The Impact of Governor Newsom’s Proposed Budget on Water Projects
The Impact of Governor Newsom’s Proposed Budget on Water Projects

On January 10, 2023, Governor Gavin Newsom announced his $297 billion budget proposal for 2023-2024, which includes a $22.5 billion budget deficit. Despite environmental/climate change programs facing $6 billion in cuts, Governor Newsom’s proposed budget includes relatively few negative impacts to water projects. In fact, the drought response and water resilience section, which includes the vast majority of water-related funding, only faces a cut of two percent, from $8.7 billion to $8.6 billion. That two percent reduction is the lowest of any environmental category.

The highlights of the Governor’s proposed budget reductions for water-related projects include:

  • Watershed Resilience Programs: $24 million reduction from the 2022-2023 budget, which is a five percent cut. The 2023-2024 funding level will be $470 million.
    • The proposal includes shifting $270 million in funding from the 2023-2024 budget to 2024-2025 budget.
  • Per- and Polyfluoroalkyl Substance (PFAS) Clean Up: 35% reduction from the 2022-2023 budget. The 2023-2024 budget will be $130 million.
    • The proposal includes shifting $30 million in funding from 2023-2024 to 2024-2025.
  • Water Recycling: $40 million reduction from the 2022-2023 budget, representing a five percent cut. The 2023-2024 budget will be $760 million.

The budget also includes reductions in the following areas: State Water Efficiency and Enhancement Program (25% cut); Aqueduct Solar Panels (43% cut); and Water Refiling Stations at Schools (100% cut).

A significant area of criticism of Governor Newsom’s budget, especially from the Republicans in the Legislature, is that it does not include any new funding for water storage or conveyance infrastructure. Given the severity of the state’s ongoing drought and Newsom’s own projections showing a reduction in the state’s water supply of up to 10% by 2040, some critics are calling for the state to invest in additional water infrastructure. Proponents of Governor Newsom’s proposed budget have responded that, given that the state is facing a significant budget deficit and is funding a number of existing projects, the ability of the state to fund new projects in the 2023-2024 budget is limited.

Despite the cuts in Governor Newsom’s budget, there is positive news for water projects. The water section is the only section in the entire proposal summary that includes a “New Investments” subsection. Many of the new projects appear to be linked with Governor Newsom’s “California's Water Supply Strategy, Adapting to a Hotter, Drier Future,” which he released in August 2022 as his plan to manage California’s water supply moving forward. The newly funded projects include:

  • Urban Flood Risk Reduction: $135.5 million to support local agencies.
  • Delta Levees: $40.6 million for projects to reduce the risks of levee failure and flooding, provide habitat benefits, and reduce the risk of saltwater intrusion.
  • 2023 Drought Contingency: $125 million as a one-time set aside to be allocated as part of the spring budget process, when additional water data will be available to inform future drought needs.
  • Planning and Permitting for New Water Supplies: nearly $11 million from a variety of sources to support planning and permitting for projects that produce new water supplies.
  • Modernizing Water Rights: $31.5 million for the Updating Water Rights Data for California Project that aims to enhance California’s water management capabilities.
  • Urban Water Use Objectives: $7 million from the General Fund over four years to implement Senate Bill 1157, which established a new foundation for long-term improvements in water conservation and drought planning to adapt to climate change. The bill’s approach is based on water use efficiency standards for certain categories of water use.
  • Stream Gages: $4.7 million to begin reactivation of historical stream gages.

The proposed budget (at page 41) also includes funding related to removal of the Klamath Dam, including money for the Department of Fish and Wildlife for new positions and programs related to the dam removal.

This proposed budget from Governor Newsom is the first stage in the budgeting process and represents a starting point for negotiations with the Legislature. The Governor will next submit a revision to his proposed budget in May. The Legislature is required to pass a budget by June 15 to take effect starting on July 1, 2023, which is the start of the next fiscal year.

  • Alexander J. Van Roekel

    Alex Van Roekel provides counsel to clients on state and federal water law issues, including compliance with statutory and regulatory requirements, litigation strategy in both state and federal court and public policy within the ...

California Water Views provides timely and insightful updates on the water sector in the state. We relay information on how water legislation and policy from the nation’s capital, Sacramento, and around the U.S. affect California’s water utilities, agencies, practitioners, and consumers.  We also write about important events, conferences, legal cases, and other key happenings involving all things water in and around California.

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