Senate subcommittee reviews cap-and-trade spending plan as auction revenues fall; short-term shift to Motor Vehicle Account proposed

The Senate Budget Subcommittee No. 2 on May 1 heard presentations from the Department of Finance and the Legislative Analyst's Office on the governor's cap-and-trade spending plan, including a one-time transfer from the Greenhouse Gas Reduction Fund (GGRF) to the Motor Vehicle Account (MVA) and updates on auction revenue projections.

The subcommittee was told that, under the governor's budget, fiscal-year 2024—25 auction revenues were estimated at about $4.1 billion, roughly $600 million lower than estimates at the 2024 budget act, while interest earnings are exceeding earlier projections. Brandon Merritt of the Department of Finance said the February 2025 auction netted about $851 million, below the $1.02 billion per-auction estimate used in the governor's budget.

The Legislative Analyst's Office (LAO) advised the committee that the proposed spending plan largely follows the plan approved in last year's budget act, with small changes intended to support the state's medium- and long-term priorities, but warned that revenue softness in recent auctions creates uncertainty for multi-year commitments. The LAO highlighted a proposed…