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Administration proposes cap‑and‑trade extension and shifting Cal Fire costs into GGRF; analysts urge caution
Summary
The administration asked the Legislature to extend California’s cap‑and‑trade program and work on a greenhouse‑gas expenditure plan that would channel revenues into priorities including high‑speed rail and to shift some Cal Fire costs to the GGRF; the Legislative Analyst’s Office urged more time and clearer statutory direction.
The administration proposed reauthorizing California's cap‑and‑trade program (rebranded in proposal materials as "cap‑and‑invest") and asked the Legislature to work with the administration on a greenhouse gas reduction fund (GGRF) expenditure plan. The May Revision identifies two high priorities: ongoing support for the high‑speed rail authority (a proposal to provide at least $1 billion per year) and shifting a portion of Cal Fire's spending from the general fund to the GGRF to relieve near‑term general‑fund pressure.
Department of Finance staff explained the proposal at the hearing and said the May Revision would include language to extend the program through 2045 and that the administration would develop a spending plan with the Legislature. LAO analysts said reauthorization is a major policy choice and recommended the Legislature take time to set clear, statutory priorities rather than rely on broad deferrals to CARB. "If the legislature has specific priorities related to the cap and trade program, providing statutory, clear statutory direction will help you ensure those priorities are reflected," LAO analyst Helen Kersey told the panel.
LAO further warned that monetized allowances are volatile and recommended cautious use of continuous appropriations; it also recommended notification language if a GGRF‑funded shift to Cal Fire created a general‑fund backstop. Department of Finance staff said the Cal Fire shift was an ongoing structural suggestion given multiyear general‑fund deficits and not a temporary one‑time fix.
Members and public commenters debated framing and transparency. Some members and outside speakers criticized rebranding the program as "cap‑and‑invest," saying proceeds from allowance auctions have been used for a mix of purposes beyond greenhouse‑gas reduction and that the program is effectively a revenue stream for state priorities. LAO and several Assembly members urged careful legislative review of an expenditure plan before authorizing long‑term commitments.
No formal action was taken; the committee asked for more detailed expenditure proposals, fiscal risk analysis and legislative language options before making decisions.
