By Luis Carmona, Resource Development Coordinator, CRWA
The initially proposed budget emphasized fiscal stability, strategic investment, and a balanced approach to statewide funding. This would include a $2.65 billion allocation to the Proposition 4 Climate Bond. On May 14, 2025, the Office of the Governor of California released its revision to the initially proposed $322 billion California State Budget, which projected a $12 billion deficit. To address the shortfall, the Governor’s Office proposes a combination of program reductions, borrowing and fund reallocations. Despite these challenges, climate-related investments remain a priority, with plans to continue investing in clean energy, wildfire protection, and water-related initiatives. Notably, the Climate Bond remains mostly unchanged, with originally proposed reallocations from the General Fund to the Bond being slightly increased.
Implementation of the Proposition 4 Climate Bond
Beginning in Fall 2025, approximately $1.07 billion in Proposition 4 Climate Bond funds are expected to be released for Safe Drinking Water, Drought, Flood & Water Resilience efforts. The initial plan focuses primarily on initiating new programs under the Bond. Early funding will support research of potential beneficiaries’ needs and plan stakeholder discussions to identify new initiatives.
The initial strategy for the 2025–2026 fiscal year will also strengthen current programs funded by various Bond measures, Greenhouse Gas Reduction Fund investments, and General Funds Appropriations. These programs will be adjusted to align with updated Bond requirements as necessary.
Integrated Regional Water Management (IRWM) Update
As part of the Proposition 4 Climate Bond, Senate Bill 867, which was signed into law in 2024, directs $100 million to the Department of Water Resources (DWR) by Fiscal Year 2027–2028 to support Integrated Regional Water Management (IRWM) efforts. Of that total, fund allocations are planned as follows:
- $500,000 in Fiscal Year 2025–2026
- $3 million in Fiscal Year 2026–2027
- $96 million in subsequent years
Section 91031 of the bill specifies that funds will support watershed-based climate resilience projects under updated IRWM guidelines. DWR will revise program criteria as needed to address climate risk impacts.
As noted previously, the initial year will support the development of current grant programs, determine the needs for technical assistance from potential beneficiaries, and continue to support for water conservation projects—particularly those benefiting disadvantaged communities.
For further information on the 2025–2026 CA State Budget or the Proposition 4 Climate bond expenditure plan, please contact lcarmona@calruralwater.org