The legislature recently passed its budget proposal for the upcoming fiscal year starting in July 2025 and ending in June 2026 (FY 25-26). The legislature’s budget proposal did not include proposals regarding agricultural climate solutions to be funded through Proposition 4 and the Greenhouse Gas Reduction Fund (GGRF). The legislature and the Governor will continue negotiations in the next two weeks to approve a final budget before the start of the fiscal year on July 1. This means that these investments may be negotiated as part of the final forthcoming June budget, or they could be negotiated separately through a series of follow-up budget bills (known as budget bill juniors and budget trailer bills) in August and September. 

The legislature’s budget proposal differs from the Governor’s May Revise budget proposal in a few ways that impact climate resilient agriculture investments, which we summarize in the table below:

Key Issues	Governor’s May Budget Proposal	Legislature’s June 13 Budget Proposal
Proposition 4 (Climate Bond)	Proposes Proposition 4 investments towards a suite of agricultural climate solutions (see list in section below).	Indicates that Proposition 4 investments will be determined in later budget bills in the summer.
Cap-and-Trade	Proposes extending the current Cap-and-Trade Program through 2045 via the budget process without any reforms.	Indicates that Cap-and-Trade reauthorization should be achieved through the normal policy bill process. Lead negotiators in the legislature have expressed interest in some Cap-and-Trade reforms.
Greenhouse Gas Reduction Fund (GGRF)	Proposes allocating $1.5 billion annually for CalFire and $1 billion annually for High Speed Rail from GGRF. Indicated that the remainder of GGRF allocations will be negotiated with the legislature.	Proposes allocating $500 million per year for FY 25-27 for CalFire from GGRF. Indicates remaining GGRF allocations will be determined in later budget bills.

 

The following three sections provide more background and summarize CalCAN’s positions on these three issues.

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Proposition 4 Food and Farm Investments in FY 25-26

The Governor’s May Revise budget proposal included Proposition 4 investments for a number of programs CalCAN has advocated for, including the Healthy Soils Program (HSP), the State Water Efficiency and Enhancement Program (SWEEP), and a new regional equipment-sharing program. More specifically, the Governor’s proposal included the following investments in FY 25-26:

• $38 million for the State Water Efficiency and Enhancement Program (SWEEP)
• $36 million for the Healthy Soils Program (HSP); an additional $26 million will be allocated in FY 26-27
• $200,000 to develop a new Regional Farm Equipment-Sharing Program; an additional $14 million will be allocated in FY 26-27 to implement the program
• $2 million for the California Farmland Conservancy Program (CFCP); an additional $9 million will be allocated in FY 26-27
• $12 million for the Multibenefit Land Repurposing Program (MLRP); an additional $51 million will be allocated in FY 26-27
• $19 million for Urban Agriculture Projects
• $10 million for the Certified Mobile Farmers’ Market Grant Program; an additional $10 million will be allocated in FY 26-27
• $10 million for Year-Round Certified Farmers’ Markets Infrastructure and Facilities; an additional $10 million will be allocated in FY 26-27
• $200,000 to develop a new Tribal Food Sovereignty Program; an additional $14 from Prop 4 will be allocated in FY 26-27 to implement the program
• $38 million for Fairground Resilience Centers

CalCAN supports the Governor’s proposed Prop 4 investments and urges the legislature to finalize this part of the budget as soon as possible in order to allow agencies to start distributing the funds.

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Cap-and-Trade Reauthorization: Reforms Needed to Maximize Benefits for California Farmers and Families

The state’s Cap-and-Trade Program, which requires the state’s largest greenhouse gas emitting companies to purchase permits to emit greenhouse gas emissions (called “allowances”), is currently set to expire in 2030. CalCAN supports the Legislature’s call to reauthorize the Cap-and-Trade Program through the normal legislative process for policy bills, which will allow more public discourse about potential reforms to the program.

CalCAN is part of a broader coalition of over 40 organizations advocating for reducing free allowances to the oil industry in the Program and redirecting those allowances towards solutions that lower costs for California farmers and families. In 2024 alone, free allowances to the oil and gas industry were estimated to be valued at over $890 million. 

Unlike the electric and gas utilities, which are required to pass the value of their free allowances onto ratepayers in the form of bill credits twice a year, the oil industry is under no obligation to pass the value of those free allowances onto consumers. Meanwhile, the five largest oil companies that operate in California continue to make record profits on the order of tens of billions of dollars per year.

Rather than subsidizing the highly profitable, multinational fossil fuel industry, our coalition asks lawmakers to invest that $1 billion per year in multi-benefit climate solutions in California, including agricultural solutions, that directly lower energy and water costs for farmers and families and make our communities more resilient to wildfires, heat waves, droughts, and floods. 

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Greenhouse Gas Reduction Fund: Consistency is Key for Agricultural Climate Solutions

The state’s Cap-and-Trade Program generates an average of $4.2 billion per year for the state’s Greenhouse Gas Reduction Fund (GGRF). Under the current Cap-and-Trade authorization, five programs are guaranteed a specific percentage of GGRF revenues annually, totalling 65% of total GGRF revenue each year, see table below. 

 

The Sustainable Agricultural Lands Program (SALC), which funds permanent agricultural conservation easements on at-risk farmland to limit urban sprawl, is the only agriculture program that has received a continuous appropriation as part of the umbrella Affordable Housing and Sustainable Communities (AHSC) Program. CalCAN and American Farmland Trust organized a letter among California-based land trusts calling on the legislature to protect SALC’s 2% continuous appropriation

Legislators and the Governor have historically made discretionary annual decisions about how to allocate the remainder of GGRF. The Alternative Manure Management Program (AMMP), Healthy Soils Program (HSP), and State Water Efficiency and Enhancement Program (SWEEP) have historically received funding from the discretionary portion of GGRF, but not reliably enough to meet farmer demand.

The Governor’s May Revise budget proposal outlined his top two investment priorities for GGRF: $1.5 billion annually for CalFire for wildfire suppression and $1 billion annually for High Speed Rail. The Governor’s proposal was silent on how the remainder of GGRF revenue should be allocated. 

We support the Legislature’s proposal to fund CalFIRE primarily through the state’s general fund, and preserve the majority of GGRF for climate solutions.

CalCAN and a coalition of food and farming organizations are continuing to advocate for a dedicated set-aside of 15% or $600 million of GGRF funding to support a suite of proven agricultural climate solutions and programs that increase resilience and ensure food affordability.

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What’s Next in the Budget Process

The legislature and the Governor will negotiate a budget package for FY 25-26 between now and June 30. It’s possible that Proposition 4  and GGRF investments could be negotiated as part of that overall budget deal, or they could extend into August and September. We will keep you informed about this process in our blog and in our monthly newsletter.