The dust has settled on budget activity for the year at the Legislature. Lawmakers have cast their final votes on the remaining trailer bills before gaveling the session to a close. Left on the table is nearly all of an existing $1.1 billion sustainable agriculture package, but few incentive programs are receiving any new funding for the current fiscal year and beyond.
According to the nonpartisan independent Legislative Analyst’s Office, the budget has addressed a $55 billion problem due to the deficit. Among the many tactics deployed, the budget package cuts spending overall by $20 billion, dips into $6 billion of reserves and shifts $2 billion in costs to other accounts, such as further divying up the state’s cap-and-trade revenues.
The budget adopts Governor Gavin Newsom’s 8% spending reduction across agencies, which will come at a steep cost for the California Department of Food and Agriculture.
“That does not sound like a lot probably to a lot of folks, but it is for an agency that's always operated on very lean resources,” said CDFA Secretary Karen Ross, in her monthly update to the State Board of Food and Agriculture.
CDFA Secretary Karen RossRoss acknowledged that it’s “very important for us to be very transparent, engage with all sectors that depend on our programs and work together as we identify solutions.”
Among the climate packages approved during the record surpluses of 2021 and 2022, the budget cuts 24% of the water and drought resilience spending, 31% from energy expenditures and 9% from sustainable agriculture.
After initially allocating $700 million to water conveyance and storage projects through the Department of Water Resources, the Legislature and governor trimmed it down to $200 million. They zeroed out new spending for CDFA’s water efficiency program, known as SWEEP, but agreed to spend $21 million on it in 2026 and maintained $119 million in previous allocations.
After spending about a billion dollars on projects related to the Sustainable Groundwater Management Act in recent years, the budget maintains a considerable level of spending in the water package, trimming it from $356 million to $295 million. The State Water Resources Control Board, meanwhile, now has $1.2 million, generated from a boost in water rights fees, to expedite and streamline groundwater recharge permits.
The state pulled back $26 million for repurposing fallowed farmland and $25 million, or nearly half, of the money previously dedicated to LandFlex, a new program paying farmers not to pump groundwater near vulnerable communities.
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After policymakers initially promised $75 million, the budget maintained $26 million for the Food Production Investment Program, which offers grants to food processors purchasing more energy efficient equipment. Last Thursday the California Energy Commission awarded $22.6 million from that fund to seven food producers.
Several CDFA programs are not receiving new funding. FARMER, which incentivizes growers to upgrade to lower emission tractors, has dropped from a $363 million allocation last year. Winegrape growers in the San Joaquin Valley — struggling to find alternatives to open burning following a ban by the California Air Resources Board (CARB) — will not have more grant support, after a $180 million fund dried up. The Healthy Soils Program, prized by Newsom, has shifted from a record $155 million allocation to no new funding from the sustainable agriculture package. CDFA will keep its programs for reducing livestock methane emissions alive by pulling $24 million from cap-and-trade revenues.
The Legislature has agreed to the administration’s push to expand the state water board’s purview. The agency is taking on federal duties vacated after the U.S. Supreme Court’s Sackett decision last year limited the reach of the Clean Water Act. The board will increase waste discharge fees to generate an additional $11 million over the next two years, funding 26 new positions.
CARB is taking on new duties as well, as it begins to establish regulations to implement SB 253 and SB 261 on corporate climate disclosure. In his initial budget proposal, Newsom had not included any funding for the agency to roll out the new regulations. He later drafted a trailer bill to delay implementation for two years, which the Legislature rejected. The final package provides more than $8 million to fund 28 new positions at CARB. It will also pay for the attorneys who are defending the agency against a lawsuit filed by a business coalition, which includes the Western Growers Association.
The administration anticipates about $18 million in ongoing costs for the program. That money is initially coming from the cap-and-trade fund but will eventually derive from fees charged to businesses reporting their emissions under the legislation.
A similar scenario is playing out at the Department of Pesticide Regulation. The budget provides $145 million in spending to the department, a slight decrease from last year. Yet DPR is tapping into revenues from its mill assessment on pesticide sales to fund an $11 million expansion this year and 47 new positions. That will increase to $35 million and 117 positions starting in 2027. The new spending will boost registration, enforcement, monitoring and grants for alternative management practices.
Under a compromise between lawmakers and industry stakeholders, the pesticide sales tax will gradually increase from the current 21 mills to 30 mills in 2027. DPR is separately increasing registration and licensing fees as well.
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