New Legislative Year Brings Budget Deficit

California

January marked the beginning of a new year for the California legislature and brought a massive budget deficit to the state. Legislators will tackle a deficit for the second year in a row and must work towards reducing the $37.9 billion deficit, a significant difference from the Legislative Analyst’s Office projected $68 billion deficit. Governor Newsom unveiled his 2024–2025 budget proposal January 10, which costs an estimated $291 billion. The plan calls for $8.5 billion in spending cuts and utilizes roughly $13 billion in state funding reserves to help bridge the deficit gap without the need for substantial cuts.

The State legislature will review the budget and come up with a revised version, expected in June. Because of the deficit, implementation of a number of bills passed in the 2023 legislative year are expected to be delayed, including two high-profile climate disclosure bills SB 253 and SB 261, which cost a collective $9 million.

For pre-existing programs, the Governor plans to implement funding delays by distributing funds across multiple years, while many programs will see a reduction in funding all together. Climate resilience programs are losing roughly 7% of the funding they had last year. Funding for sustainable agriculture, as well as drought and water resilience assistance, will also work on a reduced budget. As the funding negotiations continue, Blue Diamond and our partners will be working to maintain funding for programs utilized by growers and the Cooperative.

Legislators Returns to D.C.

Federal

The federal legislature returned to Washington D.C. on January 8th. Ten days later, Congress passed their third short-term spending bill on January 18, which extends the deadline to pass the federal spending bills for the current legislative year until March 1st and 8th. Experts expect the remaining bills to be passed through a single omnibus package, rather than their current approach of passing individual bills.

Considering the primary objective of Congress is to pass the 2024 fiscal year funding, limited legislation is expected to come out of Congress during the first legislative session; however, the House passed a $78 billion bipartisan tax bill to expand the Child Tax Credit on Jan. 31, which may indicate a stronger willingness to work together and pass necessary bills this legislative cycle. Whether Congress can maintain this cohesiveness to pass a funding package in time may impact farm bill passage.

The Republican majority in the House is narrowing following McCarthy’s resignation, Rep. George Santos’ removal, Rep. Bill Johnson’s resignment, and the absence of House Majority Leader, Steve Scalise. Scalise worked remotely in January after discovering concerning medical issues, but is expected to return to the session in-person this month.

Governor Newsom has set the special election date to vote on McCarthy’s replacement for March 19th. Several candidates are running for the position, including Bakersfield Assemblyman Vince Fong. The elected winner will fill the position in January 2025.

Health Soils Program Incentive Grants Application Deadline Tomorrow

CDFA announced that it will be giving out roughly $12 million in Healthy Soils Program Incentive Grants. Applications can request up to $100,000 for each eligible project which implements conservation management practices. These practices include carbon sequestration, greenhouse gas reduction, and soil health improvement. For more information, visit CDFA’s Healthy Soils Website.

The deadline for grant applications is Friday, February 9, 2024 at 5PM PST.

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