2026-2027 California Budget Primer for Climate & Disaster Funders

Governor Newsom’s proposed 2026-27 state budget arrives at a critical crossroads, attempting to maintain the state’s climate commitment while navigating a multi-billion-dollar deficit and significant federal cuts across the board. With a potential vacuum in federal leadership for climate policy and action, Governor Newsom proposes a spending plan that shifts nearly $15 billion of climate funding away from the General Fund toward "special funds" and voter-approved bonds.  

This article aims to provide a focused summary of the climate change, environmental protection, and wildfire resilience elements of the proposed budget. While this is not meant to be an exhaustive analysis, our hope is that philanthropic funders tracking these key policy areas can use these insights to inform their strategic investments and decision making this year.  

For a more comprehensive analysis of the state budget, consider these analyses:  

• Western Center on Law and Poverty
• California Budget and Policy Center 
• California Pan-Ethnic Health Network 
• Greenlining Institute   
• State of California Governor’s Budget Summary 2026-2027  
• Legislative Analyst’s Office 

 

Overview of Trends 

 

Climate and disaster recovery continue to surface as core themes in the proposed budget, though the scale and structure of funding reflect both progress and constraint. The administration maintains investments tied to voter-approved climate programs, including support for community resilience and transformative climate initiatives that advance local mitigation and adaptation, such as green infrastructure, clean energy deployment, and community resilience centers that serve as critical hubs during extreme events. 

At the same time, overall climate funding remains volatile. Since 2022, the state’s broader climate budget has contracted, with significant reductions affecting areas like coastal resilience, wildfire preparedness, and renewable energy development. This pattern suggests that while core commitments remain intact, climate investments are increasingly shaped by fiscal pressures and competition with other budget priorities. This budgeting approach is often counter-productive to multi-year climate strategies that require consistent flows of capital to support movement through complex processes and to attract additional private and other investment.  

A notable trend in this proposal is the continued shift away from General Fund support toward climate bond and cap-and-invest revenues. While this approach reflects current fiscal realities, it introduces new risks. Market-based revenues are inherently volatile, and bond funds are finite. Once spent, they are not guaranteed to be replenished. Large bond-funded projects also often require substantial matching funds, which better-resourced jurisdictions are more equipped to secure, potentially widening capacity gaps between communities. 

The 2026–27 proposal allocates $2.1 billion in climate bond funding as year two of a multi-year investment plan. In this context, philanthropic strategies that help catalyze bond and market-based dollars, particularly through technical assistance for bond readiness, capital access, and bridge funding during carbon-price fluctuations, will be increasingly important, especially for rural and under-resourced communities. More detailed pathways for philanthropic engagement are outlined later in this brief. 

 

Energy & Decarbonization 

 

The Budget proposes $326 million to continue clean energy investments that support California’s evolving energy needs, reduce air pollution, and increase system reliability during climate-driven extreme weather events that strain the grid. These investments span public financing for clean energy projects and staffing support aimed at maintaining affordability protections for ratepayers, reflecting the growing interdependence of the grid, buildings, and transportation as electrification accelerates statewide.  

To protect California’s clean energy transition from potential federal rollbacks, the budget also proposes $200 million for Zero-Emission Vehicle (ZEV) incentives and $1.7 million to implement the “Advance Clean Fleets” rule. While transportation focused, these investments are closely linked to broader electrification goals with implications for grid reliability, emissions reductions, and affordability.  

 

Analysis: Tracking California’s Leadership in Mitigating Climate Change 

 

The proposed $200 million for ZEV incentives is a direct effort to stay on the California Air Resources Board (CARB) 2022 Scoping Plan trajectory to achieve carbon neutrality by 2045 and an 85% reduction in greenhouse gas emissions through acceleration of zero-emissions vehicle adoption and building decarbonization. The proposed budget attempts to defend California’s transition against potential federal rollbacks (e.g., shifts in federal EV tax credits). The state’s continued commitment to the clean energy sector builds upon momentum from historical investments in energy storage, equitable building decarbonization, and energy grid contingency programs since 2019. 

As electrification expands across sectors, the effectiveness of these investments will increasingly depend on complementary policies that manage grid impacts, protect ratepayers, and ensure that low-income households can access the benefits of clean energy and zero-emission technologies. 

 

Wildfire, Coastal, and Extreme Heat Resilience 

 

The Budget proposes $314 million to continue investments in various wildfire and forest resilience projects and programs. These include local fire prevention programs, fire resilience technical and financial assistance for homeowners in risk zones, and wildfire risk reduction related to energy transmission. The proposed budget continues to modernize CAL FIRE, treating wildfire response as a year-round necessity rather than a seasonal emergency. CAL FIRE will operate at peak staffing for nine months per year (previously four to five months) and at base staffing for three months per year. The new budget allocates funding toward expanded staffing and workforce development for forestry and fire protection, and surge capacity and equipment. A one-time $35.8 million investment will add new equipment to support the state's surge capacity. The budget includes $3 million in funding for the California Safe Homes Grant Program (AB 888). This program is designed to help low- and middle-income residents in high-risk zones (like those in LA) make their homes more insurable. This program provides grants for fire-resistant roofs and creating "Zone Zero" (a five-foot ember-resistant buffer around the house). 

Further, the Budget proposes $107 million for coastal resilience, safeguarding coastal economies, restoring biodiversity and natural areas, elevating tribal knowledge and stewardship, and improving public access. To address extreme heat, the Budget proposes $241 million to support implementation of the state’s Extreme Heat Action Plan with a focus on those most vulnerable to heat impacts. 

 

Analysis: From Seasonal Readiness to Year-Round Resilience 

 

The proposed Budget treats wildfire, coastal, and extreme heat resilience with similar (although unequal) urgency. From a labor perspective, the budget’s focus on CAL FIRE staffing is a landmark victory for firefighter unions and public safety partners. Reducing the work week to 66 hours and increasing year-round engine staffing will relieve pressure on an already-strained workforce. This shift recognizes climate change has ended a seasonal perspective of wildfire risk and recognized it as a year-round threat. A major structural change in this budget is the massive shift of CAL FIRE’s baseline operations (up to $1.25 billion) onto the Greenhouse Gas Reduction Fund (GGRF)—revenue generated from the state's Cap-and-Invest program. Historically, GGRF funds were meant for new climate innovation (like high-speed rail or community solar). Using them to pay for capital projects could slow down progress on the innovation and technology needed to hit the 2045 goals. There is limited explicit support for rebuilding from the January 2025 wildfires in Los Angeles. While the proposed budget mentions the State’s continued efforts to develop solutions, the only explicit mention of recovery funding is a one-time allocation of $22.9 million from the General Fund (Proposition 98) to support fire-impacted schools. 

The Budget’s coastal resilience commitments leave a gap for the local planning and staffing needed at the regional and municipal level to manage complex projects. Likewise, funding for extreme heat resilience is directed toward urban greening and nature-based solutions. While vital to long-term climate adaptation, these strategies can take years to provide results. As such, there remains a tension in the near-term to balance immediate needs for air conditioning, grid subsidies, and affordability protection for lower-income households. 

 

Water & Natural Resources 

 

The Budget proposes $792 million for water resilience, funding projects that improve water storage, replenish groundwater, improve conditions in streams and rivers, and complete various water resilience and water-related infrastructure projects. To meet the state’s climate and biodiversity goals, the Budget proposes a $199 million investment, of which $30 million will be invested to expand the planning and implementation of priority habitat restoration projects at the Salton Sea and create new public access opportunities. The Budget also includes significant investments that protect and sustain California State Parks and $89 million to support smart agriculture programs and projects. 

 

Analysis: Balancing Extraction with Environmental Protection 

 

With climate change causing "weather whiplash," these items support both hard and nature-based infrastructure that can handle both severe drought and intense flooding. By funding groundwater replenishment and stream restoration simultaneously, the state reduces the reliance on massive, centralized reservoirs and favors decentralized "nature-based" storage like aquifers and floodplains. Restoration of the Salton Sea, slated to become a global center for lithium mining, signals the state’s pre-emption of the need to offset anticipated extraction with environmental protection.  

 

Through the Lens of Climate Equity 

 

Many of the programs most often understood as “climate equity” investments are not grouped together in the budget, but instead spread across multiple agencies, special funds, and program areas. This fragmentation makes it difficult to track year-over-year trends or assess the state’s sustained commitment to environmental justice, community capacity building, and multi-benefit climate strategies.  

While the proposed budget maintains funding for several core climate and resilience programs, such as Transformative Climate Communities and Community Resilience Centers, these programs address overlapping climate equity challenges of pollution exposure, extreme heat, disaster risk, and emergency preparedness in frontline neighborhoods. However, the proposed budget stops short of fully matching the scale of need, particularly for communities facing the greatest climate and affordability pressures. The budget appears to underinvest in equity-centered clean transportation strategies that would expand access to zero-emission mobility for low-income households and communities of color. For example, the proposed ZEV incentive does not include funding for established equity-focused programs such as the Clean Trucks and Bus Voucher Incentive Project or the Clean Mobility Options program. Given transportation’s central role in emissions reduction and household costs, this approach risks slowing climate progress while reinforcing existing affordability burdens. This gap reflects a broader pattern in recent budgets, where equity-centered climate programs have experienced reductions or pauses, followed by partial reinstatements through one-time or voter-approved funds. While these infusions, such as those from Proposition 4, have helped stabilize key programs, they have not consistently replaced the scale or predictability of prior investments. 

More broadly, the budget reflects an ongoing tension between short-term fiscal constraints and the long-term imperative to invest upstream in climate resilience. Without scaling preventive, place-based climate investments in high-risk and historically underserved communities, the state is likely to face higher disaster response costs over time while perpetuating the inequities that leave certain Californians more exposed to climate impacts in the first place. 

 

Pathways for Philanthropic Support 

 

The budget allocates billions through the Climate Bond, but these funds are competitive and complex and are largely focused on near-term implementation strategies. One-time funding creates further uncertainty, and Philanthropy California has long maintained a stance that climate resilience requires sustained, multi-year funding that a year-to-year budget cycle can't always guarantee. 

Here are four strategic areas where philanthropy can maximize alignment with key budget provisions and safeguard against the impacts of gaps:  

1. Align Resources for Technical Support. Historically, under-resourced Tribes, rural, and frontline communities lose out to larger cities with professional grant-writing teams. Philanthropy can fund a statewide resource hub offering expert support for project development, funding navigation, compliance, and peer learning to amplify regional impact and strengthen coordination. 
2. Invest in Regional Capacity. Re-grant flexible funds to strengthen policy coordination, community-led planning, cross-sector partnerships, and implementation capacity in regions where momentum is building through the Transformative Climate Communities, Community Resilience Centers, and Regional Climate Collaboratives. Build revenue streams for community-grounded climate and disaster resilience initiatives beyond one-time grants. Communities also benefit from temporary bridge funding that allows them to utilize State dollars that are often paid on a reimbursement model. 
3. Leverage Regional Insights for Policy Action. Translate regional insights into statewide policy reforms that expand equitable access to public funding and ensure accountability to California's commitment that 40% of Proposition 4’s climate funds benefit frontline communities. Funders can support organizations conducting policy education and also bring their voice directly to conversations with administrative and legislative decision-makers.  
4. Protect Pre-Disaster Pipelines and Communities. Support local Fire Safe Councils and community-led mitigation efforts. Philanthropy can support research and development for home-hardening and community finance pilots that make high-risk areas more insurable—a crisis the current state budget only tracks but does not solve. 

For a broader overview of the proposed budget, see A Philanthropy Guide to Governor Newsom's Proposed 2026-2027 California Budget.

 

Contact Us: 

 

Lily Bui, PhD 
Director, Climate and Disaster Preparedness & Resilience 
SoCal Grantmakers 
lily@socalgrantmakers.org 

Kirin Kumar  
Director, Climate and Disaster Resilience 
NorCal Grantmakers  
kkumar@ncg.org 

Megan Thomas 
CEO/President 
Catalyst of San Diego & Imperial Counties 
megan@catalystsd.org 

Karla Mercado 
VP, Philanthropy California & Public Policy 
karla@socalgrantmakers.org