The 2025-26 Budget: Natural Resources and Agriculture Discretionary Spending Proposals

2025-26 BUDGET The 2025-26 Budget: Natural Resources and Agriculture Discretionary Spending Proposals GABRIEL PETEK | LEGISLATIVE ANALYST | FEBRUARY 2025 SUMMARY Brief Discusses Three Discretionary General Fund Spending Proposals. The 2025-26 Governor’s Budget includes three notable new discretionary one-time General Fund expenditures in the agriculture and natural resources policy areas: (1) $24.9 million for the California Department of Food and Agriculture’s (CDFA’s) Farm to School Program, (2) $10 million for the California Natural Resources Agency (CNRA) to provide to the privately owned and operated Museum of Tolerance in Southern California, and (3) $6.8 million for the California Department of Parks and Recreation’s (Parks’) Library Pass Program. This brief begins by outlining the overall budget context affecting the Legislature’s consideration of these proposals. We then describe and comment on the three proposals. Our main takeaway is that while each of these proposed activities would offer some benefits—including assisting schools in procuring more locally grown food and engaging students to eat healthier diets, supporting activities to combat antisemitism, and expanding access to state parks—we recommend the Legislature apply a higher bar to its review of new spending proposals than it might in a year in which the General Fund has more capacity to support new commitments. Overall, the Legislature is in the position of having to weigh the value of these new proposals against other priorities, such as the activities to which it has already committed existing funding or maintaining somewhat larger reserve deposits to help address future budget challenges. OVERVIEW OF BUDGET CONTEXT discretionary proposals (including the three proposals discussed in this brief), $150 million High Bar for Approving New Proposals of tax expenditures, and a larger discretionary Under Current Budget Conditions. The three reserve than the state typically plans. These actions proposals discussed in this report would commit include shifting nearly $300 million in previous a modest amount of discretionary one-time General Fund augmentations for climate- and General Fund—totaling $41.7 million—in 2025-26. environmental-related programs to instead be However, our office currently estimates that the supported by the new Proposition 4 climate bond. budget is only roughly balanced in 2025-26, and While this would result in maintaining prior funding the state will have significant annual operating levels for these activities, it would preclude this deficits in the following years. As a result, every amount of Proposition 4 funds from supporting dollar of new spending essentially requires making expanded service levels or additional projects. offsetting reductions elsewhere in the 2025-26 budget or foregoing the opportunity to leave money Additionally, the budget faces a number of in state reserves to prepare for future budget notable risks and uncertainties—including related challenges. The Governor “makes room” for these to forecasted revenues, federal funding levels, three proposals by modifying funds committed and fire recovery costs—that could lead to the to other programs. As we discuss in our January General Fund condition worsening over the coming 2025 report, The 2025-26 Budget: Overview of months. Given this context, we recommend the the Governor’s Budget, the Governor proposes Legislature apply a higher bar to its review of new $2.2 billion in actions that would create capacity spending proposals than it might in a year in which in the General Fund to support $570 million of the General Fund has more capacity to support new commitments. Overall, the Legislature is in www.lao.ca.gov 1 2025-26 BUDGET the position of having to weigh the value of these Governor’s Proposal new proposals against other priorities, such as the Provides $24.9 Million for Farm to activities to which it has already committed existing School-Related Activities and Climate Smart funding or building a somewhat larger General Technical Assistance. The Governor’s budget Fund reserve to better prepare for difficult budget includes $24.9 million one-time support from the conditions in future years. This is the lens through General Fund in 2025-26 for the following activities: which we offer comments on the Governor’s three • Farm to School Incubator Grant Program proposals discussed below. ($20.4 Million). The Governor’s budget provides $20 million to support additional FARM TO SCHOOL rounds of grants through the existing Farm to Background School Incubator Grant Program. The budget also includes $350,000 to continue an existing Office of Farm to Fork Promotes Access to evaluation of the grant program. Funding Healthy Food and Food-Based Education in would be administered by CDFA’s Office of Schools. CDFA’s Office of Farm to Fork administers Farm to Fork. the Farm to School Program, which serves as a • Statewide Farm to School Outreach and statewide resource to assist schools in procuring Support ($1.6 Million). The budget proposes more locally grown food and engaging students to about $1.6 million to support a variety of eat healthier diets. The 2020-21 budget approved statewide outreach activities related to farm $1.5 million in ongoing General Fund for the office to school. Such activities would include to hire permanent staff. (Previous activities were statewide conferences, training events, and supported with limited-term positions and funding.) the development of additional strategies The 2022-23 budget approved an additional to promote the adoption of farm to school $2.9 million in ongoing General Fund for the practices. Funding would be administered by office to hire regional network and marketplace CDFA’s Office of Farm to Fork. coordinators that further support local planning and implementation. • Climate Smart Technical Assistance Grants for Producers ($3 Million). The proposal also Farm to School Incubator Grant Program Has includes $3 million to support climate smart Provided Funding to Schools and Producers. technical assistance grants. This proposal The Office of Farm to Fork also manages the Farm would provide competitive funding to to School Incubator Grant Program, which provides organizations that help encourage producers competitive grants to support the adoption and to adopt a wide variety of climate smart expansion of farm to school practices. Specifically, practices—such as those aimed at improving the program (1) supports schools and child care soil health, sequestering carbon, reducing centers in procuring locally grown food and emissions, and increasing water and energy providing hands-on food education; (2) assists efficiency. Funding would be administered by producers in increasing production capacity to CDFA’s Office of Environmental Farming and supply food to schools and child care centers; and Innovation, which manages programs such (3) supports organizations in providing technical as the Healthy Soils Program and the State assistance to schools, child care centers, and Water Efficiency and Enhancement Program. producers that are seeking to implement and CDFA’s work to support these practices is advance farm to school practices. The program not new; however, the department’s previous was first established with $8.5 million from the technical assistance activities have generally General Fund in 2020-21, with subsequent budget been supported through funding provided packages providing General Fund appropriations of for specific state programs or activities (such $30 million in 2021-22 and $60 million in 2022-23— as the Healthy Soils Program and drought all provided on a one-time basis. response allocations) rather than for broad, cross-cutting efforts. 2 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET LAO Comments the state has provided funds to schools in order to improve their ability to provide more healthy meals, As discussed earlier, given that every dollar procure California-grown foods, and incorporate of new spending essentially requires offsetting more freshly prepared foods. The Legislature could reductions elsewhere in the budget, we think explore whether the benefits that CDFA’s farm the Legislature will want to apply a high bar to to school grants provide could be incorporated its review of new spending. This context means into the activities supported by existing school the Legislature will need to weigh the importance nutrition funding—potentially leading to even and value of the proposed spending in the greater statewide adoption of the program’s goals. farm to school arena against its other General Even if the Legislature determines that a strong Fund priorities. rationale exists for funding the CDFA program Funding Supports State’s Recent Efforts to separately from the core School Nutrition program, Increase Farm to School Practices. We find that it could explore whether some of the farm to school the portions of the Governor’s proposal dedicated activities could potentially be supported by monies to the Farm to School Incubator Grant Program, the state must provide to schools to comply with the program assessment, and statewide outreach Proposition 98 constitutional requirements. This is are aligned with and would help to enhance and particularly pertinent in 2025-26 given that, as we expand the state’s recent efforts in this space. discuss in our recent publication, The 2025-26 Specifically, the proposed $20 million for the Budget: Proposition 98 Guarantee and K-12 Farm to School Incubator Grant Program would Spending Plan, the required Proposition 98 funding (1) provide schools with resources to implement level in the budget year is projected to exceed these practices and (2) help producers scale their the amounts needed to maintain existing school capacity to supply locally grown food to schools. programs. In response, the Governor’s budget The grant program has fully awarded funding proposal includes $3.4 billion in new discretionary received from previous budget packages and has a one-time spending for schools. This contrasts history of oversubscription. For instance, the most notably with the nonschool General Fund budget recent grant round had 499 applicants requesting condition, which is significantly more constrained. a total of $129 million, but only had sufficient While likely not all of the proposed CDFA activities funding to award $53 million to 195 grantees. would be eligible to be supported by Proposition 98 Additionally, the Governor’s proposal to provide funds, the Legislature could explore this option for $350,000 to continue the existing evaluation of the some components. Farm to School Incubator Grant Program could Climate Smart Technical Assistance Grants support future improvements and refinements to Do Not Directly Support Farm to School the program, and the proposed $1.6 million for Efforts. We have two concerns with the proposed statewide outreach would expand on the Office of $3 million for technical assistance grants. First, Farm to Fork’s existing efforts to support schools in this funding would not directly support producers adopting farm to school practices. seeking to participate in farm to school efforts. Legislature Could Explore How Farm to Rather, the grants would promote the adoption School Activities Might Be Incorporated of climate smart practices across all producers Into Other Programs and Funding for School in the state, regardless of their current or Nutrition. While the Legislature has provided planned involvement in farm to school initiatives. some modest amounts of General Fund for CDFA’s The department’s rationale for including this farm to school efforts in recent years, the vast request as part of this overall proposal is that majority of funding for meals that children receive supporting technical assistance might help develop at schools comes from the state’s Proposition 98 a wider procurement network of producers that school funding allotment and federal funds. In utilize these practices that can then serve schools. the current year, state and federal funds for the However, while the technical assistance grants School Nutrition program are estimated to total may help producers adopt beneficial practices— $4.6 billion. Moreover, over the past few years, www.lao.ca.gov 3 2025-26 BUDGET such as those that conserve water, reduce energy must provide to schools to meet Proposition 98 usage, and sequester carbon—they do not constitutional requirements, either as a part of or in directly support the adoption of farm to school addition to the existing School Nutrition program. practices: (1) procuring locally grown food for school meals and (2) engaging students in food MUSEUM OF TOLERANCE education activities. This distinction is important in a budget environment where the Legislature must Background be targeted in how it uses limited General Fund Overview of the Museum of Tolerance. resources to achieve its highest policy objectives. The Museum of Tolerance is a privately owned and Second, we find the proposal lacks detail on how operated museum in Los Angeles that is centered this funding would support specific outcomes. around combating prejudice and discrimination, In particular, pinpointing the specific benefits the with a focus on the history of the Holocaust. The technical assistance grants would deliver is difficult museum was established in 1993 by the Simon given that they could be used to support the Wiesenthal Center (a nonprofit organization) and adoption of a broad array of practices. features a variety of exhibits, hosts special events, and provides educational programs for youths Recommendations and adults. Reject Funding for Climate Smart Technical State Has Provided One-Time General Assistance Grants. We recommend the Legislature Fund Support for the Museum of Tolerance in reject the Governor’s proposal to provide $3 million Recent Years. The state has provided a number for climate smart technical assistance grants. In our of one-time General Fund appropriations through assessment, while the grants may help producers CNRA to support various improvements at the adopt beneficial practices, they do not directly museum over the past few years. These include: support implementation of farm to school practices. (1) $10 million in 2021-22 to build a new exhibit on Additionally, their broad scope makes it difficult to antisemitism, (2) $5 million in 2022-23 to support identify the specific benefits they might yield. In the museum repairs and to purchase and retrofit a bus context of limited General Fund resources, we do to deliver mobile learning services, (3) $2.1 million in not find that this proposal meets the high bar for 2023-24 to renovate the museum’s training center, ensuring funding is well-targeted and focused on and (4) $2 million in 2024-25 to support further achieving specified policy objectives. renovations at the training center. Additionally, Weigh Spending on Advancing Farm to the state provides $3 million annually in ongoing School Efforts Against Other General Fund Proposition 98 funds to the Los Angeles County Priorities. We find that the Governor’s proposal Office of Education to support anti-bias training to provide a combined $22 million in additional and professional development for education one-time funding to support farm to school professionals conducted by the museum. efforts—including the Farm to School Incubator Grant Program, the program assessment, and Governor’s Proposal statewide outreach—aligns with the state’s recent Provides $10 Million One-Time General efforts in this area and likely would help continue Fund for New Exhibit Extension and Museum progress on enhancing farm to school connections. Improvements. The Governor’s budget includes However, given General Fund constraints and the $10 million from the General Fund in 2025-26 uncertain budget context, we recommend that the through CNRA to support a variety of improvements Legislature weigh additional spending on advancing at the Museum of Tolerance. Of this amount, farm to school efforts against its other spending $6.3 million would be used to extend the themes priorities. To the degree this program remains a from the new antisemitism exhibit to the rest high priority for continued support, the Legislature of the museum, including installing interactive also could explore whether some of the activities and immersive learning features. The project could potentially be supported by funding the state is expected to be completed in June 2027. 4 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET The proposal also includes $2 million to make During its deliberations, we recommend that the improvements to the museum’s entryway, lobby, Legislature (1) view this proposal as a distinct set and memorial plaza. Those improvements are of projects and evaluate their merits independently expected to be completed in January 2026. of previously funded projects at the museum Both components would be funded solely by this and (2) consider whether improvements to proposal. The remaining funds from this proposal nonstate-owned infrastructure are a top priority would cover project overhead ($1.2 million) and given current budget constraints. CNRA administrative costs ($500,000). CALIFORNIA STATE PARKS LAO Comments LIBRARY PASS PROGRAM Proposal Related to Previously Funded Effort, but Represents New Projects. The administration Background indicates that the funding from this proposal would Library Pass Program First Established in not directly support the construction of the new 2021-22. The California State Parks Library Pass exhibit on antisemitism for which the state provided Program provides free access to state parks some funding in the 2021-22 budget. (That new through 33,000 passes that can be checked out exhibit is expected to be completed in October from public library branches throughout the state. 2025.) Instead, the new proposed funding would Passes can be checked out by all library card expand on the central themes of that exhibit by holders. The program was first established in adding new interactive and immersive learning 2021-22 when the state provided $3 million General features throughout the rest of the museum, Fund per year through 2023-24. An additional in addition to other unrelated improvements. $13.5 million was provided in 2022-23 to increase We therefore find that the Legislature should view the number of free passes available through this proposal as a new and distinct set of projects 2023-24. The 2024-25 budget included another and evaluate their merits accordingly. allotment of $6.5 million General Fund to extend the Key Question Is Whether Improvements program for one additional year. to Nonstate-Owned Infrastructure Are a Top California Also Offers Other Free Parks Priority Given Current Budget Constraints. Passes. In addition to the Library Pass Program, While supporting privately owned infrastructure may the state supports several other free parks pass provide benefits—such as making improvements programs with varying eligibility criteria. These to a museum with an important anti-discrimination include: (1) the Golden Bear Pass for individuals mission—it does not fall within the core over the age of 62 who meet certain income responsibilities of the state. This is a distinction that requirements as well as recipients of the California is particularly important in a budget environment Work Opportunity and Responsibility to Kids with limited General Fund resources where the state Program, Supplemental Security Income, and may find it challenging to address its own areas of Tribal Temporary Assistance for Needy Families; responsibility—such as infrastructure it owns and (2) the California State Park Adventurers Pass operates. Given that every dollar of new spending for fourth-graders and their families; and (3) the essentially requires offsetting reductions elsewhere Distinguished Veteran Pass for veterans who meet in the budget, the Legislature is in the position of certain criteria. needing to weigh the importance and value of the proposed spending for the Museum of Tolerance Governor’s Proposal against its other General Fund priorities. One-Time Funding for Additional Year of Library Pass Program. The Governor proposes Recommendation a transfer of $6.75 million from the General Fund Weigh Merits of Proposal Against Other to the State Park and Recreation Fund to continue General Fund Priorities. We recommend the the Library Pass Program for an additional Legislature assess whether the proposal aligns year in 2025-26. Funding would be used to with its highest priorities for General Fund. cover the estimated marginal costs for Parks to www.lao.ca.gov 5 2025-26 BUDGET accommodate the increase in visitors that result identified costs as a factor for not previously visiting from extending the program (such as to support state parks. Parks notes that while the program is staffing and maintenance). available throughout the state, the department has taken steps to increase access within lower-income LAO Comments communities by providing a larger proportion of As noted above, the budget context requires passes to library branches located in areas with that the Legislature apply a higher bar to its review high poverty index percentages. However, an of new spending proposals than it might in a year important consideration is that because the Library in which the General Fund has more capacity, as Pass Program is available to any Californian with new spending essentially comes at the expense of a public library card, it is not as closely targeted existing commitments. toward residents with particular demographics as Data Suggest Program Encourages Increased other free park pass programs the state operates. Park Visitation. While Parks has not collected For example, the Golden Bear Pass program is data on the number of times the passes have specifically designed to increase parks access been used to access state parks, it has conducted for lower-income residents. A key question for surveys to collect data from users of the program. the Legislature to consider is whether expanding Respondents indicate that as a result of the broad-based park passes to Californians of all program, they anticipate visiting state parks more income levels continues to be a priority for limited frequently and also that they are more likely to use General Fund resources. other library resources and services. Recommendation Program Improves Affordability for Weigh Proposal Against Other Budget Participants but Is Less Targeted Than Other Priorities. Survey data suggests the Library Parks Access Programs. Data that Parks has Pass Program has had some success at pursuing collected from surveys of program users indicate its goals of increasing access and encouraging that the program serves participants across a more widespread use of state parks. However, range of incomes, including those at the lower end. given the constrained General Fund condition, Specifically, the survey found that 23 percent of we recommend the Legislature consider whether respondents earn $30,000 or less; 19 percent earn providing funding to continue the broad-based between $30,001 and $60,000; 15 percent earn Library Pass Program for an additional year is between $60,001 and $90,000; and 11 percent among its highest budget priorities, particularly report earning between $90,001 and $120,000. given the state already supports other free parks (An additional 12 percent of respondents provided pass programs that are more targeted. other entries that were not quantified by Parks and 20 percent of respondents chose not to answer this question.) Among survey respondents, 64 percent 6 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET www.lao.ca.gov 7 2025-26 BUDGET LAO PUBLICATIONS This report was prepared by Frank Jimenez and Luke Koushmaro, and reviewed by Rachel Ehlers and Ross Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 8 LEGISLATIVE ANALYST’S OFFICE