Newsom's budget shrinks climate and natural resources funding

Chaewon Chung, The Sacramento Bee on Feb 10, 2026

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Overall funding for key climate and resource programs would drop sharply under Gov. Gavin Newsom’s proposed 2026‑27 budget, the Legislative Analyst’s Office’s new analysis found.

The LAO’s analysis shows that total proposed spending for California Natural Resources Agency, California Environmental Protection Agency and California Department of Food and Agriculture combined falls from about $23.1 billion in 2025‑26 to $18.9 billion in 2026‑27, with CNRA alone dropping from $18.4 billion to $12.8 billion.

According to the LAO analysts, the apparent drop is largely the result of a temporary surge of general fund surplus money for climate and resources programs phasing out, not a cut to their underlying base budgets.

“It’s like if you get a bonus check from your employer, but it’s not part of your base pay, and then you don’t get that bonus the next year. It looks like you have a year to year decline in your income, but your base pay is the same,” Rachel Ehlers, deputy legislative analyst said.

The big climate surplus budget appropriations were made in 2021‑22 and 2022‑23, when the state was experiencing large general fund surpluses.

California saw significant general fund surpluses for a few years following the COVID‑19 pandemic, which analysts described as the result of an unusually strong stock market and capital-gains-driven income tax receipts among wealthy Californians, amplified by the state’s very progressive tax structure.

Resources and environmental programs were the second largest policy area beneficiary of the state’s temporary surplus dollars. And funding for those departments, Ehlers explained, is now essentially returning to its more typical baseline level.

Natural resources expenditures summary includes funding for CAL FIRE, the Department of Water Resources, the California Energy Commission, the Department of Parks and Recreation, the Department of Fish and Wildlife and other environmental-related agencies grouped in the CNRA portfolio.

Tuesday’s analysis numbers are grounded in the state officials’ relatively optimistic revenue path, which is almost $30 billion higher than the LAO’s estimate across the 2024‑25 through 2026‑27 budget window.

The report notes they are based on a projection that “state revenues will remain on their current trend and does not incorporate the risk of a stock market downturn, which we believe is elevated.”

Meanwhile, with little room in the general fund and limited‑term climate surpluses essentially expiring, state budget analysts noted the Legislature could lean more on special funds, particularly cap‑and‑invest revenues in the Greenhouse Gas Reduction Fund.

“It is quite a flexible funding source. Its revenues are considered akin to a tax revenue, so they can be used legally for any purpose,” Helen Kerstein, a principal fiscal and policy analyst at LAO said.

“It can be part of the budget solutions,” Kerstein added, if the Legislature wants to “offset some general fund costs.”

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