The 2026-27 Budget

Governor’s Office of Land Use and Climate Innovation Proposals

Summary

The Governor’s 2026-27 budget proposes two categories of General Fund budget augmentations for the Governor’s Office of Land Use and Climate Innovation (LCI): (1) ongoing support for administrative and policy activities and (2) temporary and ongoing funding for statutorily required activities. Overall, we find LCI’s proposals to be reasonable and well-justified. However, in the context of the state’s structural budget deficit, any increases to ongoing General Fund spending will inevitably require commensurate programmatic reductions (or revenue increases) elsewhere in the state budget. Therefore, the Legislature finds itself in the position of needing to evaluate whether these activities and staffing expansions at LCI are a higher priority than other existing General Fund-supported activities. As the budget picture becomes more clear in the next few months, we recommend the Legislature decide whether the merits of these proposals outweigh the resulting additional pressure on the General Fund both in 2026-27 and out-years. If the Legislature decides its budget framework cannot accommodate all of the new proposed spending, it could revise existing statutory requirements to downscale LCI’s responsibilities and corresponding resource needs.

Background

LCI Is Tasked With Various Responsibilities. LCI conducts five primary categories of activities for the state.

• California Environmental Quality Act (CEQA) Resources. The office coordinates the state-level guidance for and review of CEQA-related documents, including maintaining a statewide clearinghouse of CEQA environmental documents.

• Land Use Planning Information. LCI conducts various land use planning activities, including developing guidance and information for local governments’ General Plans.

• Climate Adaptation Initiatives. The office implements various climate-related initiatives including the Integrated Climate Adaptation and Resiliency Program, certain adaptation planning grant programs, and coordinating some statewide climate change research.

• Strategic Growth Council (SGC). LCI houses SGC, which coordinates work across various state departments and agencies and disburses grants to address statewide climate and land use issues such as extreme heat and sustainable communities.

• Statewide Initiatives. Certain specific state initiatives are housed under LCI, including the Governor’s Military Council and the California Racial Equity Commission.

Change From the Office of Planning and Research (OPR) to LCI. The functions that LCI performs were part of OPR until that office underwent restructuring in 2024 and split into two new offices: the Governor’s Office of Service and Community Engagement (GO-SERVE) and LCI. LCI continues to report directly to the Governor’s Office—rather than to an Agency and Cabinet Secretary—even though it now performs many government functions similar to a traditional department. While the two offices are now separate, LCI provides administrative, cybersecurity, and information technology (IT) infrastructure services to GO-SERVE. GO-SERVE reimburses LCI for the staff time LCI spends providing these services (but not for the cost of maintaining the infrastructure).

New Responsibilities in the 2020s. OPR started out as a small office with the purpose of long-term land use research and planning, as well as advising the Governor and the cabinet on such issues. However, the office’s statutory responsibilities have expanded over time, including a new focus on climate change and serving as the state’s lead entity on CEQA issues. For example, the Legislature and Governor have tasked the office with additional responsibilities to develop statewide guidance on complying with CEQA and to review applications for projects seeking streamlined CEQA processes. Additionally, in the early 2020s when the state was benefiting from a large General Fund surplus, the budget allocated substantial limited-term funding for LCI and SGC to administer several climate-related grant programs, including some related to extreme heat. While this funding has now mostly been allocated to grantees, Proposition 4—the 2024 climate bond—also assigned LCI and SGC responsibilities for administering bond funding for a number of similar climate programs.

Civil Service Transition. As LCI was established under the Office of the Governor, its staff were initially designated as exempt or appointed employees. In 2023, the Legislature approved the administration’s request to transition most of the office’s employees to traditional civil service status, which required standardization of various processes such as hiring and employee classifications. Because the office’s staffing is now structured similarly to other state departments, it also needs to comply with certain standards, such as having an Equal Employment Opportunity (EEO) officer and a bargaining unit analyst in its administrative team. As its staffing numbers and statutory responsibilities have grown, the office has also expanded its fiscal services unit to formalize its operations and ensure compliance with standard government operating procedures such as those related to contracts and accounting.

Governor’s Proposal

The Governor proposes $11.2 million in 2026-27, growing to $12 million annually thereafter through 2031-32, from the General Fund to support LCI’s existing administrative and policy workload and to implement statutorily required activities. The proposal would support 51.5 existing positions and two new positions at LCI (many of which are currently supported by limited-term funding), along with providing funding for some IT equipment, software licenses, and contracts. Figure 1 provides a breakdown of the proposals. As shown, the funding request includes $10.5 million ongoing to support IT, administrative, legislative, and land policy staff and activities. For implementing various statutory responsibilities, the Governor proposes $741,000 in 2026-27, $1.7 million in 2027-28, $1.5 million from 2028-29 through 2031-32, and $522,000 ongoing thereafter.

Assessment

Administration Has Provided Reasonable Justification for Proposals. Our review found a number of well-justified reasons for why LCI is requesting additional funding. In particular:

• IT Security Needs. The Legislature approved LCI’s request to establish its own IT unit in 2023 with some ongoing support ($5.2 million and 15 positions) and some limited-term funding ($3.7 million through 2025-26). The 2026-27 proposal requests the continuation of the limited-term funding to maintain cyberinfrastructure and support workload growth, as well as an additional $2.6 million to bring the office’s IT system into compliance with state and federal requirements and provide ongoing support for five existing positions. LCI states that absent the cybersecurity funding, it will be vulnerable to security incidents, face interruptions in e-mail and document storage services, and risk noncompliance with various cybersecurity requirements. These risks likely would apply to GO-SERVE’s operations as well, since that office also relies on LCI’s IT infrastructure. Because the Legislature already signed off on LCI’s plans to establish its own IT office, providing additional funding to complete that transition and ensure the systems are safe and secure would be consistent with previous legislative decisions. Moreover, our review found that LCI’s proposed total of 20 IT staff positions is not out of line with the size of IT units at other comparable state departments.

• Existing Positions Supported by Limited-Term Funding. LCI reports that it currently is supporting some of its administrative staff functions using a share of the funding it received for limited-term activities and grants. However, while previous General Fund appropriations provided some flexibility to use funding to help cover officewide administrative costs, more recent rounds such as Proposition 4 bond funding came with additional limitations and made this practice more difficult. Once its remaining funding is exhausted, LCI states that it will not have sufficient resources to support its current administrative staffing levels, even though the need for existing staff to oversee programs and grant recipients and to support core office functions such as accounting and contracting will remain.

• Transition to Civil Service. As noted earlier, LCI’s transition to the civil service model has resulted in additional administrative workload to comply with state law, including related to EEO and collective bargaining. Through its approval of budget requests in 2023-24, the Legislature essentially signed off on this change in approach. As such, providing the necessary resources to comply with applicable human resources laws and practices would be consistent and appropriate.

• Increase in CEQA-Related Workload. LCI’s role in providing a centralized resource on CEQA for other state and local agencies helps ensure consistent and efficient implementation of this important state law. However, while the office’s CEQA responsibilities and workload have grown, it has not received commensurate increases in ongoing state funds to support all of that work. Rather, LCI states that some of these staff have been funded via a patchwork approach including some limited-term sources (similar to how it has funded some administrative functions). Providing ongoing support for all of the existing LCI staff that work on CEQA guidelines and modernization efforts can help avoid delays or incompletion of such work and ensure the state continues to provide effective CEQA coordination, technical assistance, and information.

• Implementing New Statutory Requirements. The Governor’s proposals for implementing legislation seem reasonably well-aligned with the statutorily required activities and expected workload. For example, the proposal to provide $219,000 in 2026-27 and 2027-28 to update CEQA exemption guidance for sustainable transportation projects pursuant to Chapter 742 of 2025 (SB 71, Wiener) matches the estimates from the Assembly Appropriations Committee analysis published when the legislation passed. Funding proposed for the judicial streamlining program pursuant to Chapter 19 of 2021 (SB 7, Atkins) and Chapter 60 of 2023 (SB 149, Caballero) is at similar levels to what was provided in previous years, and would allow LCI to continue implementing the legislation’s requirements through its sunset year. Providing the proposed funding for such activities is consistent with the Legislature’s previous actions in enacting these bills and would allow LCI to meet its statutory requirements and avoid implementation delays.

However, Current General Fund Condition Means Spending Augmentations Will Require Additional Budget Solutions. Taken together, this set of proposals represents a new ongoing General Fund commitment. While we find that the proposals have merit, like all other General Fund augmentations they must be considered in the context of the state’s projected multiyear structural deficits—which are estimated to range from about $20 billion to $35 billion annually. In this context, any increases to ongoing General Fund spending would inevitably require commensurate reductions (or revenue increases) elsewhere in order to balance the budget in future years. Therefore, the Legislature finds itself in the position of needing to evaluate whether these activities and staffing expansions at LCI are a higher priority than other existing General Fund-supported activities. If the Legislature determines its budget cannot support the full requested amounts, it could consider downscaling the proposals and providing a lower level of funding. The resulting trade-off would be that LCI would not be able to provide the same level of service. For example, providing less funding for land use policy staff might mean the office takes longer to respond to CEQA-related requests for technical assistance. If it needs to provide less funding, the Legislature could also consider revisiting LCI’s statutory requirements, time lines, and associated resource needs—for example, by reducing expectations around how the office should implement the CalHeatScore extreme heat ranking.

Recommendation

Weigh Merits of LCI Proposals Within Context of Overall Budget Strategy. As the budget picture becomes more clear in the next few months, we recommend the Legislature decide whether the merits of these proposals outweigh the resulting additional pressure on the General Fund both in 2026-27 and out-years. Because we find LCI’s funding requests to be justified, opting to provide less funding for some or all of these proposals would come with trade-offs. For example, lack of funding could limit the state’s CEQA guidance capacity, delay or interrupt the implementation of some of LCI’s programs, and result in noncompliance with statutory requirements. However, fully funding these proposals would come at the expense of other existing state commitments. If the Legislature determines that its other existing state commitments are higher priority than the LCI activities that would be funded with these proposals, it could revise existing statutory requirements to downscale LCI’s responsibilities and resource needs.