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Money for zero-emission programs back in the California budget

Environmentally friendly infrastructure got a big boost just before California Gov. Gavin Newsom signed the budget on July 1 and then again last week through a grant-funding program.

With the budget shortfall this year, lawmakers scrambled to tap the state’s cap-and-trade program and other non-general fund sources to sustain ongoing programs.

California lawmakers added money back into the budget for zero-emission infrastructure as part of an agreement in the final hours before the July 1 budget signing.

“The final budget restored 100% of total ZEV funding, which includes vehicle charging infrastructure, by shifting expenditures to the Greenhouse Gas Reduction Fund over several years,” said H.D. Palmer, a spokesman in the Department of Finance.

A total of $3.2 billion was shifted to the state’s Greenhouse Gas Reduction Fund’s cap-and-trade program over four years, including $720 million in 2023-24, and $830 million in each of the subsequent three years (2024-25, 1025-26, 2026-27), Palmer said.

Newsom set a target in 2020 to ban the sale of new gas-powered cars in the state after 2035.

In August, the California Air Resources Board in August, passed a rule forcing automakers to speed up production of cleaner vehicles beginning in 2026 until sales of only zero-emission cars, pickup trucks and SUVs are allowed in the state.

Newsom, who was elected to a second term in November 2022, has been pushing throughout his term for funding to continue to build the state’s zero-emission infrastructure — including grant funding for cities to construct electric car hook-ups.

California Gov. Newsom has prioritized electric vehicle adoption in the state during his time as governor.

Bloomberg News

That funding got left on the cutting room floor in his May budget revisions as the state did belt-tightening to deal with reduced revenues and uncertainty around revenue from income taxes. The federal government and then the state pushed the income tax filing deadline to October for California counties impacted by flooding earlier in the year, which was most of the state.

But just days before Newsom signed the budget on July 1, he announced an investment of more than $1.5 billion — including approximately $450 million for zero-emission infrastructure, locomotives, vessels and vehicles — as part of the state’s work to build a more efficient, sustainable and resilient supply chain.

“No other state has a supply chain as critical to the national and global economy as California,” said Newsom said. “These investments — unprecedented in scope and scale — will modernize our ports, reduce pollution, eliminate bottlenecks and create a more dynamic distribution network.”

Revenue from the cap-and-trade program was substituted for money not available through the general fund, “one of the ways we are maintaining programs, while closing the shortfall,” Palmer said.

Newsom also announced $1.5 billion in port infrastructure upgrades on Thursday.

The funding would support a more sustainable, efficient goods movement system and produce lifesaving safety improvements, according to the governor’s press release. It also includes $450 million to support zero-emission projects, including upgrades at the ports of Los Angeles and Long Beach — the busiest ports in the Western Hemisphere.

The $1.5 billion will fund 15 projects creating an estimated 20,000 jobs and increase the capacity to move goods throughout the state’s global trade gateways while lessening environmental impacts on neighboring communities. Administered by the California State Transportation Agency (CalSTA), $350 million was also awarded to 13 projects that eliminate street-level rail crossings to make critical life-saving safety improvements, reduce emissions and keep goods and people moving.

“These awards — a direct result of Gov. Newsom’s visionary leadership — will help maintain our state’s competitive edge in our nation-leading supply chain infrastructure and will create a cleaner, safer and more efficient goods movement system that will have a lasting positive impact for the people of California,” said Transportation Secretary Toks Omishakin. “The historic level of state funding also puts these projects in a stronger position to compete for significant federal infrastructure dollars from the Biden-Harris administration.”

Projects receiving funding will help boost capacity to move goods through the ports of Los Angeles and Long Beach and enhance all major trade centers throughout the state — from San Diego to the Central Valley to the Bay Area. The high-priority grade separation projects, the majority of which are funded through the Transit and Intercity Rail Capital Program, will improve safety and reduce conflicts and delays at railroad crossings, helping to enhance the state’s freight and passenger rail systems.

“This game-changing grant will make a tremendous difference in our efforts to bring more business and jobs to the harbor, enhance the efficiency of cargo movement and accelerate the Port of Long Beach’s ongoing transformation to zero-emission operations,” said Port of Long Beach CEO Mario Cordero. “I would like to thank Gov. Newsom and the state Legislature for having the foresight to invest in California’s seaports and to secure our spot as an economic engine for the state and the nation.”

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