surplus of $97.5 billion. In early May, Governor Gavin Newsom announced a proposed record-breaking $300 billion spending plan that includes this unprecedented surplus. It is being dubbed the “May Revise.”.

The massive “May Revise” includes spending for inflationary issues, additional K-12 funding, drought relief, healthcare, and the“Strategic Electricity Reliability Reserve.” 

The Governor’s proposed budget also includes $11 billion to help Californians deal with rising gas prices: payments of $400 per vehicle up to $800 per household, even for electric vehicles.

Let’s break it down further. What else does this budget include to address California’s energy woes?

The “May Revise” also provides funding for the Lithium Valley, a drilling site in Southern California’s desert. It accelerates the permitting process for geothermal.  It incentivizes projects that manufacture, process, or recover lithium through a sales and use tax exclusion.  The Governor’s “May Revise” proposes $80 million for training at the San Diego State University in the Imperial Valley. 

The Devil in the Details

The details of the proposal are spelled out in the document: “The California Blueprint: California Climate Commitment – Newsom’s Comprehensive Plan to Tackle Pollution, Protect Californians, and Forge an Oil-Free Future.” Here is what else it includes: 

Climate Change Investments 

1. $2.7 billion investment to bolster wildfire resilience (forest thinning, prescribed burns, grazing, reforestation, fuel breaks, and new technology to detect wildfires early). 
2. $2 billion to address drought needs and water supplies. (This is in addition to the $5.2 billion committed last year).
3. $800 million to cool our schools and neighborhoods, including projects to reduce urban overheating 
4. $445 million to address health impacts of carbon pollution 

Investments in Fossil Fuels, Deliver Clean, Reliable and Affordable Energy 

1. $6.1 billion for electric vehicle accessibility. (This brings the total investment to $10 billion over six years). 
2. $1.5 billion for electric school buses 
3. $10 billion energy package: 
   1. $5.2 billion to deploy a Strategic Electricity Reliability Reserve to enhance grid reliability
   2. $1.2 billion to address past-due electricity bills
   3. $295 million to develop grid support
   4.  $970 million to incentivize residential solar and storage installation. 
4. $9.1 billion for public transportation and prepare for the impacts of climate change, including $7.95 billion for high-speed rail and transit.
5.  $2.1 billion to nature-based solutions to fight climate change

Legislative Approval and Signature Needed

All of these proposals still need legislative approval, so the Governor’s “May Revise” will likely be amended to include the Legislature’s priorities as well.  The Legislature must produce their version of the budget by June 15.  The Governor will then need to approve the budget with his signature by July 15.  Between now and then, expect a lot of “horse trading.”