Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Cap And Trade topic
No spam. Unsubscribe anytime.
Senate subcommittee reviews cap-and-trade spending plan as finance officials propose one‑time transfer to motor vehicle account
Summary
The Senate Budget Subcommittee No. 2 heard May 1 from state finance and legislative‑analyst staff on the governor’s cap‑and‑trade spending plan, which largely repeats last year’s agreed framework but includes an $81.2 million transfer from the Greenhouse Gas Reduction Fund to the Motor Vehicle Account.
The Senate Budget Subcommittee No. 2 heard May 1 from Department of Finance and Legislative Analyst’s Office staff on the governor’s proposed cap‑and‑trade spending plan, including a one‑time $81.2 million transfer from the Greenhouse Gas Reduction Fund (GGRF) to the Motor Vehicle Account (MVA).
Brandon Merritt of the Department of Finance presented the revenue picture, saying the governor’s budget estimated 2024‑25 auction revenues at about $4.1 billion, roughly $600 million lower than the estimate in the 2024 Budget Act, while projected interest earnings from the State Money Investment Fund were higher—about $650 million for the current year, $250 million above prior projections. Merritt and colleagues also said February 2025 auction receipts were about $851 million, about $260 million less than the $1.02 billion per auction assumed at the governor’s budget.
The Legislative Analyst’s Office cautioned that the spending plan largely mirrors the package the Legislature and governor agreed to last year, with a “very modest” set of changes aimed at supporting the MVA. Helen Kerstin of the LAO explained that $32 million of funding would shift from GGRF to Proposition 4 funds, freeing GGRF dollars that—together with unallocated GGRF—would be proposed to support the MVA. The LAO warned that those shifts involve trade‑offs in priorities and additionality of funds.
Committee members pressed finance staff about longer‑term MVA solvency. Matthew Mesito of the Department of Finance said the MVA faces recurring operational shortfalls and that the governor’s proposal is intended to maintain solvency for now, but that Finance will continue monitoring and could recommend changes in the May revision. Finance staff described the budget‑act control mechanism (control section 15.14(b)) under which departments may hold up to 25% of appropriations pending final auction receipts and a May determination of available auction proceeds.
Senators also discussed implications for programs that have depended on cap‑and‑trade revenues—such as high‑speed rail and various incentive programs—and the uncertainty created by recent lower auction outcomes and pending reauthorization decisions. The LAO advised continued close monitoring of allowance auction results and the general fund condition and said lower allowance prices or unsold allowances in past years have materially reduced revenue in prior cycles.
The panel did not take votes. Committee members signaled continued oversight and follow‑up in advance of the May Revision and as more auction results become available.
