Committee questions administration’s proposed GGRF restructuring and CalFire backfill

SACRAMENTO — Budget Subcommittee No. 4 spent substantial time on March 11 examining the governor’s proposed restructuring of the Greenhouse Gas Reduction Fund (GGRF) expenditure plan and related trailer‑bill changes to SB 840 implementation.

The Department of Finance described a three‑tier approach carried out under SB 840, noting the proposed governor’s budget assumes $3.77 billion in 2026–27 GGRF proceeds and would prioritize tier‑1 items and state operations. "The budget proposal... reflects the updated structure as reauthorized in 2025 by SB 840," Brandon Merritt (Department of Finance) told the committee. (Brandon Merritt, Department of Finance)

Legislative Analyst Office staff and several members expressed concern that the administration’s trailer language would treat interest earnings and beginning fund balance outside the SB 840 methodology, allocate state operations ahead of some programmatic tiers, and effectively reduce funds available to tier‑3 programs originally reflected in the 2024‑25 legislative expenditure plan. "We think the legislature should consider whether those changes are consistent with your intent," Helen Christine told the committee. (Helen Christine, LAO)

Members pressed the administration to preserve previously negotiated commitments such as the $250 million identified in SB 840 and to avoid using GGRF to backfill ongoing general‑fund operations where possible. The chair and several members asked the administration to revisit whether CalFire operations should be funded from the general fund rather than GGRF as improved general‑fund revenues permit. (Chair and members)

Stakeholders in public comment urged both full funding of planned tier‑3 investments (notably transit capital and agricultural programs) and caution about using GGRF to meet ongoing general‑fund obligations. Local governments, transit agencies, and environmental groups all requested clarity and predictability so multi‑year projects can proceed. (Public commenters)

The committee did not adopt changes but signaled it expects follow‑up discussions to reconcile statutory intent, the administration’s interpretation, and the legislature’s priorities.