LOS ANGELES, CALIFORNIA - JANUARY 8: California Governor Gavin Newsom (R) tours the downtown business district of Pacific Palisades as the Palisades Fire continues to burn on January 8, 2025 in Los Angeles, California. Fueled by intense Santa Ana Winds, the Palisades Fire has grown to over 2,900 acres and 30,000 people have been ordered to evacuate while a second major fire continues to burn near Eaton Canyon in Altadena. (Photo by Eric Thayer/Getty Images)
Sacramento, California – California Gov. Gavin Newsom’s latest budget proposal is kicking up a heated debate in the state Capitol over how the state should spend billions in climate funds. Newsom seeks to extend the state’s cap-and-trade program through 2045 and redirect at least $2.5 billion from the climate fund to support firefighting and the embattled high-speed rail project—a move critics say could undercut other critical climate priorities.
Cap and trade, funded by emissions credits purchased by major polluters, has generated nearly $13 billion since its launch in 2013. These funds have primarily gone toward cutting greenhouse gases through investments in clean energy, public transit, and electric vehicles. But under Newsom’s new proposal, more than half of next year’s projected $4.8 billion in cap and trade revenue could be funneled into firefighting and rail.
The plan includes $1.54 billion for Cal Fire, covering over a third of the agency’s budget, and at least $1 billion annually through 2045 for high-speed rail, which has long faced delays and cost overruns. Last year, the project received $407 million from the climate fund.
Newsom’s proposal to rename the program “cap and invest” and fast-track its extension through the state budget process has drawn sharp criticism from lawmakers and environmental advocates. Opponents argue that the funding shift could jeopardize efforts to decarbonize transportation — California’s largest emissions source — and neglect disadvantaged communities disproportionately burdened by pollution.
“You’re going to have some tough choices,” said Helen Kerstein of the Legislative Analyst’s Office, warning that new spending will require cuts elsewhere.
Environmental justice groups and some legislators say the plan leaves too little for clean air, affordable housing, and clean water. “We believe it is not only possible, but absolutely necessary, to achieve and balance all three: climate, health equity, and affordability,” said Connie Cho of the Asian Pacific Environmental Network.
The proposal also maintains controversial program elements, including free emissions permits for oil and gas companies and carbon offsets — mechanisms critics say have done little to reduce pollution in vulnerable neighborhoods.
With California facing a $12 billion budget deficit, Newsom’s strategy of linking climate policy to broader fiscal negotiations may boost leverage but limits public input and legislative oversight.
“This is probably the most challenging budget situation the state of California has faced in at least the last seventeen years,” said Assemblymember Cottie Petrie-Norris. “Trying to then shoehorn in the reauthorization of our landmark climate program seems kind of insane to me.”
