“Wildly unpredictable” is the phrase that immediately comes to mind when describing the impact the COVID-19 pandemic has had on forecasting the California state revenues and the overall state budget.
This time last year, the state was predicting an enormous budget deficit of $54 billion. Now, at the time of this writing, Governor Newsom is preparing to sign the 2021-2022 budget framework that was just passed by the Legislature. This budget includes nearly $100 billion in new spending. The new spending is largely funded both by an unanticipated record surplus as well as federal aid that has been appropriated to the state as part of the pandemic response. Notwithstanding budgetary and policy concerns, it is a stunning reversal of where we thought we would find ourselves in 2021. It is important to note that there will be many additional budget trailer bills negotiated in the next several weeks that are designed to implement the state budget. Several of these budget trailer bills will have a direct impact on agriculture.
There are always pros and cons to having a state budget surplus. The cons are that new programs will be created that will assuredly require ongoing funding which will lead to difficult conversations on future cuts, fees, and taxes when the general fund and pandemic response funds eventually dwindle. It is also easier for the Governor and Legislature to enact more costly policy mandates if state incentive funding is provided to reduce the implementation of those directives. Of course, the positive side to a surplus is that there is no immediate pressure to raise taxes and there is a greater likelihood to receive more substantial funding for the agricultural industry. It is truly a mixed bag.
Western Growers and other agricultural interests have been fighting for several years for adequate state incentive funding to help our farmers meet the stringent air quality goals that have been put into place to meet both federal attainment standards and California’s ongoing emissions reduction targets. The budget trailer bill process recognizes the cost burden these mandates place on farmers and proposes allocation of substantial funds to mitigate these efforts. Some key examples are the proposed $363 million in funding for the replacement of agricultural diesel engines and the $150 million in proposed incentive funding for alternatives to agricultural burning. A strict deadline on reducing and eliminating agricultural burning has been put into place by the California Air Resources Board. The $150 million in proposed funding will help address some of the costs arising from that mandate. However, much more robust and long-term incentive funding is needed for both of these issue areas in order for agricultural interests to feasibly reach the attainment goals.
The unprecedented budget surplus has also led to proposed new funding for implementation of the Sustainable Groundwater Management Act, provision of clean drinking water to impacted communities, and more funding for the State Water Efficiency and Enhancement Program. The California Department of Food and Agriculture will also see additional funds for healthy soils and other environmental stewardship programs.
Western Growers continues to strenuously advocate against new broad mandates being placed upon our industry. We do not want to see new programs created that will make it even more challenging for farmers to compete in the global economy. WG staff will also remain committed to fighting for state incentive funding so that any additional costs to our farmers can be mitigated to the greatest extent possible. Our industry is unique and deserves to be recognized for the critical and essential services that we provide.
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