Climate Change-Driven Storms Could Make Newsom’s Climate Spending Problems Worse

Back on Jan. 10, in the middle of a historic series of rainstorms in both the northern and southern regions of California, Gov. Gavin Newsom announced that his new budget would cut $4 billion from the state’s planned spending to combat climate change. Now, those storms—which themselves appeared to be driven by climate change—are making Newsom’s budget headaches worse.

Here’s why.

The storms caused damage estimated to cost between $5 billion and $7 billion, according to the financial services firm Moody’s. Even more tragically, the historic rainfall claimed 22 lives statewide, in counties ranging from Mendocino in the north all the way down to San Bernardino County in Southern California, according to a report by the Los Angeles Times. 

With much of the state continuing to recover from the January downpours, the Internal Revenue Service on Feb. 24 extended the 2023 income tax filing deadline from April 18 to October 16, after previously pushing it to May 15. The extended deadline applies to all but 13 of California’s 58 counties. Seven of the state’s 10 most populous counties will receive the extension. 

The IRS extension appears to have forced Newsom’s hand. On March 2, less than a week after the IRS granted the federal tax filing extension, Newsom said that the state would be “aligning” with the Biden administration, and extending the deadline for filing state income taxes to Oct. 16 as well.

Newsom had already extended filing deadlines for individuals and businesses who were directly affected by storm damage, as well as allowing those taxpayers to claim new income deductions for financial losses suffered due to the damage.

But as Newsom and the state legislature attempt to come up with a budget that accounts for shortfalls that began to become evident in 2022, when the state’s previously projected $97 billion budget surplus rather suddenly took a wrong turn into a $25 billion deficit. Under the surplus projections, the state had allocated money for a wide range of benefits and social services such as expansion of Medi-Cal eligibility, allowing even undocumented immigrants to receive health insurance at no cost through the joint state-federal public program known nationally as Medicaid. 

The legislature also approved Newsom’s plan to spend $54 billion on efforts to slow climate change, the phenomenon believed to lead both to extreme storms and to the punishing drought that has gripped the state for decades. According to NASA’s Center for Climate Sciences, every increase in oceanic surface temperatures of one degree Centigrade, the frequency of extreme storms jumps by 21 percent. At the same time, a study published last year in the scientific journal Nature found that 42 percent of the extended drought since the turn of the current century can be attributed to human-caused increase of global temperatures. 

Newsom now wants to slash $4 billion from his own climate spending program. But that total and other areas of the budget may now take a further hit thanks to the extended tax deadlines being offered in response to the climate change-driven storms.

Lawmakers and the governor generally figure out the state budget, which takes effect on July 1, based on tax revenues that come in with the traditional April deadline. But the extended state tax deadlines mean that state coffers won’t see their annual influx of cash until later in the year, more than three months after the budget takes hold.

"We're going to have to make more projections and assumptions because the cash we could normally have in the bank in April, we’re not going to receive until mid-October," H.D. Palmer, a spokesperson for Newsom's financial policy, told Sacramento TV station KCRA. 

But even with the extended tax filing deadlines, Newsom’s and the state’s deadlines for completing the budget process are determined by state law and will not change, Palmer added.