For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE –
“I thank our legislative leaders for their partnership in taking this major step to address the shortfall with a balanced approach”
Gov. Newsom, on the first budget deficit action
“This deal is a swing and a miss. California’s budget has major league problems and Newsom is proposing JV solutions”
Assembly Republican Leader James Gallagher
- Governor, Legislative Leaders Agree On $17 Billion in Cuts & Delays to Reduce Budget Deficit
- California Economy May Drop to 6th Place on the Globe
- Budget Deficit Tests Progressives
- Legislative Leaders Come from Rural Areas; 1st Time in Half Century
- Business Coalition Puts Tax Vote Restructure on Ballot: “Full Steam Ahead” v. Newsom & Unions
- Former State Controller Yee Runs for Governor
- After Strikes, Movie Show Biz Takes its Act on the Road
- Wet Winter 2.0 Boosts Water Supply
- Farmers Could Save Water By Planting Different (Less Lucrative) Crops
Capital News & Notes (CN&N) curates California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING APRIL 5, 2024
Governor, Legislative Leaders Agree On $17 Billion in Cuts & Delays to Reduce Budget Deficit
CalMatters
Salary savings from open positions in state government, cutting welfare programs that serve tens of thousands of families, delaying funding for public transit — these are some of the first steps that California officials plan to take to deal with a looming multibillion-dollar budget deficit.
Facing a shortfall estimated at somewhere between $38 billion and $73 billion next year, Gov. Gavin Newsom and legislative leaders announced today an “early action” plan to tackle part of that gap before the regular budget process later this spring.
The $17.3 billion package includes some program cuts, but mostly relies on new revenue, internal borrowing and funding delays and shifts for savings. It is expected to come up for a vote in the Legislature next week.
“I thank our legislative leaders for their partnership in taking this major step to address the shortfall with a balanced approach that meets the needs of Californians and maintains a strong fiscal foundation for the state’s future,” Newsom, who has been calling for early budget action since January, said in a statement.
Among the major proposals are a nearly $4 billion expansion of a tax on health insurance plans that allows the state to draw matching federal funds; delaying $1 billion for transit infrastructure and $550 million for preschool, transitional kindergarten and full-day kindergarten facilities; shifting $1.8 billion of cap-and-trade revenue, intended to reduce greenhouse gas emissions, to backfill other programs; and reducing funding for state departments by more than $760 million, based on their vacant positions, while deferring another $1.6 billion in employee pay.
The strategy faces criticism from Republicans, who called it “gimmicky,” though they do not have the votes to block the plan, which requires only a simple majority.
“This deal is a swing and a miss from Democrats. California’s budget has major league problems and Newsom is proposing JV solutions,” Assembly Republican Leader James Gallagher of Chico said in a statement. “With a $73 billion deficit, this gimmicky agreement is not the homerun Gavin thinks it is.”
Under the early action plan, a school facilities program and several climate initiatives will be cut, as will about $337 million in remaining funding for two welfare services that subsidize employment and that provide cash assistance, transitional housing and counseling to families in crisis.
It also includes language to freeze one-time funding from past years and an agreement to tap into half of the state’s reserves in the upcoming budget.
“We are all committed to delivering an on-time balanced budget and this early action agreement is a critical first step to shrink the state’s shortfall,” McGuire said in a statement.
They are far from finished. Next up, Newsom will present his revised budget proposal in May. That will kick off a month of deliberation with the Legislature, which must pass a balanced budget by June 15 or forgo its pay.
“We expect the Governor to deliver challenging budget proposals next month to reduce the deficit in the long-term, and we’ll consider them carefully,” Rivas said in a statement. “Together, we can deliver real solutions for hard-working Californians.”
https://calmatters.org/politics/capitol/2024/04/budget-deficit-california-deal/
State Senate Summary:
California Economy May Drop to 6th Place on the Globe
Sacramento Bee
In 2022, Bloomberg News Editor-in-Chief Emeritus Matthew Winkler predicted that California could soon overtake Germany to become the world’s fourth largest economy.
Gov. Gavin Newsom touted that prediction in a statement, saying at the time, “While critics often say California’s best days are behind us, reality proves otherwise — our economic growth and job gains continue to fuel the nation’s economy.”
But according to a special report from the California Center for Jobs and the Economy, an affiliate of the California Business Roundtable, not only is No. 4 not in the cards, but the Golden State might soon actually slip to No. 6.
According to U.S. Bureau of Economic Analysis data, the California real gross domestic product (GDP) rose 3.1% in the fourth quarter of 2023, below the U.S. average of 3.4% and 29th highest among states. For 2023 as a whole, California’s real GDP rose 2.1%, below the U.S. average of 2.5% and 32nd highest among states.
“While the latest results show improvement, California’s sub-par GDP performance in 2022 and 2023 underlies much of the sharp drop in revenues the state is now experiencing,” according to the center’s analysis.
Other economists have also predicted modest growth. California in February had the nation’s highest unemployment rate. And, the UCLA Anderson economist forecast said in its report last month, “the California economy is forecasted to continue to grow faster than the U.S. but not by much.”
According to the Center for Jobs report, the declining GDP is a result of a weakening tech sector in the state.
California’s preliminary 2023 GDP was $3.8 trillion, putting the state at No. 5 in the world according to the International Monetary Fund (IMF). However, that was only 3.5% larger than No. 6-ranked India.
“At its current rate of growth and using the IMF projects, California would slip below India in 2024,” the report said.
While the results are based on the October 2023 IMF report, they will be updated when the spring edition is released this month.
Reached for comment, Newsom’s office released a statement saying that “California is the tent pole of the American economy in terms of innovation and entrepreneurial spirit — creating more jobs than any other state over the past three years, minting more millionaires than ever before, leading the global AI race, and being the conveyor belt for talent through our world-leading public university systems.”
Budget Deficit Tests Progressives
CalMatters commentary by Dan Walters
It’s crunch time for California’s progressive activists.
The state’s much-changed financial circumstances are reflected in a legislative agenda issued recently by the Building the California Dream Alliance, a coalition of dozens of progressive organizations. Were the state enjoying the huge budget surpluses that Newsom erroneously proclaimed two years ago, the coalition would be proposing new or expanded programs.
Instead, all but a couple of the 28 items on its new agenda would not cost the state budget anything, but rather would affect policies in the private economy, in schools, in courts and in medical care.
One example: Senate Bill 1446 would make it more difficult for retailers to reduce their staffs by installing self-checkout systems.
Meanwhile, another progressive organization, the California Budget and Policy Center, staged a webinar on Tuesday to beat the drums for raising taxes to avoid reductions in social and medical services this year and in following years when additional deficits are anticipated.
The organization says it wants “a California for all where everyone has access to economic opportunity, housing, health care, and other basic needs is possible,” adding that “policymakers can achieve this vision by advancing fairer taxation to prevent cuts when there’s a budget shortfall like today and build a truly just and equitable California for all.”
However, when it came to specifics, the webinar’s panel dwelled on raising corporate income taxes by eliminating or reducing some loopholes that the Legislature provided in past years, such as the tax credit for research and development.
Panel members also revived a corporate tax overhaul that state Senate leadership proposed last year, but failed to gain any traction.
“We want to make sure revenues are part of the conversation,” the organization’s tax analyst, Kayla Kitson, said. “We have options.”
Corporate taxes are just a fifth of the state’s general fund revenues, and even doubling them would fall way short of covering the budget deficit. The big money is to be found in personal income taxes.
Newsom, however, has repeatedly rejected tax increases as a remedy – which is why the Senate corporate tax hike didn’t move last year – and a business-backed measure on the November ballot would make increasing state and local taxes even more difficult.
In the absence of a tax increase of some kind, direct or indirect reductions in the programs that progressives and their legislative allies cherish would seem to be inevitable.
https://calmatters.org/commentary/2024/04/california-progressives-defense-budget-deficit/
Legislative Leaders Come from Rural Areas; 1st Time in Half Century
Politico
It’s the first time in more than 50 years that both of California’s legislative leaders hail from rural districts. Local politicians accustomed to being on the outskirts of Sacramento policymaking are enjoying the view from the inside.
Rural interests, particularly agriculture but also forestry and local government, see an opening to finally make their mark on nation-leading policies, especially on the environment.
“The reality is that most of California’s rural and agricultural communities have long been marginalized in Sacramento, so just having a friendly ear in a position of influence makes us hopeful,” said Alex Biering, a lobbyist for the California Farm Bureau.
Sen. Mike McGuire’s sprawling North Coast district encompasses some of the state’s most famous redwood forests, salmon fisheries and Sonoma County wineries. Speaker Robert Rivas represents a Central Coast region known as the salad bowl of America and grew up in farmworker housing. They’re both a far cry from their immediate predecessors, Sen. Toni Atkins of San Diego and Assemblymember Anthony Rendon of south-central Los Angeles.
For Chris Lopez, the current chair of the Rural County Representatives of California, which includes 40 of California’s 58 counties, the representation alone is powerful.
“When Robert was sworn in as speaker, having a mariachi on that floor playing music spoke to my heart,” said Lopez, who has close ties with the speaker because both came up through San Benito County politics. “It wasn’t just about having a Latino, but having a Latino who grew up rural in farmworker housing.”
Lopez is hoping those good vibes will translate into specific budget and policy wins.
One example: RCRC has long sought an exemption from CA SB1383 (15R), former Sen. Ricardo Lara’s 2016 law requiring counties to reduce the amount of organic waste that goes into landfills and decomposes into methane, a potent global warming gas. Lopez argues that remote areas don’t have enough access to composting facilities and is sponsoring Assemblymember Jim Wood’s CA AB2902 (23R), which would indefinitely extend the exemption for rural jurisdictions.
The law is one instance of how cities’ grip on political power has made some of California’s most iconic climate policies not work as well for rural areas, Lopez said.
“Our communities need longer runways, they need a little bit more assistance on the technical advisory side,” he said. “I know we have got folks there now who understand that.”
The last time both leaders hailed from rural districts was in 1969, when Democrat Hugh Burns of Fresno County led the Senate and Republican Bob Monagan of San Joaquin County led the Assembly, according to Alex Vassar, California State Library communications manager. The most recent rural Assembly speaker was Cruz Bustamante, a moderate Fresno Democrat who led the Assembly from 1996 to 1998 before becoming lieutenant governor.
Urbanites’ dominance in California state politics is unsurprising given the concentration of people in Los Angeles, San Diego and San Francisco and the tendency of rural voters to elect Republicans, who have little chance of succeeding on the statewide stage.
But McGuire and Rivas, both 44, are young and ambitious. They’re taking the helm of the Legislature in a down budget year, which will make it harder to please their caucuses — but they’re careful to emphasize they’re representing everyone, including their urban counterparts.
“No matter if you live in Eureka or Encino, the priorities are similar,” McGuire said in a statement. “While I’ll always have country roots, I’m going to fight like hell to lift up every Californian, no matter if you live in the big city or a one traffic stop light town.”
McGuire’s comments come after Assemblymember Isaac Bryan before his ouster as majority leader referred to himself as “Los Angeles’ voice,” while noting to an LA business group that Rivas is “not from here.”
McGuire has made wildfire preparedness a priority, and has outlined the most detailed plan of any lawmaker to right the state’s troubled property insurance industry after catastrophic losses, some to fires in his district. (He has an open campaign account for an insurance commissioner run in 2026.)
Rivas, for his part, is one of the Legislature’s biggest champions of the potential climate benefits of landscapes like farms and forests to absorb carbon. He co-authored a bill in 2022 requiring the state to set first-in-the-nation emissions targets for natural and working lands.
Laurie Wayburn, the president of the conservation nonprofit Pacific Forest Trust, is hoping that track record translates into additional policy and money — especially in the climate bond that’s vying for the November ballot.
“There is really the opportunity to shift the emphasis in our climate investments to really reflect the value of natural and working lands,” said Wayburn.
Rivas named climate resilience as one of his top priorities at a conference last week put on by the Climate Center, giving land management a particular shoutout. He also noted the need for climate advocates to embrace the state’s diverse communities if they want to keep notching political wins.
“Climate issues and impacts in San Francisco are much different than the climate emissions and impacts of Bakersfield in the Central Valley,” Rivas said. “Trying to organize regionally and having a very strategic approach, that’s why I want to always preach and encourage collaboration.”
https://www.politico.com/news/2024/03/26/rural-california-legislative-leaders-00148931
Business Coalition Puts Tax Vote Restructure on Ballot: “Full Steam Ahead” v. Newsom & Unions
Wall Street Journal excerpt
A coalition of California companies is going to war with Gov. Gavin Newsom and his Democratic allies over taxes it says have grown out of control in the Golden State.
The businesses have gathered enough signatures to put a measure on November’s ballot that would require two-thirds of voters to approve most local tax increases and roll back some recently enacted ones.
If passed, it would be one of the most significant changes to the way California funds its government since 1978’s Proposition 13, a voter-approved law that severely limited property tax increases.
Backers say it is necessary to stop continued tax increases that are making it too expensive to operate in California and pushing companies to leave the state. Real estate businesses in Southern California are among the biggest funders, according to state campaign finance records, partly in response to a surcharge on luxury home sales that Los Angeles voters passed in 2022.
Newsom, local officials and labor unions say the proposal would decimate funding for basic services such as trash collection and firefighting and would make budgeting decisions near-impossible.
The companies spent some $16 million to gather signatures to put their proposal before voters and are gearing up for a fight political analysts say could draw tens of millions of dollars in advertising by both sides.
“The business community is fed up, they want to start stepping up to make a positive change. And they recognize that if they don’t do it, nobody will,” said Rob Lapsley, president of the California Business Roundtable, an advocacy group representing some of the state’s biggest businesses and leading the “yes” campaign.
Mike Roth, a spokesman for the “no” campaign, said his side “will not only have the financial resources but the boots on the ground needed for a robust campaign to educate voters about this deceptive and dangerous measure.”
Currently, many local tax increases in California can become law with a majority vote by the public. The measure, which proponents are calling the Taxpayer Protection Act, would raise that threshold to two-thirds. It would also require any tax hikes passed by the legislature to be approved by a majority of voters statewide.
In addition, it would retroactively invalidate some local and state tax increases passed since 2022 that don’t meet the new law’s requirements—a provision opponents say would be particularly destabilizing.
“It’s a complete revision to the Constitution and to how we currently do government in the state of California,” said Kyle Packham of the California Special Districts Association, whose members include utility districts and major transit agencies.
The fight is the latest manifestation of a long-running conflict between those who want to fund generous services in a state known for its progressive policies and those who argue high costs make California unattractive to families and businesses.
Making it harder for voters to raise taxes on themselves isn’t a new idea, nor is the California Business Roundtable’s advocacy for it. The group spent millions in 2018 qualifying a similar measure for the ballot with significant backing from the American Beverage Association, which wanted to block local taxes on high-sugar drinks.
That summer, the Roundtable yanked the antitax measure from the ballot after the soda industry struck a deal with then-Gov. Jerry Brown and Democratic legislators on a law banning new local beverage and food taxes for 12 years.
Any possible deal this time around would likely involve the real-estate industry, which wants to revoke Los Angeles’s surtax on property sales of more than $5 million that passed with 58% of the vote in 2022 and prevent similar measures from passing elsewhere.
Lapsley acknowledged the real-estate industry is “under full-scale frontal assault,” but he said his group isn’t holding out for a compromise in the Legislature this time.
“We are full steam ahead,” he said.
Former State Controller Yee Runs for Governor
Sacramento Bee
Nearly one year after she told the San Francisco Chronicle that she intended to run for governor, former California Controller Betty Yee, a Democrat, formally announced her campaign in a post on X.
“While some worry we have no power over our future in California, I know that we do. We have the power to make California add up for all of us again. That’s why I’m running for Governor,” Yee wrote.
Her post included a biographical video explaining her background and a link to her campaign website.
California’s current governor, Gavin Newsom, term limits out in 2026, and is widely believed to be considering a 2028 presidential run.
Yee has vowed to tackle the crises of affordability and climate change, to bring accountability and transparency to Sacramento, and to “uplift all communities in California” through an inclusive agenda.
Yee joins a crowded field of Democratic gubernatorial hopefuls in 2026, including former Senate President pro Tem Toni Atkins, Lt. Gov. Eleni Kounalakis and Superintendent of Public Instruction Tony Thurmond. California Attorney General Rob Bonta has publicly entertained a run, according to Politico, but has yet to declare his intentions.
No notable Republican has announced a gubernatorial bid yet.
After Strikes, Movie Show Biz Takes its Act on the Road
LA Times
Major studios were desperate to salvage the 2024 film schedules, and creatives, performers and crew members couldn’t wait to get back on set and start making money again. However, filming has not rebounded as swiftly as anticipated — at least, not in California.
The number of on-location shoot days in the L.A. area was down 26% in January compared to the same month in 2023, according to FilmLA. Smaller, independent projects, employing fewer cast and crew members, have received the majority of filming permits compared to major studios and streaming productions.
Since the strike settled, top entertainment companies have been notably absent from filming in L.A. The decreasing volume of major motion pictures shot in California continues a long-term pattern.
- Disney has 22 live-action films in various stages of production, roughly three of which are based in California.
- Warner Bros. only has one feature out of seven filming in California.
- Sony has begun production on six movies, with one slated to shoot in California.
- Universal Pictures has 11 films in production or pre-production, and none were shot or set to shoot in the Golden State.
Worsening matters, California is finding it challenging to recover from the walkouts because shooting here is more expensive, multiple production executives told The Times. This expense makes L.A. less appealing to studios seeking cost-cutting options after a significant industry disruption.
“California — while it has its advantages — sits in the wrong place for a moment like this,” said one Hollywood producer who was unauthorized to comment.
Filming activity in the Greater L.A. area had already declined by the end of 2022, according to the nonprofit FilmLA, which monitors on-location shoots and filming permits in L.A.
“Given that 40% of production employment is based in Southern California for the country … that makes L.A. significantly more important and significantly more impacted when the entertainment industry has a problem,” said Kevin Klowden, executive director of MI finance at the Milken Institute.
Industry experts and insiders attribute the ongoing exodus of productions from California to tax credit incentives offered by other popular filming destinations, such as Georgia, New Mexico, New York, Louisiana and the United Kingdom, which California has failed to compete with.
As other production hubs “continue to develop around the world, we have to find ways to be more competitive,” said FilmLA president Paul Audley. “And I frankly don’t anticipate that changing given what we’re hearing out of Sacramento at this point.”
In the aftermath of the streaming wars — which saw several companies greenlight an excess of content in an effort to compete with Netflix — the studios have been tightening their belts, slashing their staffs, restructuring their businesses and slimming down their production budgets and slates.
TV, film and commercial shoots are a sizable driver of employment, not just for Hollywood’s elite but also for the industry’s below-the-line laborers, craftspeople and myriad ancillary businesses that keep the industry moving.
The slow bounce back post-strike has already impacted small businesses that depend on the steady flow of Hollywood production for revenue, including local prop houses, florists, marketing agencies, drivers and dry cleaners.
“It’s been sloooooooow,” added Mimi Clarke, vice president of Front Row Media, an entertainment marketing agency specializing in product placement in movies. “January was a blip, February a bit more, March a bit more, but it’s not where it should be.”
These days, Clarke noted that the agency only receives about half as many weekly inquiries compared to late 2022. She added that much of the new business is for productions in other filming hotspots like Atlanta, Albuquerque and Croatia.
“L.A. is even quieter,” she said.
Wet Winter 2.0 Boosts Water Supply
Dept. of Water Resources
The Department of Water Resources (DWR) conducted the all-important April snow survey, the fourth measurement of the season at Phillips Station. The manual survey recorded 64 inches of snow depth and a snow water equivalent of 27.5 inches, which is 113 percent of average for this location.
The snow water equivalent measures the amount of water contained in the snowpack and is a key component of DWR’s water supply forecast. The April measurement is critical for water managers as it’s considered the peak snowpack for the season and marks the transition to spring snowmelt into the state’s rivers and reservoirs.
DWR’s electronic readings from 130 stations placed throughout the state indicate that the statewide snowpack’s snow water equivalent is 28.6 inches, or 110 percent of the April 1 average, a significant improvement from just 28 percent of average on January 1.
The focus now shifts to forecasting spring snowmelt runoff and capturing as much of that water as possible for future use.
“It’s great news that the snowpack was able to catch up in March from a dry start this year. This water year shows once again how our climate is shifting, and how we can swing from dry to wet conditions within a season,” said DWR Director Karla Nemeth this week.
“These swings make it crucial to maintain conservation while managing the runoff. Variable climate conditions could result in less water runoff into our reservoirs. 100 percent snowpack does not mean 100 percent runoff. Capturing and storing what we can in wetter years for drier times remains a key priority.”
California’s reservoirs remain in good shape thanks to state efforts to capture and store as much water as possible from record storms in 2023 and again this season. The State Water Project has increased storage by 700,000 acre-feet at Lake Oroville and by 154,000 acre-feet at San Luis Reservoir since January 1. Statewide, reservoir levels currently stand at 116 percent of average.
However, there are challenges ahead as the spring runoff begins. The dry start to the year, soot and ash from burn scars that accelerates snowmelt, and other factors may result in below average spring runoff which can impact water availability.
Recently, the State Water Project increased its forecasted allocation of water supplies for the year to 30 percent, up from an initial 10 percent, due to the storms in February and March. However, uncertainty about the spring runoff and ongoing pumping restrictions to protect threatened and endangered species in the Delta has impacted that allocation forecast.
“California has had two years of relatively positive water conditions, but that is no reason to let our guard down now,” said Dr. Michael Anderson, State Climatologist with DWR.
“With three record-setting multi-year droughts in the last 15 years and warmer temperatures, a well above average snowpack is needed to reach average runoff. The wild swings from dry to wet that make up today’s water years make it important to maintain conservation while managing the runoff we do receive. Our water years moving forward will see more extreme dry times interrupted by very wet periods like we saw this winter.”
That need to adapt to a changing climate is why Governor Gavin Newsom joined the snow survey at Phillips Station to announce the release of the California Water Plan Update 2023.
The Water Plan Update sets forth a vision for all Californians to benefit from water resources that are sustainable, resilient to climate change and achieves equity for all communities and benefits the environment. Check out the Water Plan Update to learn more about how the plan focuses on key issues including addressing climate urgency, strengthening watershed resilience, and achieving equity in water management.
As part of the state’s climate adaptation efforts, over the past two years, California has worked with local groundwater agencies and state and federal partners to capture as much water as possible to prepare for the next drought.
In 2023, more than 1.2 million acre-feet of groundwater recharge was permitted by state agencies, with nearly 400,000 acre-feet of flood water recharged using the Executive Orders issued by Governor Newsom.
On average, the Sierra snowpack supplies about 30 percent of California’s water needs. Its natural ability to store water is why the Sierra snowpack is often referred to as California’s “frozen reservoir.” Data from these snow surveys and forecasts produced by DWR’s Snow Surveys and Water Supply Forecasting Unit are important factors in determining how DWR provides water to 27 million Californians and manages the state’s water resources.
DWR conducts five snow surveys at Phillips Station each winter near the first of each month, January through April and, if necessary, May.
Farmers Could Save Water By Planting Different (Less Lucrative) Crops
CalMatters
California farmers could save massive amounts of water if they planted less thirsty — but also less lucrative — crops instead of almonds, alfalfa and other water-guzzling crops, according to new research by scientists who used remote sensing and artificial intelligence.
Such a seismic shift in the nation’s most productive agricultural state could cut consumption by roughly 93%, researchers with UC Santa Barbara and the NASA Jet Propulsion Laboratory reported Monday.
But Anna Boser, the study’s lead author, acknowledged that replacing all of California’s water-intensive crops with the least-intensive ones, such as grains and hay, is an unrealistic economic scenario.
“In reality, that is not going to happen,” Boser told CalMatters. “Grain and hay crops aren’t really super economically viable in California, which is why everybody is growing crops that are more water intensive.”
In a less-extreme scenario, the researchers reported that fallowing 5% of fields with the most water-intensive crops could cut water consumption by more than 9%, according to the study, published in the journal Nature Communications. Another 10 to 11% would be saved by increasing water efficiency or by switching half of growers from the thirstiest to more average crops, the researchers reported.
“We potentially don’t need to be as extreme with our changes in order to save water in agriculture as we originally thought,” Boser said.
For instance, in a critically overdrafted basin in Tulare County, that would mean switching from crops such as kiwis, walnuts, almonds, alfalfa and cherries to more average water users, such as corn or sorghum.
The market value of California’s crops and livestock is estimated at $59 billion, led by dairy, grapes, cattle and almonds. The state’s growers feed much of the country, as well as exporting their products internationally.
California is world-famous for its high-value specialty crops, such as pistachios, almonds, walnuts, strawberries, stone fruits and wine and table grapes. Many of these use larger amounts of water but are the least likely to be fallowed by farmers.
“Forage crops and grains are lower water use but can also be grown in many areas of the country, whereas the specialty crops California grows can’t as easily,” said Alexandra Biering, senior policy advocate with the California Farm Bureau. “At the end of the day, as a society, we’ve left it up to farmers to decide what to grow with the resources they have, based on what the market demands.”
Climate change is squeezing water supplies, increasing temperatures and making the state’s swings from dry to wet even more extreme and less predictable. Some farmers are experimenting with new crops that are more resistant to droughts or heat.
At the same time, growers are also reeling from struggling markets. Though California is the country’s top walnut producer, the U.S. Department of Agriculture estimates that 25,000 acres have come out of production amid plummeting tree nut prices. And almonds, often demonized as a water guzzler, saw a drop in total acreage for the past two years.
Now, as state policies are poised to restrict the flow of groundwater from depleted aquifers, up to a million acres of prime farmland may need to come out of production in the San Joaquin Valley, according to The Public Policy Institute of California.
“In areas where groundwater pumping restrictions are in place, like in parts of Tulare County, some growers are already transitioning to lower water use crops like cotton,” Biering said. “To the extent that this study is useful for growers to understand their options under a reduced water supply, that’s great.”
The study used a satellite tool to estimate the amounts of water that crops used in the Central Valley, then used artificial intelligence to subtract how much water evaporates from various landscapes and soil types in order to isolate how much the crops used.
Boser pulled from the U.S. Geological Survey’s National Water Information System to calculate that Central Valley counties use more than 23 million acre-feet of water a year for irrigation. That’s enough to supply about three-quarters of the U.S. population. About 62% of this is consumed by the crops.
Farmers in the southern Central Valley, such as Kern and Kings counties, were the most efficient, doing the most with the least water. Those in the lusher, northern valley and around the Sacramento-San Joaquin Delta were the least efficient; they have more abundant local supplies and they plant crops like rice that aren’t suited to drip irrigation.
Josué Medellín-Azuara, a UC Merced associate professor of civil and environmental engineering, commended Boser’s detailed mapping. “It helps refocus efforts for areas that are struggling to get water, or to work with their water balances,” he said. “It will help identify hotspots for planning on water resources.”
But he said some of the water-tightening scenarios the study evaluated are more feasible than others.
“You start dictating crops, that becomes a little bit of a problem,” he said. “There are reasons why certain crops are grown in California, meaning there’s a demand for them.”
Boser found that the usual suspects topped the list of the most water-intensive crops in California, including almonds and alfalfa as well as dates, kiwis and cotton. Grain and other hay crops, turf farms, wheat and sunflowers were among the thriftiest. Vineyards, pistachios, olives, plums, prunes and apricots were in the middle.
About 85% of the industry’s employment and revenues are in fruits, nuts and vegetables, Medellín-Azuara said. Farmers growing these higher value crops are more likely to purchase water from growers of less-valuable crops than to go without themselves.
“These crops have the ability to buy water from the lower value commodities,” he said. “You can make a case for rice, but for trees it’s harder.”
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