Assembly hearing hears concerns about cap-and-invest extension, $1.5 billion GGRF shift to Cal Fire and transit funding cuts

The Assembly Budget Subcommittee heard sharp questions and public opposition on the administration’s May Revision proposal to extend California’s cap-and-trade program (relabelled “cap and invest”) and to shift $1.5 billion in Greenhouse Gas Reduction Fund (GGRF) proceeds to Cal Fire in 2025–26, growing to $1.9 billion by 2029–30.

The proposal to extend cap-and-trade to 2045 and to relabel it “cap and invest” was presented by Andrew Arch with the Department of Finance. Arch told the subcommittee the May Revision “proposes a simple extension of the program to 02/1945 which aligns with California's carbon neutrality” goal. Assembly members and outside groups pressed the administration on how the extension and the proposed transfers would affect already-committed GGRF programs, continuous appropriations, and transit capital projects.

The subcommittee’s chair and several members said they were alarmed that GGRF funds previously committed to transit, affordable housing and community programs could be reduced or delayed. Assemblymember Conley said the shift of GGRF resources to Cal Fire raises “philosophical” and practical concerns because Cal Fire provides ongoing, essential services that some members argued should be funded in the general fund rather than by a market-based, time-limited fund. The administration’s proposal includes provisional language to allow Finance to reduce the GGRF appropriation and increase the general fund appropriation if auction proceeds are projected to be low.

Transit advocates warned of immediate effects. Michael Pimentel of the California Transit Association told the committee that “we are talking about a reduction of up to $3,000,000,000 between now and fiscal year ’28–’29.” He said roughly $2 billion of that total had already been committed to capital projects and that projects funded through recent competitive cycles would be at risk.

Multiple stakeholders — including environmental justice groups, regional air districts and housing advocates — urged that programs with continuous appropriations such as the Affordable Housing and Sustainable Communities program, AB 617 community air protection funding, and other long-planned discretionary GGRF investments remain funded. Rachel Ehlers of the Legislative Analyst’s Office said her office will publish formal comments in the coming days and noted options for reconciling the administration’s proposal with the previously developed discretionary plan.

Members also pressed for details about the administration’s fiscal arithmetic. The administration said the May Revision’s baseline only proposes the Cal Fire shift and related items; it does not include a final discretionary GGRF spending plan and intends to work with the legislature on the remaining allocations. The LAO explained that one option would be to substitute the previously agreed discretionary plan with the Cal Fire allocation, leaving continuous appropriations unchanged.

Lawmakers requested the administration return with specific, itemized impacts on projects and programs that were previously awarded or committed; a clear description of which continuous appropriations — if any — the administration seeks to change; and a detailed explanation of the Cal Fire backstop and how it would operate if auction proceeds fall below projections.

Members signaled they expect more detailed numbers and a project-level accounting at a follow-up hearing next week.

Ending: The subcommittee concluded without votes on the proposals and scheduled a follow-up hearing focused on detailed departmental answers and the LAO’s analysis.