The 2026-27 Budget: Proposition 4 Spending Plan

analysis full 2026-27 BUDGET The 2026-27 Budget: Proposition 4 Spending Plan GABRIEL PETEK | LEGISLATIVE ANALYST | FEBRUARY 2026 SUMMARY Governor’s Budget Proposes $2.1 Billion in Proposition 4 Bond Funding in 2026-27. The Governor’s budget proposes appropriating $2.1 billion (about 21 percent of the total authorized by Proposition 4) in 2026-27. Unlike the Governor’s initial 2025-26 proposal, in general, the budget does not propose a multiyear spending plan for Proposition 4; the administration indicates that—in response to feedback from the Legislature—it instead will submit programmatic bond funding proposals on a year-by-year basis. The administration also proposes a new budget control section aimed at reducing the administrative burdens associated with implementing large-scale or state-administered Proposition 4-funded projects. Overall, Proposed Plan Seems Reasonable and Consistent With Bond Requirements. Based on our review, the Governor’s proposal appears reasonable. We have not identified any proposed actions or appropriations that conflict with bond requirements, and the timing of the funding allocations generally seems to account for and align with what we know about department capacity and local demand. Also, by proposing only one year of project funding at a time—rather than a multiyear spending plan—the Governor gives the Legislature more opportunities to review and weigh in on proposed bond funding and implementation on an annual basis. In addition, we find the administration’s proposed control section to be reasonable, although the Legislature might benefit from receiving summary information about the degree to which the provisions are used. Legislature Could Consider Clarifying Spending Guidance for New Programs and Activities. The Governor’s budget proposes providing Proposition 4 spending for several new programs and activities in 2026-27. While the Legislature did approve some funding for a few of these activities in 2025-26, notable discretion remains around how specifically the funds can and will be used. As such, these proposed appropriations represent a key opportunity for the Legislature to articulate its priorities and provide guidance about how specifically these funds will be spent, to the degree it has any. Absent such guidance, the Legislature is essentially deferring to the administration to make spending decisions. While none of the administration’s proposed activities raised specific concerns for us through our review, approving or modifying these proposals represents the Legislature’s opportunity to confirm and express its intent and priorities—which could differ from what the Governor is proposing. www.lao.ca.gov 1 analysis full 2026-27 BUDGET INTRODUCTION In July 2024, the Legislature approved spending and overarching comments on the Chapter 83 (SB 867, Allen), authorizing a $10 billion Governor’s proposal. In subsequent sections, bond measure entitled the “Safe Drinking Water, we walk through how the Governor proposes to Wildfire Prevention, Drought Preparedness, and allocate and implement funding within the bond’s Clean Air Bond Act of 2024.” Largely designed to eight spending categories, which are: increase the state’s resilience to the impacts of • Safe Drinking Water, Drought, Flood, and climate change, the measure was placed on the Water Resilience. statewide ballot as Proposition 4 and subsequently • Wildfire and Forest Resilience. approved by voters in November 2024. This bond • Coastal Resilience. measure builds on significant funding for climate-related programs—principally from the • Biodiversity and Nature-Based General Fund—the state has made in recent years. Climate Solutions. This brief begins with background on • Clean Energy. Proposition 4, including a description of the first • Park Creation and Outdoor Access. year of implementation funding authorized by the • Extreme Heat Mitigation. 2025-26 budget package. It then provides an • Climate Smart Agriculture. overview of the Governor’s proposed 2026-27 BACKGROUND Proposition 4 Authorizes $10 Billion in specifies the criteria for communities to meet General Obligation Bonds for Climate-Related those definitions.) Activities. Proposition 4 authorizes the state to • Funds must be prioritized for projects that sell a total of $10 billion in general obligation bonds leverage private, federal, or local funding or primarily for climate-resilience purposes, including provide the greatest public benefit. related to water, wildfire, and energy, among • On an annual basis, the California Natural others. The bond measure includes a number of Resources Agency (CNRA) must report requirements to guide how funds are administered information about projects’ objectives; status; and overseen by about 30 different state agencies, anticipated outcomes; expected public departments, boards, commissions, conservancies, benefits; and other basic information such as and offices. Much of the funding is to be awarded location, cost, and matching funds. through competitive grants to eligible applicants Legislature Appropriated $3.5 Billion in including local agencies, nonprofit organizations, Bond Funding for First Year of Implementation. tribes, and utilities. Remaining funding will support The 2025-26 budget package authorized the state-led activities, such as deferred maintenance state to spend $3.5 billion, or slightly more than and wildfire resilience activities at state parks and one-third, of the $10 billion total. This amount was projects at the Salton Sea. In addition, some key approved via three different 2025 budget actions: provisions apply to all programs and projects: (1) $181 million provided through Chapter 2 of 2025 • At least 40 percent of total funds must (AB 100, Gabriel) (these funds were available for go to projects that benefit vulnerable departments to spend during the final few months populations or disadvantaged communities of 2024-25), (2) $2.9 million through Chapter 5 and at least 10 percent of total funds of 2025 (AB 102, Gabriel), and (3) $3.3 billion must go to projects that benefit severely through Chapter 104 of 2025 (SB 105, Wiener). disadvantaged communities. (Bond language 2 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET The budget package also authorized nearly 80 new and departments to use the emergency rulemaking positions across 12 departments to administer process under the Administrative Procedure Act to Proposition 4-funded programs. Trailer bill develop and adopt their bond program guidelines language adopted in Chapter 106 of 2025 (AB 149, and selection criteria. Committee on Budget) also allowed state agencies GOVERNOR’S PROPOSAL Provides $2.1 Billion in 2026-27. As shown delivery”—funding scheduled for appropriation in in Figure 1, the Governor proposes appropriating future fiscal years to enable departments to hire $2.1 billion (about 21 percent of the total authorized and plan for program administration and oversight by Proposition 4) in 2026-27, including $792 million activities.) As illustrated in the figure, the share for water-related programs and $326 million of remaining funding the Governor proposes for clean energy programs. The proposal also appropriating in 2026-27 varies across each of includes funding for 14 new positions at three the individual bond categories. For example, departments—eight at the California Department of the proposal includes 71 percent of the total Fish and Wildlife (CDFW), five at the State Coastal remaining amount for extreme heat mitigation and Conservancy (SCC), and one at the Sierra Nevada a comparatively much lower 12 percent of the total Conservancy—to support the administration remaining amount for coastal resilience. of their bond programs. Unlike the Governor’s Proposes Budget Language Intended to initial 2025-26 proposal, in general, the budget Facilitate Large-Scale Projects and Reduce does not propose a multiyear spending plan for Administrative Burdens. The administration Proposition 4; the administration indicates that— proposes a new budget control section with in response to feedback from the Legislature—it two primary provisions aimed at reducing instead will submit programmatic bond funding the administrative burdens associated with proposals on a year-by-year basis. (The exception implementing large-scale or state-administered to this approach is that the proposal includes Proposition 4-funded projects. small amounts of state operations—or “program Figure 1 Governor’s Proposition 4 Proposal: 2026-27 Spending Plan (In Millions) 2026-27 Remaining Category Bond Total 2025-26 Proposed Balancea Safe Drinking Water, Drought, Flood, and Water Resilience $3,800 $1,199 $792 $1,809 Wildfire and Forest Resilience 1,500 598b 314 588 Coastal Resilience 1,200 279 107 814 Biodiversity and Nature-Based Climate Solutions 1,200 390 199 611 Clean Energy 850 275 326 249 Park Creation and Outdoor Access 700 466 35 199 Extreme Heat Mitigation 450 110 241 99 Climate Smart Agriculture 300 153 89 58 Totals $10,000 $3,470 $2,103 $4,427 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will be $75 million in total for all chapters of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. b $181 million of this amount was provided through Chapter 2 of 2025 (AB 100, Gabriel) and was available for administering departments to expend beginning in April 2025. Note: Numbers may not add up due to rounding. www.lao.ca.gov 3 analysis full 2026-27 BUDGET • Allows State Departments to Consolidate spending authority from the participating Multiple Proposition 4 Grant Program departments to the lead department. The lead Funds for Landscape-Level Projects. department would then work directly with The proposed control section would allow the grantee to complete the project with the state departments that each administer consolidated funding, including ensuring different Proposition 4 grant programs to compliance with bond requirements. jointly fund projects at a landscape and/or • Streamlines Inter-Department Grant multi-jurisdictional scale and consolidate Process for State-Administered Projects. funding, administration, and oversight under In some cases, one state department might one lead department. Under the proposed apply for and be awarded a Proposition 4 language, participating departments would grant from a different state department to identify an applicable project; select a lead undertake a project. To help avoid delays and department; and enter into agreements that, cash flow constraints that may arise from this among other details, would estimate the total process, the proposed control section would amount of funding needed for the project permit DOF to transfer the spending authority and the Proposition 4 contribution from each directly to the receiving department, rather entity. The lead department would notify the than that department needing to “front” the Department of Finance (DOF) once all of the money from its own budget and then request agreements are finalized and, if it approves and wait for reimbursement. the arrangement, DOF would transfer budget LAO OVERARCHING COMMENTS Overall, Proposed Plan Seems Reasonable grant programs, as we discuss in the paragraph and Consistent With Bond Requirements. below. Additionally, some departments with bond Based on our review, the Governor’s proposed funding to implement state-level projects such as 2026-27 spending plan for Proposition 4 appears deferred maintenance are assessing and prioritizing reasonable. We have not identified any proposed their projects before committing funding. Some actions or appropriations that conflict with bond departments also are trying to align their existing requirements, and the timing of the funding programs (that are supported with other funds) allocations generally seems to account for and align with their new bond programs to avoid duplication. with what we know about department capacity Other departments are working through more and local demand. The administration provided routine administrative tasks associated with reasonable workload justification for the new distributing the funding, such as procurement requested positions. Also, by proposing only one and contract negotiations. The Legislature could year of project funding at a time—rather than a consider using the budget subcommittee process multiyear spending plan—the Governor gives the to better understand these issues and, to the Legislature more opportunities to review and weigh extent steps could be taken to avoid some of these in on proposed bond funding and implementation delays, explore how best to help departments on an annual basis. address them. Previously Approved Funding Remains Many Programs Working Through Emergency Largely Unspent Thus Far. The administration Rulemaking Process. Departments continue to has indicated that a relatively small amount of work through the emergency rulemaking process Proposition 4 funding has been spent so far in authorized by AB 149, with at least four department 2025-26, due to several reasons. For example, emergency regulation packages for bond programs many departments still are working through the already approved and two others currently under emergency rulemaking process to develop their review. However, most departments were new to 4 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET the emergency rulemaking process and required the Governor proposes to appropriate $455 million some assistance and training to get it underway. in 2026-27. The largest of these proposed (Previous natural resources bonds included allocations is $323 million for the California language exempting bond-funded programs from Infrastructure and Economic Development needing to develop regulations through either the Bank (IBank) to provide public financing for emergency or traditional process.) For example, transmission projects. CNRA published guidance documents in While the Legislature did approve a cumulative September 2025 to help departments understand $186 million for some of these activities in the bond’s implementation requirements and 2025-26, we believe notable discretion remains provide them with best practices. CNRA then around how specifically the funds can and will be worked with the Office of Administrative Law used. As such, these proposed appropriations (OAL) to provide departments with training on represent a key opportunity for the Legislature to the emergency rulemaking process and to create articulate its priorities and provide guidance about a template for some grant programs. OAL also how specifically these funds should be spent, needed additional time to review some grant to the degree it has any. Absent such guidance, program regulations due to a lack of familiarity the Legislature is essentially deferring to the with departments’ existing program guidelines administration to make spending decisions. For and processes. Once departments submit example, some of the specific activities contained their proposed regulations to OAL and receive in the administration’s proposals—which are not approval, they generally expect to be able to use specified in or required by bond language—include: those documents for the duration of the program. • Nature, Climate Education, and Research (Any future changes to the program, however, Facilities Grants. The bond included similar would require revision and resubmission of the categories of funding in both the Water and regulations.) While the emergency rulemaking Parks chapters. In 2026-27, the administration process for many programs remains ongoing, the proposes combining funding from both bond Legislature also is in the process of considering chapters to run a competitive grant program AB 35 (Alvarez) which would exempt Proposition 4 for capital projects at education and research bond programs from the need to adopt regulations facilities. (The Legislature appropriated some and instead require administering departments to funding from these categories in 2025-26 for submit their proposed guidelines and processes several specific facilities.) to CNRA. • Fire Training Center. The bond language is For New Programs, Legislature Could not specific about how these training center Consider Clarifying Spending Guidance in funds must be used. The administration Statute. The Legislature designed Proposition 4 proposes using $2.5 million in 2026-27 and such that most of the funding will be allocated the entire remaining balance in the out-years through preexisting programs. However, a few to fund improvements at the California instances exist where the bond language allows Department of Forestry and Fire Protection’s for more discretion around exactly how funds will (CalFire’s) Ione Training Center. The be used. These include categories for which the remaining $2.5 million in 2026-27, together bond language allows funds to be used for multiple with $2.5 million from the amount approved potential activities, or for which funds are dedicated in 2025-26, would be used for CalFire’s for a new program or activity that does not have Prescribed Fire Learning Hub. an established framework in place. The Governor’s • Fuel Reduction, Structure Hardening, budget proposes providing Proposition 4 funding Defensible Space, Reforestation, and for several such new programs or activities in Acquisitions. This bond category sets aside 2026-27, as we summarize in Figure 2 on the next funding for a range of potential activities. page. As shown, these 11 programs represent The administration proposes providing $830 million of the bond’s authorized total, of which $20 million in 2026-27 to be used over the www.lao.ca.gov 5 analysis full 2026-27 BUDGET Figure 2 Governor’s Proposition 4 Proposal: New Programs and Activities (In Millions) Implementing Bond Bond 2026-27 Remaining Purpose Departments Category Total 2025-26 Proposed Balancea Nature, climate education, and research CNRA Water/Parks $45 $33 $10 $2 facilities Salton Sea Conservancy SSC Water 10 2 3 5 Fire training center CalFire Wildfire 25 3 5 17 Fuel reduction, structure hardening, CalFire Wildfire 50 30 20 — defensible space, reforestation, acquisitions Reduce wildfire risk related to electricity CalFire Wildfire 35 — 15 19 transmission San Andreas Corridor Program WCB Biodiversity 80 — 20 59 and NBS Public financing of transmission projects IBank Clean Energy 325 — 323 — Reducing climate impacts on disadvantaged CNRA/CDFW/ Parks 200 119 26 54 communities and expanding outdoor SMMC recreation Regional farm equipment sharing CDFA Agriculture 15 — 14 1 Tribal food sovereignty CDFA Agriculture 15 — 14 1 Increasing land access and tenure DOC Agriculture 30 — 5 25 Totals $830 $186 $455 $184 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will be $6 million in total for all of these programs. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. Note: Numbers may not add up due to rounding. CNRA = California Natural Resources Agency; SSC = Salton Sea Conservancy; CalFire = California Department of Forestry and Fire Protection; WCB = Wildlife Conservation Board; NBS = nature-based solutions; IBank = California Infrastructure and Economic Development Bank; CDFW = California Department of Fish and Wildlife; SMMC = Santa Monica Mountains Conservancy; CDFA = California Department of Food and Agriculture; and DOC = Department of Conservation. next three fiscal years for financial and proposals represents the Legislature’s opportunity technical assistance for homeowners to to confirm and express its intent and priorities— implement defensible space mitigations. which could differ from what the Governor is • Reducing Climate Impacts on proposing. For each new program, the Legislature Disadvantaged Communities and could use budget subcommittee hearings to ensure Expanding Outdoor Recreation. The bond it understands specifically what the administration language does not specify exactly how these is planning and request additional information if funds must be used. The administration would needed. To the extent the Legislature would like use $6 million of the proposed $26 million in to modify the proposal and/or specify spending 2026-27 to support a three-year stewardship guidance, it could do so in budget bill and/or program at the California Department of trailer bill language. Such language could help Parks and Recreation (Parks) to enhance the Legislature ensure its expectations for the use lands adjacent to and surrounding the former of this funding are upheld. We note that although Sonoma Developmental Center. the Salton Sea Conservancy is a new state entity, Chapter 771 of 2024 (SB 583, Padilla) and the terms None of the administration’s proposed activities of the funding provided in 2025-26 set direction for these funds raised specific concerns for us for the creation of the conservancy. Similarly, through our review. However, since in many cases Chapter 119 of 2025 (SB 254, Becker) established the administration’s proposed approach was not a structure for the new IBank energy infrastructure specifically articulated by the Legislature in the financing program that the Proposition 4 funds bond language, approving or modifying these 6 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET will support. These are examples of the type of interactions of the associated proposals. For supplemental statutory direction the Legislature example, it could explore the implications of funding could choose to adopt for other new programs. one proposal without approving the other (such Some Proposition 4 Programs Relate to as if the budget condition requires it to reject new Other Governor’s Budget Proposals. Some of proposed General Fund spending). the bond programs in the proposed spending plan Proposed Control Section Seems relate to other Governor’s budget proposals. For Reasonable, but Lacks Legislative Reporting. example, in addition to the proposed $20 million We find the administration’s proposed from Proposition 4 for CalFire’s defensible space control section to be reasonable. Easing mitigation grant program, the department is also departments’ ability to jointly fund landscape and requesting $6.2 million General Fund and 31 multi-jurisdictional projects would be consistent positions in 2026-27 (and a similar amount ongoing) with bond language that encourages these types to perform defensible space inspections. Similarly, of projects. Moreover, streamlining the funding the Department of Water Resources (DWR) is process for state-administered projects could help requesting $9.5 million in Proposition 1 (2014) departments undertake the work more quickly and funding along with $15.5 million in Proposition 4 efficiently. However, while the proposed control funding for a fish passage project in the San section requires notification and approval of DOF Joaquin River. As another example, DWR is before spending authority changes, it does not requesting $8.7 million from the General Fund include legislative notification. The Legislature might and $3.8 million from Proposition 4 to support benefit from receiving summary information about state operations associated with urban flood risk the degree to which the proposed control section reduction projects conducted with the federal is used—both to help it track project funding and government. To the extent Proposition 4-funded implementation, as well as to understand possible activities relate to other proposals in the budget, strategies for easing administrative burdens and we recommend the Legislature consider them in potential unintended consequences. tandem. This could allow it to assess the potential OVERVIEW OF SPECIFIC SPENDING CATEGORIES Below, we summarize how the Governor water recycling. The 2026-27 proposal emphasizes proposes to allocate and implement funding within three of these areas, while mostly deferring each of the bond’s eight spending categories. providing funding for the other two. Specifically, the Governor proposes providing $232 million for Safe Drinking Water, Drought, Flood, three flood programs, $173 million for drinking and Water Resilience water, and $78 million for water recycling, but only Proposition 4 authorizes a total of $3.8 billion for $20 million for groundwater management/instream water-related activities. As shown in Figure 3 on the flow and $2 million for dam safety (state operations next page, the Governor proposes to appropriate only). DWR indicates that it plans to request $792 million in 2026-27. After accounting for appropriation of most groundwater project funding the $1.2 billion appropriated in 2025-26, this in 2027-28 following engagement with groundwater would leave $1.8 billion (47 percent) available for sustainability agencies as well as public scoping future years. meetings in 2025-26 and development of guidelines and regulations in 2026-27. (Funding in 2026-27 Nearly two-thirds of this chapter of the bond is would support a DWR-led fish passage project dedicated to five program areas within DWR and that is part of the San Joaquin River restoration.) the State Water Resources Control Board (SWRCB): Additionally, DWR notes that it has been developing flood management, dam safety, groundwater guidelines and regulations for the Dam Safety management/instream flow, drinking water, and www.lao.ca.gov 7 analysis full 2026-27 BUDGET Figure 3 Governor’s Proposition 4 Proposal: Safe Drinking Water, Drought, Flood, and Water Resilience (In Millions) Code Implementing Bond 2026-27 Remaining Purpose Section Departments Total 2025-26 Proposed Balancea Water Quality, Safe Drinking Water $610 $194 $173 $238 Water quality, safe drinking water 91011(a) SWRCB $585 $183 $160 $237 Tribal water infrastructure 91011(a)(8)(B) SWRCB 25 11 13 0.8 Flood Risk and Stormwater Management $1,140 $419 $273 $439 Sacramento-San Joaquin Delta levees 91021(a) DWR $150 — $60 $89 Flood Control Subventions Program 91021(b) DWR 150 $123 24 1 State Plan of Flood Control projects 91021(c) DWR 250 63 148 37 Dam safety 91022 DWR 480 232 2 243 Urban stormwater management 91023 SWRCB 110 1 39 69 Rivers, Lakes, Streams; Watershed Resilience $605 $238 $96 $266 Integrated regional water management 91031 DWR $100 $0.5 $2 $97 Los Angeles River Watershed—Lower 91032(a) RMC 40 0.6 11 29 Los Angeles River Watershed—Upper 91032(b) SMMC 40 20 6 13 Riverine Stewardship Program 91032(c) DWR 50 1 5 44 Santa Ana River Conservancy Program 91032(d) SCC 25 10 0.2 14 Urban Streams Restoration Program 91032(e) DWR 25 1 11 13 Wildlife refuges and wetland habitat areas 91032(f) CNRA 25 0.2 0.2 24 Lower American River Conservancy Program 91032(g) WCB 10 3 — 7 Coyote Valley Conservation Program 91032(h) SCC 25 3 14 7 West Coyote Hills Program 91032(i) SCC 25 — 23 2 California-Mexico rivers and coastal waters 91032(j) SWRCB 50 47 0.7 2 Clear Lake Watershed 91032(k) CNRA 20 2 17 1 Salton Sea Management Program 91033(a) DWR/CNRA 160 148 3 7 Salton Sea Conservancy 91033(b) SSC 10 2 3 5 Streamflow Enhancement Program $150 $31 $11 $107 Streamflow Enhancement Program 91040(a) WCB $100 $21 $11 $68 Habitat Enhancement and Restoration 91040(b) WCB 50 11 0.5 39 Other $1,295 $317 $238 $730 Groundwater management, instream flow 91012(a) DWR $386 $30 $20 $334 Multibenefit Land Repurposing Program 91013 DOC 200 32 65 102 Water reuse and recycling 91014 SWRCB 386 153 78 152 Water Storage Investment Program 91015 CWC 75 74 — — Brackish desalination, salinity management 91016 DWR 63 0.2 0.6 61 Water data management, stream gages 91017 DWR 10 8 0.5 2 Water data management, stream gages 91017 SWRCB 5 0.4 0.7 4 Regional conveyance projects and repairs 91018 CNRA/DWR 75 3 69 3 Water conservation—agricultural and urban 91019 DWR 75 0.3 1 73 Nature, climate education, and research 91045 CNRA 20 15 4 1 facilities Totals $3,800 $1,199 $792 $1,780 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $28 million for the water-related chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. Note: Numbers may not add up due to rounding. SWRCB = State Water Resources Control Board; DWR = Department of Water Resources; RMC = San Gabriel and Lower Los Angeles Rivers and Mountains Conservancy; SMMC = Santa Monica Mountains Conservancy; SCC = State Coastal Conservancy; CNRA = California Natural Resources Agency; WCB = Wildlife Conservation Board; SSC = Salton Sea Conservancy; DOC = Department of Conservation; and CWC = California Water Commission. 8 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Program and will solicit proposals in 2026-27 using funding proposed over the next three fiscal years funding it received in the current year. Within flood to assist homeowners with defensible space programs, the budget proposes $60 million for mitigations. Some programs are also new, such as maintenance of Sacramento-San Joaquin Delta $15.2 million for CalFire (in coordination with the levees. Additionally, separate from Proposition 4, Office of Energy Infrastructure Safety) to undertake the budget proposes $14 million one time from the activities to reduce wildfire risk related to electricity General Fund for DWR to support habitat mitigation transmission. As we discuss earlier, this initial year that is required whenever Delta levee maintenance of program funding represents a key opportunity projects are undertaken. Without that support for the Legislature to weigh in on its priorities and for mitigation, DWR’s ability to proceed with provide guidance for how the administration should Proposition 4-funded levee maintenance projects target these expenditures. may be delayed. Coastal Resilience In other water-related Proposition 4 spending Proposition 4 authorizes a total of $1.2 billion for categories, the budget proposes $69 million (most coastal resilience activities. The budget proposes to of the $75 million total) for regional conveyance appropriate $107 million of this amount in 2026-27, projects and repairs. CNRA—which would administer the funding—indicates that two-thirds as shown in Figure 5 on page 11. Four programs administered by SCC account for 70 percent of the appropriation would support repairs to State of total authorized coastal-related funding. Water Project infrastructure damaged by land For these programs, the 2026-27 proposal largely subsidence. The budget proposes $39 million for consists of program delivery/state operations urban stormwater management (administered by funding, with the exception of $33 million for SWRCB)—the first major infusion of Proposition 4 coastal resilience projects, reflecting SCC’s plan funding for this purpose. SWRCB anticipates to allocate about $30 million annually over the issuing a grant solicitation in the fall of 2026. coming years through this program. Notably, Wildfire and Forest Resilience relative to other bond chapters, the administration Proposition 4 includes a total of $1.5 billion has proposed allocating a smaller share of total for a variety of activities related to wildfire and funding from the coastal resilience chapter of the forest resilience. Figure 4 on the next page bond across the first two years of Proposition 4 shows how the budget proposes to appropriate implementation—32 percent ($387 million). $314 million—21 percent—of this total in 2026-27. In contrast, when added to the 2025-26 amounts, The largest category of proposed funding is the administration’s proposals for 2026-27 would $58 million for CalFire to distribute local fire appropriate an average of about 59 percent of total prevention grants for community hazardous fuels authorized funding for other chapters of the bond. reduction and wildfire prevention projects. Other This distinction is due in part to SCC experiencing large categories of funding include $51 million unanticipated delays in the emergency rulemaking for the Department of Conservation’s Regional process and staffing capacity constraints to Forest and Fire Capacity program, $39 million administer bond funding. Because the conservancy for regional projects primarily administered by is still working on administering current-year CalFire, and $37 million for the forest health appropriations, the budget proposes relatively program. As noted earlier, CalFire’s separate modest funding in 2026-27 along with five new budget proposal to fund defensible space inspector positions to support implementation. positions on a permanent basis with General Fund interacts with the $19.6 million in Proposition 4 www.lao.ca.gov 9 analysis full 2026-27 BUDGET Figure 4 Governor’s Proposition 4 Proposal: Wildfire and Forest Resilience (In Millions) Code Implementing Bond 2026-27 Remaining Purpose Section Departments Total 2025-26 Proposed Balancea Wildfire Mitigation Grant Program 91510 OES $135 $13 $26 $95 Regional Forest and Fire Capacity Program 91520(a) DOC 185 10 51 123 Regional projects 91520(b) CalFire, SMMC, 170 91b 39 38 SNC Forest health program 91520(c) CalFire 175 92c 37 45 Local fire prevention grants 91520(d) CalFire 185 81 58 45 Fire training center 91520(e) CalFire 25 3 5 17 Forest health and watershed projects 91520(f) Parks 200 33 33 132 Fuel reduction, structure hardening, 91520(g) CalFire 50 30 20 — defensible space, reforestation, acquisitions Watershed improvement, forest health, 91520(h) SNC 34 31d — 2 biomass utilization, chaparral and forest 91520(i) TC 26 24d — 1 restoration, and workforce development 91520(j) SMMC 34 32d — 1 91520(k) SCC 34 31d — 2 91520(l) RMC 34 31d — 2 91520(m) SDRC 26 24d — 2 91520(n) WC 15 14d — 1 91520(o) CFF 15 14d — 1 Infrastructure for vegetative waste 91530 DOC 50 11 15 24 Fire ignition detection technology 91535 CalFire 25 23 2 — Reducing risk from electricity transmission 91540 CalFire 35 — 15 19 Demonstrated jobs projects 91545(a) CCC 50 10 12 28 Totals $1,500 $598 $314 $577 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $11 million for the Wildfire and Forest Resilience chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. b Of the $91 million for regional projects in 2025-26, CalFire received $31 million, SMMC received $15 million, and SNC received $45 million. c Of the $92 million for the forest health program in 2025-26, $10 million was included for the Karuk Tribe fire resiliency center from Chapter 2 of 2025 (AB 100, Gabriel) and was available to expend beginning in April 2025. d Provided through AB 100 in 2024-25. Note: Numbers may not add up due to rounding. OES = Governor’s Office of Emergency Services; DOC = Department of Conservation; CalFire = California Department of Forestry and Fire Protection; SMMC = Santa Monica Mountains Conservancy; SNC = Sierra Nevada Conservancy; Parks = California Department of Parks and Recreation; TC = Tahoe Conservancy; SCC = State Coastal Commission; RMC = San Gabriel and Lower Los Angeles Rivers and Mountains Conservancy; SDRC = San Diego River Conservancy; WC = Wildfire Conservancy; CFF = California Fire Foundation; and CCC = California Conservation Corps. Biodiversity and Board (WCB) for protection and enhancement of Nature-Based Climate Solutions fish and wildlife resources and habitats. Of this amount, the budget proposes that WCB provide Proposition 4 authorizes a total of $1.2 billion DWR with $30 million for priority habitat projects for activities in the biodiversity and nature-based and new public access opportunities at the Salton climate solutions chapter. The budget proposes Sea. The Salton Sea Management Program to appropriate $199 million in 2026-27, as shown (which includes projects led by DWR) is under a in Figure 6 on page 12. After accounting for tight schedule mandated by SWRCB to complete previously appropriated and proposed funds, nearly 30,000 acres of habitat projects by 2028 to $602 million (51 percent) would remain for future address a receding shoreline and the public health years. The largest proposed appropriation in problems caused by resulting toxic airborne dust. 2026-27 is $111 million to the Wildlife Conservation 10 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Figure 5 Governor’s Proposition 4 Proposal: Coastal Resilience (In Millions) Code Implementing Bond 2026-27 Remaining Purpose Section Departments Total 2025-26 Proposed Balancea Coastal resilience projects and programs 92010(a) SCC $330 $63 $33 $232 San Francisco Bay programs 92010(b) SCC 85 41 0.7 43 Coastal/flood management for developed 92015 SCC 350 33 2 312 shoreline Ocean and coastal resilience 92020 OPC 135 23 15 96 Implementing SB 1 92030 OPC 75 20 26 29 Implementing Sea Level Rise Adaptation 92040 Parks 50 24 0.3 25 Strategy Island ecosystems; fisheries; kelp ecosystems 92050 CDFW 63 24 10 28 Island ecosystems; fisheries; kelp ecosystems 92050 OPC 12 12 — — Dam removal and water infrastructure 92060 SCC 75 35 0.6 39 Hatchery upgrades, Central Valley Chinook 92070 CDFW 25 5 20 — salmon Totals $1,200 $279 $107 $804 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $9 million for the Coastal Resilience chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. Note: Numbers may not add up due to rounding. SCC = State Coastal Conservancy; OPC = Ocean Protection Council; SB 1 = Chapter 236 of 2021 (SB 1, Atkins); Parks = California Department of Parks and Recreation; and CDFW = California Department of Fish and Wildlife. The budget also proposes $20 million to WCB for Park Creation and Outdoor Access the San Andreas Corridor Program. However, WCB Proposition 4 includes a total of $700 million for notes that it is awaiting additional direction from a variety of activities related to supporting park the Legislature about the geographic scope of this creation and outdoor access activities. Figure 8 new program. on page 13 shows how the budget proposes to appropriate $35 million—5 percent—of this total in Clean Energy 2026-27. This total and proportion are notably lower Proposition 4 includes a total of $850 million compared to most other bond chapters, in large for activities related to clean energy. As part because a relatively large share of funding shown in Figure 7 on page 13, the Governor was provided in 2025-26. The largest category of proposes to allocate almost 40 percent of this funding in 2026-27 is $26 million for projects largely total—$326 million—in 2026-27. Nearly all this implemented by CDFW (with some funding for funding—$323 million—is proposed for IBank to Parks) that expand outdoor recreation and reduce implement a new transmission financing program climate impacts on disadvantaged communities. established pursuant to SB 254. In addition to The other notable category of funding is $6 million these bond funds, pursuant to Chapter 117 of for nature, climate education, and research facilities 2025 (AB 1207, Irwin), this new transmission administered by CNRA. financing program is slated to receive 5 percent of the proceeds from the sale of the cap-and-invest allowances that are provided to electric investor-owned utilities through July 1, 2031. The Governor proposes to defer the allocation of the remaining $241 million of bond funds for offshore wind-related projects to a future year. www.lao.ca.gov 11 analysis full 2026-27 BUDGET Figure 6 Governor’s Proposition 4 Proposal: Biodiversity and Nature-Based Climate Solutions (In Millions) Code Implementing Bond 2026-27 Remaining Purpose Section Departments Total 2025-26 Proposed Balancea Fish and Wildlife Resources and Habitats $870 $297 $153 $414 Fish and wildlife resources and habitats 93010 WCB $668 $256 $111 $296 Wildlife crossings and corridors 93030 WCB 100 21 21 58 San Andreas Corridor Program 93030 WCB 80 — 20 59 Southern Ballona Creek watershed 93050 WCB 22 20 2 — Climate Change Risk Reduction and Public Accessb $320 $84 $46 $188 Baldwin Hills Conservancy 93020(a)(1) $48 $13 $0.4 $34 California Tahoe Conservancy 93020(a)(2) 29 5 4 20 Coachella Valley Mountains 93020(a)(3) 11 2 2 6 Conservancy Sacramento-San Joaquin Delta 93020(a)(4) 29 4 15 9 Conservancy San Diego River Conservancy 93020(a)(5) 48 8 0.2 39 San Gabriel and Lower Los Angeles 93020(a)(6) 48 10 11 26 Rivers and Mountains Conservancy San Joaquin River Conservancy 93020(a)(7) 11 5 5 0.4 Santa Monica Mountains Conservancy 93020(a)(8) 48 25 7 15 Sierra Nevada Conservancy 93020(a)(9) 48 10 0.1 38 Tribal Nature-Based Solutions $10 $9 $0.2 $0.4 Tribal Nature-Based Solutions Program 93040 CNRA $10 $9 $0.2 $0.4 Totals $1,200 $390 $199 $602 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $9 million for the Biodiversity and Nature-Based Climate Solutions chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. b The applicable conservancy is the implementing department. Note: Numbers may not add up due to rounding. WCB = Wildlife Conservation Board and CNRA = California Natural Resources Agency. Extreme Heat Mitigation administrative funding for CNRA’s Urban Greening Program, leaving the remaining balance of Proposition 4 includes a total of $450 million $52 million to be appropriated in a future year. for a range of extreme heat mitigation programs. As shown in Figure 9 on page 14, the Governor’s Climate Smart Agriculture budget proposes to appropriate $241 million in Proposition 4 includes a total of $300 million 2026-27—54 percent of the total from this chapter for a variety of activities related to supporting of the bond. Under the proposal, the Governor’s climate smart agriculture. Figure 10 on page 14 Office of Land Use and Climate Innovation shows how the budget proposes to appropriate would receive $217 million in the budget year to $89 million—30 percent—of this total in 2026-27. administer three extreme heat and community The largest category of funding is $26 million to resilience programs, with the largest allotment for improve the climate resilience of agricultural lands the Transformative Climate Communities Program through the Healthy Soils Program administered ($137 million). This represents a noticeable ramp-up by the California Department of Agriculture (CDFA). and first year of Proposition 4 grant funding for this Other notable appropriations include $20 million program, which was allocated $1 million to support to support farmers’ markets, $14 million for a initial planning activities last year. Another major new regional farm equipment sharing program, recipient of the proposed funding for 2026-27 is and $14 million for a new tribal food sovereignty CalFire’s urban forests program ($23 million). The program—all administered by CDFA. Governor’s proposal includes a small amount of 12 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Figure 7 Governor’s Proposition 4 Proposal: Clean Energy (In Millions) Code Implementing Bond 2026-27 Remaining Purpose Section Departments Total 2025-26 Proposed Balancea Public financing of transmission projects 94520 IBank $325 — $323 — Distributed Energy Backup Assets 94530 CEC 50 $47 0.5 $2.5 Development of offshore wind generation 94540 CEC 475 228 3 241 Totals $850 $275 $326 $243 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $6 million for the Clean Energy chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. Note: Numbers may not add up due to rounding. IBank = California Infrastructure and Economic Development Bank and CEC = California Energy Commission. Figure 8 Governor’s Proposition 4 Proposal: Park Creation and Outdoor Access (In Millions) Code Implementing Bond 2026-27 Remaining Purpose Section Departments Total 2025-26 Proposed Balancea Statewide Park Program 94010(a) Parks $200 $190 $2 $7 Reducing climate impacts on 94020 CDFW, CNRA, 200 119c 26c 54 disadvantaged communities and Parks, SMMCb expanding outdoor recreation Enhancing natural resource value and 94030 CNRA, SCC, WCBb 100 56d 0.7d 43 expanding trail access Deferred maintenance 94040 Parks 175 84 0.4 89 Nature, climate education, and research 94050 CNRA 25 17 6 1 facilities Totals $700 $466 $35 $194 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $5 million for the Park Creation and Outdoor Access chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. b Other CNRA departments also may be implementing departments. c Of the $119 million for reducing climate impacts on disadvantaged communities and expanding outdoor recreation in 2025-26, CDFW receives $10 million, Parks receives $107 million, and SMMC receives $2 million. Of the $26 million in 2026-27, CDFW receives $20 million and Parks receives $6 million. d Of the $56 million for enhancing natural resource value and expanding trail access in 2025-26, SCC receives $51 million and WCB receives $5 million. In 2026-27, SCC receives $700,000. Note: Numbers may not add up due to rounding. Parks = California Department of Parks and Recreation; CDFW = California Department of Fish and Wildlife; CNRA = California Natural Resources Agency; SMMC = Santa Monica Mountains Conservancy; SCC = State Coastal Commission; and WCB = Wildlife Conservation Board. www.lao.ca.gov 13 analysis full 2026-27 BUDGET Figure 9 Governor’s Proposition 4 Proposal: Extreme Heat Mitigation (In Millions) Code Implementing Bond Previous 2026-27 Remaining Purpose Section Departments Total Years Proposed Balancea Extreme Heat and Community Resilience 92510 LCI $50 $23 $24 $2 Program Transformative Climate Communities Program 92520 LCI 150 1 137 11 Urban Greening Program 92530 CNRA 100 47 0.7 52 Urban forests 92540 CalFire 50 0.5 23 26 Community resilience centers 92550 LCI 60 0.8 55 3 Fairground upgrades 92560 CDFA 40 38 0.7 1 Totals $450 $110 $241 $96 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $3 million for the Extreme Heat Mitigation chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. Note: Numbers may not add up due to rounding. LCI = Governor’s Office of Land Use and Climate Innovation; CNRA = California Natural Resources Agency; CalFire = California Department of Forestry and Fire Protection; and CDFA = California Department of Food and Agriculture. Figure 10 Governor’s Proposition 4 Proposal: Climate Smart Agriculture (In Millions) Code Implementing Bond 2026-27 Remaining Purpose Section Departments Total 2025-26 Proposed Balancea Climate Resilience of Agricultural Lands $105 $74 $27 $4 Soil health and carbon sequestration 93510(a) CDFA $65 $36 $26 $3 State Water Efficiency and Enhancement 93510(b) CDFA 40 38 0.7 1 Program Food Systems and Market Access $90 $38 $48 $3 Certified mobile farmers’ markets 93540(a) CDFA $20 $10 $10 $0.7 Year-round certified farmers’ markets 93540(b) CDFA 20 9.6 9.6 0.7 Urban agriculture projects 93540(c) CDFA 20 18.8 0.4 0.7 Regional farm equipment sharing 93540(d) CDFA 15 0.2 14 0.6 Tribal food sovereignty 93540(e) CDFA 15 0.2 14 0.6 Other $105 $42 $15 $48 Invasive Species Account 93520 CDFA $20 $20 — — Conservation and enhancement of farmland 93530 DOC 15 7 $0.2 $8 and rangeland Increasing land access and tenure 93550 DOC 30 — 5 25 Deployment of vanpool vehicles and facilities 93560 CalVans 15 — — 15 Research farms at postsecondary education 93570 CDE 15 15 — — institutions Low-Income Weatherization Program— 93580 CSD 10 0.2 9 0.2 farmworker housing Totals $300 $154 $89 $55 a Amounts displayed are reduced by the estimated statewide bond costs, which the administration estimates will total $2 million for the Climate Smart Agriculture chapter of the bond. The remaining balance also includes program delivery and state operations costs, some of which are scheduled for appropriation in future fiscal years. Note: Numbers may not add up due to rounding. CDFA = California Department of Food and Agriculture; DOC = Department of Conservation; CalVans = California Vanpool Authority; CDE = California Department of Education; and CSD = Department of Community Services and Development. 14 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET www.lao.ca.gov 15 analysis full 2026-27 BUDGET CONTACTS Brian Metzker Overarching Comments Brian.Metzker@lao.ca.gov Wildfire and Forest Resilience (916) 319-8354 Parks and Outdoor Access Climate Smart Agriculture Sonja Petek Water, Drought, Flood Sonja.Petek@lao.ca.gov Coastal Resilience (916) 319-8324 Biodiversity and Nature-Based Solutions Helen Kerstein Clean Energy Helen.Kerstein@lao.ca.gov (916) 319-8364 Gökçe Sencan Extreme Heat Mitigation Gokce.Sencan@lao.ca.gov (916) 319-8329 LAO PUBLICATIONS This report was 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. 16 LEGISLATIVE ANALYST’S OFFICE