By NOAH BAUSTIN 

With help from Camille von Kaenel, Alex Nieves and Marisa Guerra Echeverria

CAP AND FUND: A Senate proposal to fund climate and other programs caught up in a fight over cash from the state’s emissions trading program is here.

The plan, released late Thursday by Senate Budget Chair John Laird and Sen. Eloise Gomez Reyes, who chairs the subcommittee overseeing environmental issues, is a stopgap measure that would allow lawmakers to tap $500 million in cap-and-invest revenues for transit, clean water and other legislative priorities, instead of using it to fund Cal Fire.

Newsom and lawmakers agreed in June to shift $1.25 billion this budget cycle from revenues generated through the sale of pollution allowance permits to help prop up the cash-strapped firefighting agency. In addition to that hit, lower-than-expected prices for emission permits have left lawmakers unhappy with the balance sheet for the Greenhouse Gas Reduction Fund, where the cap-and-invest dollars are deposited.

The Senate plan calls for reducing the planned infusion for Cal Fire to $750 million and diverting $500 million to the threatened programs. Lawmakers estimate that will bring the total amount of available GGRF revenues up to $1.128 billion.

The chamber also proposed phasing out an upcoming incentive that will let major polluters reduce the number of permits they need to buy by investing in low-emission technology. The California Air Resources Board’s decision to expand that manufacturing decarbonization incentive in May has driven fears that cap-and-invest will generate less revenue than expected in the future.

The largest chunk of spending in the Senate’s plan is $504 million to support various public transit programs. And along with funding for affordable housing, wildfire and air pollution, it includes $10 million in incentives for farmers who replace polluting equipment with lower-emissions ones. That farmer program was not included in a deal the Legislature passed last year to extend cap-and-invest.

The Senate will now need to introduce the plan in a budget trailer bill, and see if the Assembly is willing to come to the table. — AN

Published on POLITICO.